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Changes in The SAB Regime

In April of 2019, the Ontario Conservative government published their budget and outlined their proposed plan to put “drivers first” in Ontario. The main objective of this plan is to change the insurance regime in Ontario for the purpose of lowering premium costs, increasing consumer choice and providing quicker access to treatment. 

Some of the positive changes include increasing the ability of insurance companies and consumers to communicate through electronic means; giving consumers the ability to lower their premiums by providing insurance companies access to their credit history; working with the Law Society in examining contingency fee arrangements; introducing measures to combat insurance fraud; and ending the practice of “postal code discrimination.” 

Two controversial changes have also been proposed. First, the government proposed raising the default Catastrophic Benefit limit from $1 million to $2 million while providing the consumer with the option to lower it to $1 million if they choose to do so. Second, the government proposed introducing a default “care not cash” clause with the option of purchasing the right to settle your claim in cash instead. Both these proposed changes are problematic. The unfortunate reality is that those changes will have a negative effect on insured persons and will make a complicated process even more complicated. Further, the changes will have the potential effect of leaving many without affordable options in their plan for treatment. Each of these two proposed changes will be examined in more detail below. 

Increase of the default Catastrophic Impairment Benefit Limit 

The catastrophic impairment benefit is provided to individuals who suffered a catastrophic impairment, as defined in the regulations, as a result of an auto collision, and is set at a default limit (currently at $1 million) with the option left to the consumer to have it changed. This benefit can be allocated in differing proportions between medical, rehabilitation and attendant care expenses. 

The proposal to raise the default amount to $2 million is a good change. Before another legislation change in 2015, the amount was $2 million and usually every dollar if not more is required for care and treatment for those with catastrophic injuries. The previous government had lowered the amount to $1 million notwithstanding that the cost of medical treatment and ongoing care required for those who fall into this category is astronomical and generally not covered by Ontario’s public health care system. For many, $1 million fell significantly short of what was needed for ongoing care for the rest of their lives. Thus, the proposed increase to $2 million is a step in the right direction. However, the one issue with this proposal is that it provides the consumer the option to lower this to $1 million. This is concerning because consumers wanting to save a few dollars on their premium, may choose the lower limit, not fully understanding the risks they face by that choice. At the time of purchase, most consumers are not actively thinking about the potential costs they would face should they become seriously injured or may not realize how large those costs be. It is questionable that at the time of purchase a consumer will be provided with the necessary information needed to make an informed decision regarding cutting the default benefit in half. This is true and seen often with “optional benefits”. Consumers do not even know what they are and usually not informed by the insurers that optional benefits can greatly increase medical and rehabilitation funding and income replacement benefits for a small additional premium. 

The Default “Care Not Cash” Clause 

The main premise behind this proposal is that when a consumer is purchasing insurance, the policy they purchase will by default prevent them from negotiating a lump sum settlement with their insurer (unless they purchase an additional rider which will allow them the future ability to settle a claim with the insurer). In other words, the consumer must purchase the right to settle any future claims. The government has marketed this proposal to voters by stating that this will speed up treatment and ultimately put more money in the pockets of the people rather than lawyers and insurance companies. However, this proposal will not put more money in the hands of consumers. What it will do is make an already complicated process even more complicated as well as place more control in the hands of insurance company when dealing with medical treatment plans. 

Currently, when receiving medical treatment under an insurance policy, the insurer has the right to assess the treatment plan proposed by a provider and deny the plan if it feels it is excessive or unnecessary. When this happens, the insured person is faced with three choices: 

(1) They can dispute this denial to the License Appeal Tribunal (LAT). Unlike in a regular court proceeding, where a successful party can ask for the costs of the dispute from the unsuccessful party, at the LAT the insured and the insurer pay their own costs – regardless of who is successful. As the cost of the appeal is often more expensive than the cost of the treatment, the insured person may not have the financial means or knowledge to fight the denial of their treatment. Also, how does an injured person go through this complicated process when they are injured, many of whom may have significant concussions or brain injury symptoms. 

(2) An insured person can give up and not fight the denial of the treatment plan. Thus, they will either go without the treatment altogether or they will have to fund it from their own pocket. This is often the case that the person just gives up and the insurance company saves money! 

(3) An insured person can negotiate a settlement with the insurance company. This choice provides the insured with a lump sum of money which they can control. With this choice, the insured person can decide what treatment they want to obtain and they no longer answer to the insurance company as to what treatment they should or should not receive. They won’t be victim to constant treatment plan denials and can actually get treatment and not regress! 

By utilizing a default “care not cash” clause, the government is proposing that consumers purchase a right that is otherwise available by default in any other contractual dispute: the right to settle. Settlement of an insurance claim provides power to the injured party. It allows them to be in control of their own treatment without the interference of an insurance company. Although the government’s proposal would allow insured persons to purchase the option to settle, the reality is that less than 2% of consumers purchase additional riders. Further, most consumers will likely not have given much thought as to how their insurance company will treat them should they be involved in an accident. It is unlikely that consumers will be given, at the time of purchase, the necessary information to fully understand how the lack of the right to a settlement will impact them down the road. All in all, this proposal puts insurance companies first and the people last. It will not speed access to treatment and nor will it put more money in the pockets of drivers. Although the Ontario auto insurance Regime is in need of change, these two changes will not lead to desirable outcomes for consumers. By and large, these proposals benefit insurance companies at the expense of insured persons who will have just been through a traumatic and life altering accident. 

What are your thoughts? Make sure to discuss these changes with your broker or auto insurer agent. Contact a personal injury lawyer when you are injured to help get you the necessary treatment you need. 

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