Sign In

to manage your profile

I forgot my password

Driving Home Education

Ontario's new auto product reforms are a reminder that a broker's value-add proposition is the expertise and advice they can offer their client.

As the industry processes recent amendments to Ontario’s auto insurance system, it must consider a crucial next step: how best to communicate the changes to consumers.

Effective September 1, the minimum accident and benefits coverage required by law will be reduced. At the same time, Ontario drivers will have more options to consider when buying auto insurance, and the opportunity to “tailor” their own coverage.

“Auto insurance is a legally mandated product, and this is the first time, that I can recall, that minimum benefits will be going down,” says Paul Taylor, operations director of the Insurance Brokers Association of Ontario (IBAO). “If there has ever been a time where the consumer needs to be educated, this is the time.”

Under the new regulations, medical and rehabilitation benefits for non-catastrophic claims by standard policyholders will be cut in half from $100,000 to $50,000 (CDN). Assessments and rehabilitation for minor injuries will be capped at $3,500. Medical assessment costs, which are a portion of these benefits and, according to industry data, have been on a steady incline since 2003, will also be capped at $2,000.

“Even with the halving of these benefits, Ontario motorists will still have some of the richest minimum benefits in the country,” says Taylor. “But it’s incredibly important that consumers understand that they don’t have what they used to.”

Lower Cost; More Choice
Both the industry and consumers are expected to see reduced costs as a result of the changes to the standard coverage.

At the same time, consumers will have more choices when it comes to optional coverage, such as increasing medical and rehabilitation benefits, attendant care, deductibles on court-awarded compensation and property damage. Housekeeping, home maintenance and caregiver benefits will also now be optional for non-catastrophic claims.

“One of the challenges for brokers in light of these changes will be getting the client’s attention,” explains Dan Danyluk, CEO of the Insurance Brokers Association of Canada (IBAC). “Clients generally place a generous amount of trust in their broker.”

A Lengthy Review
The reforms come as a result of a comprehensive review process of policies. An adaptation to the Insurance Act in 2003 mandates that the Financial Services Commission of Ontario (FSCO) revisit certain policies within the act every five years. The most recent review began in the second half of 2008. It has included a wide-reaching consultation with stakeholders to address growing concerns that costs to both consumers and the industry have skyrocketed in recent years.

FSCO data shows, for example, that an increasing number of claimants with minor injuries have been claiming and receiving accident care benefits. Between 2004 and 2007, claims frequency increased by 62% and attendant care costs increased by 59%, at the same time claim severity decreased.

Industry data suggests that complexities in the current law and the absence of a cap on medical assessments have also caused administrative costs to balloon. It is estimated that $0.40 on every $1 paid out under the accident and benefits portion of auto insurance is now spent on administrative costs.

A total of 41 legal and regulatory changes had been proposed as part of the review. Not all the proposals put forward last year will be implemented this fall, which has the potential to confuse both the industry and consumers. Some, such as the recommendation to harmonize review processes under the Insurance Act, require legislative approval and cannot be approved by the regulatory agency. Others, such as the proposed implementation of the 2008 findings of the United Nations Neck Pain Task Force, will require several years of study prior to becoming regulation.

And while it has been proposed that the definition of “catastrophic impairment” be expanded to include catastrophic brain injuries, it is unlikely a new definition will be established prior to more independent and in-depth review of the subject.

Communicating the changes
As a participant in the Communications working group, a subset of a steering committee–made up of trial lawyers, medical professionals and brokers–overseen by FSCO to develop core messaging around the changes, Taylor has been a key voice of the insurance industry in how best to inform consumers about the reforms.

“The intent, from the regulator’s point of view, is that core messaging exists everywhere and that it’s universally adopted and communicated, regardless of who is communicating it,” says Taylor. “Everybody will be selling the same standard product and the same mandatory product. The messaging must be consistent across the industry.

“We have a fairly extensive attack plan to provide our own members with enough information and early enough,” explains Taylor. “We must communicate these messages with as much clarity, consistency and brevity as possible.”

The IBAO, for its part, will run concurrent information sessions open to members and non-members in

27 Ontario municipalities for four weeks starting in mid-April. The brokers association is also relying on its print-on-demand website, so that members can upload templates of flyers and tip sheets that outline the changes consistently. nAs the industry processes recent amendments to Ontario’s auto insurance system, it must consider a crucial next step: how best to communicate the changes to consumers.

