Finance Minister Dwight Duncan announced over 40 changes to Ontario’s
auto insurance system last Monday.
Will this package bring premiums down?? Or even freeze vehicle
insurance rate increases over the longer term??
The short answers: no and no.
The main changes are:
* offering choice for non-catastrophic medical and rehabilitation
costs. Policyholders can opt to drop to a limit of $50,000 from the
current $100,000. These limits include medical assessments.
* eliminating “objectionable quoting practices” like using
financial credit scoring to measure and price risk. But there is a
counter-effect that is not widely understood: those getting – and about
to lose – a lower price for having a good credit record won’t see this
helping premium affordability.
* medical assessment cost control which would limit the cost of
assessments to $2000 and eliminate rebuttal examinations.
Some context: Ontario’s system remains among the most generous in
Canada. The obvious trending indicators point to the problem: it is not
the cost of repairing vehicle, but the costs associated with healing and
rehabilitating injured bodies.
My observation as an insider: the Ontario system takes very good care of
injured motorists – there is no better system on the continent. But the
intentional default in favour of getting quick treatment for injured
people leaves the system open to abuse and outright fraud.
Recent news articles have documented a relatively small faction of
lawyers, paralegals, and health-delivery players “gaming” the system -
sometimes in concert – to drive up costs that ultimately do not benefit
those who are injured.
The question is, if we want the best, are we prepared to pay for the
best?? And if we want lightning-quick response, with liberal benefits
to injured motorists, can we deal with the inevitable abuse of the
system?? Only then will we see cost containment reflected in our
premiums.