The question that must be asked with provincial government's plan to reform auto insurance is whether the initiative is truly in the best interests of consumers and the public at large.
Finance Minister Peter Bethlenfalvy outlined the new rules when the 2024 provincial budget was unveiled in March. The plan is to eliminate some mandatory coverages in a move that the government maintains is designed to cut the cost of auto insurance. "We're going to allow consumers to have more convenience and choice," he told a news conference. "We want insurance to be affordable."
The Ford government says medical, rehabilitation and attendant care benefits would continue to be mandatory for drivers. However, all other accident benefits, which include income replacement, death benefits and funeral benefits, will become optional.
"This would provide drivers with an opportunity to lower their premiums by taking advantage of a wider range of coverage options to meet their needs," according to the budget outline.
Getting Less Is Not Convenient.
It sounds like a fine idea. But with the greatest respect to the finance minister, my concern lies with the very real possibility that some drivers may be left under-insured.
The government believes allowing consumers the choice to eliminate some insurance options will lower their premiums and who wouldn't be in favour of that? However, Bethlenfalvy noted the reforms won't necessarily lead to lower insurance rates.
"I don't think this is where we have any sort of specific numbers in terms of the rate of increase or a decrease," he told CBC.
The government claims its plan will provide convenience. But is taking something that everybody is entitled to and saying, "Now you can't have it unless you are willing to pay extra," really convenient?
If you want income replacement benefits, that is going to be an add-on. If you want dependency benefits, that is an add-on. If you want death and funeral benefits, that is going to be an add-on.
Will people even buy optional insurance? Times are tight and those who are struggling financially look at ways to save money. However, these are also some of the people who can least afford to be without coverage.
The government states that "drivers may already have access to certain benefits through their workplace benefit plans, so they should have the choice not to have to pay for them twice through their auto insurance policies."
But not everyone has benefits at work and the danger is people who are looking to stretch their paycheque will forgo the added expense of insurance options, leaving them vulnerable if they are involved in an accident. NDP Leader Marit Stiles criticized the plan for that very reason.
"My concern - and I think the concern of our caucus and our party - is this is going to force Ontarians who are looking for more affordable options, frankly, to take on an additional risk that they shouldn't be forced to take on," she told reporters.
Insurers Allowed to Set Option Prices.
This plan could mean the insurance coverage you once had will cost you more if you want to keep what are arguably essential benefits. It should be noted that the core price of auto insurance is subject to regulation, but insurers are allowed to set the price of optional benefits. It seems unlikely that those drivers who are having a difficult time making ends meet will be inclined to pay an extra $20, $30 or $50 a month for benefit options.
Even if you do have workplace coverage, such as long-term disability (LTD), there is a six-month waiting period before you would see even a penny after an injury. That can be an eternity for those who are barely scraping by. If you are involved in an accident and unable to work, how are you going to buy groceries and pay rent or your utilities?
I am worried that this plan could ultimately be putting people in the position of gambling with their future. Those who don't have alternative benefits through no fault of their own could get into a car accident and find themselves with little or no coverage. They would then not have the money to pay for the basic necessities and forced to turn to welfare or the Ontario Disability Support Program. So what was once the primary responsibility of the insurance company could indirectly become the primary responsibility of the taxpayer.
When the word "convenience" is used, I tend to take a closer look. In my experience when telecom companies, banks and insurance providers talk about convenience, that is code for, "We are going to give you less."
Are we creating a situation where we are forcing consumers to buy a product that has little, if any, practical value? If so, it is money for nothing, as the song goes.
Frankly, people might be better advised to take the money they would need to spend for the planned new auto insurance options and purchase a private LTD policy. They would be better protected, in my respectful opinion.
Promise of Consumer-Friendly Policies.
Insurance providers welcomed the government's latest plan. And to the cynically inclined, there is reason to see why they would.
"The Ontario Budget is a good start towards giving drivers more control over their auto insurance by selecting coverage that best suits them. Aviva Canada applauds the government's leadership for being the first province in Canada to take a consumer-oriented approach that delivers meaningful choice," said Aviva Canada managing director Susan Penwarden.
There is the fear that it will be the insurance industry will be the one to benefit most from this plan.
I am in favour of any insurance reforms that help consumers but, for years, Ontario governments have been promising consumer-friendly automobile insurance policies.
Under the Liberals, Kathleen Lynn pledged to reduce insurance rates by 15 per cent. It never happened.
In 2016, the $2-million limit for medical, rehabilitation and attendant care benefits for catastrophically injured people was reduced to $1 million. Three years later the Ford government promised to bump it back up. We are still waiting.
The government talks about studying postal code auto insurance discrimination and attendant care pay schedules but we need action. Not just talk of studies.
We must guard against initiatives that seemingly have no real value for the average consumer. In the end, it is reasonable to conclude that these latest changes are not necessarily going to help Ontario drivers. In fact, they could be harmful.
As a personal injury lawyer I represent many clients who have been injured in a motor vehicle accident, and I encourage anyone who may have questions about the impact of these changes to auto insurance to contact me.
