The battle for Bill 15 may be won, but the war is far from over in making auto insurance viable, says one insurer.
Aviva Canada, like other insurers, is lending its voice to praise the Ontario government for passing into legislation Bill 15 – but is pointing out that although the changes will assist in the reduction of insurance rates for Ontario drivers, there are more savings to be had within the current system.
“We are pleased that the Ontario Government passed Bill 15 without issue, it is a good first step,” says Karin Ots, senior vice president of regulatory and government relations for
Aviva Canada. “But to truly affect long-term change for the Ontario auto insurance system, we need to reduce claims costs to be in line with other provinces.”
Ontario is one of the most heavily regulated insurance markets in the world and the benefits mandated by the government are the most expensive in Canada - offering a greater amount of benefits, a higher value of benefits and a significantly longer period in which benefits are available versus other provinces, says Ots. For every $1 of premium that Aviva earns, 65 cents is paid out in claims costs.
Claims costs need to come down in order to reduce premiums, especially when 92 per cent of Aviva's policy-holders in Ontario do not make a claim, Ots points out.
In Ontario, accident benefit claims have an average cost of $26,863 compared to $3,628 in Alberta. Of those costs, 48 per cent go to non-treatment expenses, such as legal fees and assessments, versus the 52 per cent that go to actually treating of victims.
It is the extraordinarily high amount of claims costs that are being spent on healthcare providers, lawyers and other service providers in Ontario that needs to be reduced to lower premiums, says Ots.
According to numbers from the IBC Analysis of 2012 GISA data, for bodily injury tort claims, the average cost in Ontario is $157,133 while it is only $50,020 in Alberta. (continued.)
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As only 8 per cent of Ontario drivers make a claim. Aviva Canada has put forward a number of recommendations to the Ontario government that, if instituted, would see an overall decrease in the insurance rate paid by Ontario drivers. The recommendations would decrease the payments to healthcare providers and lawyers.
The recommendations would also decrease the basic level of coverage but make additional benefits available as optional coverage, bringing Ontario in line with other provinces, says Ots.
The recommendations to reduce claims costs listed below were outlined in a plan sent to Ontario Finance Minister Charles Sousa earlier this year.
- Reduce the claiming period for medical and rehabilitation benefits from 10 years to four years;
- Streamline care for motor vehicle accidents with workers' compensation;
- Clarify the definition of catastrophic impairment to ensure that the most seriously injured claimants are covered;
- Implement a tort cap similar to Alberta, Nova Scotia and New Brunswick; and
- Cap plaintiff lawyer contingency fees.
