Daw: More car insurance hikes before any relief

Nov 03, 2009

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Personal Finance Columnist

Many Ontario drivers will see further premium increases before any potential savings from the province's new package of cost controls and options for coverage become available, insurers warned yesterday.

"There should be cost savings," possibly enough that many motorists will pay less without having to reduce their coverage under new basic policy, said an optimistic George Cook, president of the Dominion of Canada General Insurance Co.

But he warned many policyholders will see increases that have been approved already, or could yet be approved, before the package of changes outlined in the Toronto Star and announced Monday can be implemented next summer.

Finance Minister Dwight Duncan announced more than 40 pending changes that were greeted with a mixture of praise, criticism and puzzlement depending on the interest group, with everyone clamboring for more detail.

Insurers, lawyers and some care providers were pleased to see reimbursement for treatment and assessement of minor sprain, strain and whiplash injuries will be capped for interim period at $3,500, with few exceptions.

But health providers were not happy consumers would also be given the choice to buy $50,000 of medical rehabilition benefits as in Alberta and New Brunswich instead of the current mandatory $100,000 in Ontario.

Healthcare providers who had lobbied against a $25,000 option said $50,000 would still not be enough for some serious injuries, particularly without relaxing the current limitation that an injury must be serious and permanent to sue for excess medical costs.

They said insurers would profit without there being a guarantee of savings for consumers, leaving accident victims to rely on an over-stressed public healthcare system, or having to pay from their own pockets.

"There is a lot of detail that is yet to come," Cooke said after attending a government briefing session that left other insurers unwilling to speculate on the potential for savings to consumers.

"There are increases (in premium) going through the system right now. So there will be a bit of a transition," Cooke added. "Whatever magic date this happens in the summer of 2010, for people who have just renewed their coverage, somehow are going to have to be able to endorse their policies so they can take advantage of the same prices (as those who renew later.)

At Queen's Park, the Conservative opposition party said Duncan should have got at the root of the problem with higher premiums by taking a closer look at fraud and waste in the medical and auto repair systems, the Star's Rob Ferguson reports.

"I'm very worried that the reforms brought forward to date are actually about reducing coverage to people as opposed to going after the fraud and the waste in the system," said Progressive Conservative Leader Tim Hudak.

"There's a lot of gaming going on," he added. "Much more could have been done. The double digit increases we've seen in the last couple of months are actually unaffordable to Ontario families in today's economic environment."

The Liberals appear afraid of taking on the insurance industy and its suppliers, said NDP Leader Andrea Horwath.

"They're basically saying if you can't afford decent insurance we'll provide you with a cheaper product for a cheaper price. It's not rocket science," she told reporters. "They need to take a look at the system over all."

The fact that it took a year of review to come up with the Liberals' solution is astounding, added NDP finance critic Michael Prue. "In the end, any fool can sell an inferior product for less money and that's really all that's happening here."

The Insurance Bureau of Canada applauded the government for addressing affordability of premiums while at the same time maintaining "robust benefits".

"We are pleased that the government is taking the steps necessary to create a better auto insurance system for Ontarians," said IBC President & CEO, Don Forgeron. "Consumers need and deserve a stable and affordable auto insurance system. The current system is overly generous and encourages unnecessary costs."

The Ontario Trial Lawyers Association said in a news release the auto-insurance reform proposals released today by the Ontario government fall short in securing fairness and access to justice for innocent accident victims.

Eliminating a deduction from pain and suffering awards after fatal accidents is a step in the right direction, and there are measures aimed at taking pressure off premium increases, said association president Judith Hull. But, she said, "we need to find a longer term solution to cure what ails auto insurance."

Dorianne Sauvé, chief executive of the Ontario Pysiotherapy Association, called for a clarification of how accident victims who need more treatment will get out of the box of the proposed $3,500 coverage limit for minor injuries.

Details of the government's reform package are available on the Web at http://news.ontario.ca/mof/en/2009/11/ontario-providing-choice-in-auto-insurance.html.

thestar.com