Effective September 1, the minimum accident and benefits coverage required by law will be reduced. At the same time, Ontario drivers will have more options to consider when buying auto insurance, and the opportunity to “tailor” their own coverage.

“Auto insurance is a legally mandated product, and this is the first time, that I can recall, that minimum benefits will be going down,” says Paul Taylor, operations director of the Insurance Brokers Association of Ontario (IBAO). “If there has ever been a time where the consumer needs to be educated, this is the time.”

Under the new regulations, medical and rehabilitation benefits for non-catastrophic claims by standard policyholders will be cut in half from $100,000 to $50,000 (CDN). Assessments and rehabilitation for minor injuries will be capped at $3,500. Medical assessment costs, which are a portion of these benefits and, according to industry data, have been on a steady incline since 2003, will also be capped at $2,000.

“Even with the halving of these benefits, Ontario motorists will still have some of the richest minimum benefits in the country,” says Taylor. “But it’s incredibly important that consumers understand that they don’t have what they used to.”

Lower Cost; More Choice
Both the industry and consumers are expected to see reduced costs as a result of the changes to the standard coverage.

At the same time, consumers will have more choices when it comes to optional coverage, such as increasing medical and rehabilitation benefits, attendant care, deductibles on court-awarded compensation and property damage. Housekeeping, home maintenance and caregiver benefits will also now be optional for non-catastrophic claims.

“One of the challenges for brokers in light of these changes will be getting the client’s attention,” explains Dan Danyluk, CEO of the Insurance Brokers Association of Canada (IBAC). “Clients generally place a generous amount of trust in their broker.”

A Lengthy Review
The reforms come as a result of a comprehensive review process of policies. An adaptation to the Insurance Act in 2003 mandates that the Financial Services Commission of Ontario (FSCO) revisit certain policies within the act every five years. The most recent review began in the second half of 2008. It has included a wide-reaching consultation with stakeholders to address growing concerns that costs to both consumers and the industry have skyrocketed in recent years.

FSCO data shows, for example, that an increasing number of claimants with minor injuries have been claiming and receiving accident care benefits. Between 2004 and 2007, claims frequency increased by 62% and attendant care costs increased by 59%, at the same time claim severity decreased.

Industry data suggests that complexities in the current law and the absence of a cap on medical assessments have also caused administrative costs to balloon. It is estimated that $0.40 on every $1 paid out under the accident and benefits portion of auto insurance is now spent on administrative costs.

A total of 41 legal and regulatory changes had been proposed as part of the review. Not all the proposals put forward last year will be implemented this fall, which has the potential to confuse both the industry and consumers. Some, such as the recommendation to harmonize review processes under the Insurance Act, require legislative approval and cannot be approved by the regulatory agency. Others, such as the proposed implementation of the 2008 findings of the United Nations Neck Pain Task Force, will require several years of study prior to becoming regulation.

And while it has been proposed that the definition of “catastrophic impairment” be expanded to include catastrophic brain injuries, it is unlikely a new definition will be established prior to more independent and in-depth review of the subject.

Communicating the changes
As a participant in the Communications working group, a subset of a steering committee–made up of trial lawyers, medical professionals and brokers–overseen by FSCO to develop core messaging around the changes, Taylor has been a key voice of the insurance industry in how best to inform consumers about the reforms.

“The intent, from the regulator’s point of view, is that core messaging exists everywhere and that it’s universally adopted and communicated, regardless of who is communicating it,” says Taylor. “Everybody will be selling the same standard product and the same mandatory product. The messaging must be consistent across the industry.

“We have a fairly extensive attack plan to provide our own members with enough information and early enough,” explains Taylor. “We must communicate these messages with as much clarity, consistency and brevity as possible.”

The IBAO, for its part, will run concurrent information sessions open to members and non-members in 27 Ontario municipalities for four weeks starting in mid-April. The brokers association is also relying on its print-on-demand website, so that members can upload templates of flyers and tip sheets that outline the changes consistently.

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the April 2010 edition of Canadian Insurance Top Broker magazine.

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.