What your clients need to know about the new Ontario auto insurance
A slew of auto insurance changes have come into effect in Ontario. Brokers: you’re going to be busy.
“Brokers are going to have to be responsible for so much more than they were before,” says Laurie Walker, president of Walker Consulting & Auditing. “Benefits are being taken away.”
The fine print on these new rules is considerable. After boning up themselves, brokers will have to inform their clients about new exposure gaps. And as the rules get tested in practice, information will likely keep changing for months, and even years.
Walker was one of the speakers at a seminar recently in Toronto hosted by the Insurance Institute. “Clear as mud,” she quipped of one legislated detail. The new rules are generating a number of questions, some of which may have no clear answers yet or will spark new debates. Example A: the definition of a minor accident, which will now not affect a client’s rating.
“These changes affect not only what the claims people do, [but] what the brokers do, what the underwriters are now having to do, what IT is now having to do,” said Walker. “And overall what ends up in the reinsurer’s hand at the end of the day.”
On an administrative level, clients will now be shown a lengthier and more firmly worded Warning Notice of the fines and charges levied against anyone found guilty of insurance fraud. Brokers and agents will also have to collect more data from clients at intake.
There’s also now a five per cent discount for those with winter tires. For clients who pay in monthly installments, the interest rate insurers can charge drops from three percent down to 1.3 per cent.
The basic policy limit now includes attendant care and has dropped to $65,000 — this new, combined rate will be $21,000 lower. Catastrophic impairment benefit also includes attendant care and will now be just $1 million. (“If you need 24-hour care, it’s not enough,” warned Walker.) For non-catastrophic claims, coverage will drop to five years.
New rules also cap the optional benefits insurers can offer for these benefits.
Also impacting client coverage will be new rules regarding non-earner benefits. The definition of people in this category will not change, but their benefits will: they’ll now get capped at two years, with a quicker four-week waiting period. And teens have to be 18 to qualify, up from 16 years old.
Minds really began to spin with the introduction of a new minor accident underwriting rule. An accident that cost under $2,000 for each vehicle and resulted in no injury or any payout from an insurer may not impact premiums or the renewal or cancellation of a policy. What if there’s no receipt? What if someone comes forward later with an injury? “Clearly we’ve talked about this for about seven minutes and I’ve generated enough questions in this room to prove there’s some grey area here,” said Walker.
Other changes outlined at the full-day seminar included:
- more sophisticated medical definitions for various aspects of catastrophic injury and impairment’
- an increase of interest charges on late payments, to 1.3 percent
- the need for a new 60-day benefit statement — some clients will be getting two statements if they are receiving benefits under the pre-June 1 rules, too (“It’s an IT nightmare,” said Walker)
- attendant care benefits will be paid out based on services incurred, not assessed
- neuropsychologists used must be in practice for at least five years
- emergency medical expenses under $250 have to be deemed by the insurer to be essential
The seminar also presented a quick summing-up of the new dispute resolution system now being used in Ontario for auto insurance. This new arbitration and mediation system is now managed by Safety, Licensing Appeals and Standards Tribunals Ontario. It’s goal: run with no backlog and offer opportunities to settle disputes as early as possible.
Its another complex detail for brokers to sort out as soon as possible. They’ll have to shift gears to keep pace with the fine print of different rules, new processes and changed numbers that are transforming the auto market in Ontario right now.
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the June/July 2016 edition of Canadian Insurance Top Broker magazine