Ontario brokers may want to begin demanding that the province implement auto insurance reforms, or else they risk compromising their reputation and future business opportunities, according to the Ontario Trial Lawyers Association (OTLA).
After hiring two York University Schulich School of Business professors to conduct an updated
analysis of Ontario’s auto insurance industry, the OTLA concluded that the system is “fundamentally broken” and called for the province’s Auditor General to conduct an independent review of premiums, coverage and profits.
While the Insurance Bureau of Canada tried to discredit the report, OTLA maintains its position that the unsettling findings are reflective of the industry at large.
“What we found when looking at all the insurers was that they made twice as much money on average in 2014 than they should have permitted to make,” said lawyer and OTLA president Maia Bent. “They made 10.6% return on equity compared to the 5.6% that the professors determined was reasonable.”
Bent also responded to the IBC’s claim that the report was “misleading” and “not an academic study.”
“This was done by two academics at York University Schulich School of Business with impeccable credentials. In fact, they’ve done work for FSCO previously,” Bent said. “They’re very neutral and experienced, so much so that the government has hired them in the past.”
She also debunked the idea that lawyers charge as much as 40% in contingency fees, arguing that the standard is 15% from the client and in the case of a winning verdict, the losing insurance company is obliged to contribute another 15% as well.
Bent argues that this should be a top issue for brokers, who may be unfairly blamed for Ontario’s flawed auto insurance system.
“The brokers are the frontline with the public,” Bent said. “People are angry that they’re having to pay a lot for very little protection, and brokers are the ones who feel the wrath of the public.”
In addition, Bent also worries that brokers may be held liable for the inadequate coverage.
“If people go back to brokers after an accident and discover how little there is, they’re not going to be pleased,” she said. “A very real risk for brokers is that if people were not sold optional benefits or explained that those were available, there could be cases of broker negligence.”
She hopes that the broker community, as well as consumer advocates and members of the public, will remain vocal enough to catch the attention of Ontario politicians and regulators.
“Everybody should be speaking out on behalf of what’s right,” she said.
