Insurance Premiums Continue to Rise While Benefits to Victims are Decimated

Toronto Personal Injury Lawyer Albert Conforzi: Andrea Horwath, leader of the Ontario NDP, is calling for a 15% reduction in auto insurance premiums for motorists in Ontario.

She commented on the nearly $2 billion in savings achieved by the industry as a result of the amendments that decimated benefits to victims in September, 2010. In spite of the savings, premiums have continued to rise. She cited that, for example, in 2011 premiums went up by 5%. From the CBC:

Major changes to auto insurance regulations in 2010 "dramatically" reduced benefits for drivers and turned out to be a huge "bonus" for companies, Horwath said. In 2011, the value of statutory accident payouts dropped by 50 per cent from the year before, to just under $2 billion, she said.

"Ontarians are tired of waiting," Horwath said. "Changes have been made to the Ontario insurance system that have allowed the companies to have far, far less in their payouts. And yet, that's not being realized in savings, in rates, to Ontarians."

Her proposal was part of the NDP wish list that is being thrown at the Liberal minority government as the price for continued NDP political support.

The immediate response from the insurance industry was twofold, and didn't surprise me in the least. One, that 77,000 jobs would be lost if premiums were reduced. Two, that what is really needed are anti-fraud measures recommended last fall by an anti-fraud task force.

Since 1990, Ontario motorists have had a succession of insurance regimes foisted upon it by an insurance industry that is truly gifted at finding someone to blame as a means to extract concessions from the government.

Insurers are masters of misdirection: lawyers, rehab facilities, doctors, fraudsters. I wonder who they'll blame next?

Originally, it was lawyers who were to blame for high insurance premiums. The government responded by giving insurers a no-fault system, combined with a tort threshold designed to eliminate the vast majority of bodily injury claims.

When premiums continued to rise, the insurers blamed the rehabilitation industry, who were claiming too many of the benefits that were available. The government amended the policy again at insurers' behest, but premiums continued to rise.

Then insurers blamed doctors, whom insurers thought were claiming too much money for the costs of medical assessments. The government again gave the industry what they wanted. And yet again, the premiums continued to rise.

The September 2010 amendments were demanded by insurers because there were just too many benefits available to victims. Therefore, what was needed was more choice. Optional benefits were introduced to give people more than basic coverages. Of course, very few people know about the options and even fewer can afford them. And yes, premiums still rise.

The latest bogeyman for the industry is fraud. According to the insurance industry, the system (which was created and repeatedly changed at their behest) has too much fraud in it. If only the fraud could be curtailed, they say, then premiums would come down.

Right.

I have previously blogged about insurance fraud. Fact is, the cost of fraud to the system has long been present and has long been built into the premiums.

Insurers are masters of misdirection: lawyers, rehab facilities, doctors, fraudsters. I wonder who they'll blame next?

Caught in the middle of all this, of course, are victims. For more than 20 years, we have seen an erosion of the rights of victims, while insurers have continued to amass profits. So when they respond to Andrea Horwath's call for a reduction in premiums, forgive me if I don't believe a word that the industry says in response.

I have long said that insurers in Ontario will not be happy until they can collect premiums without having to pay benefits. I still feel that way.

Albert Conforzi is a personal injury lawyer with Pace Law Firm in Toronto. His posts generally appear on Mondays.

So What Does "Economic Loss" Mean, Anyway?

Toronto Personal Injury Lawyer Albert Conforzi Back in the fall, I reviewed a decision regarding the meaning of the word "incurred" as used in the Statutory Accident Benefits Schedule (SABS). That decision, Henry v. Gore Mutual, held that once the threshold decision of finding an economic loss had been made, there was no necessary correlation between the economic loss sustained and the amount of attendant care benefit to be paid.

An arbitration decision was recently released, Simser v Aviva Canada, which reviewed whether individuals had sustained an economic loss as a result of providing attendant care, housekeeping and home maintenance services to the injured applicant. Under the SABS, certain conditions must be fulfilled before an expense can be considered as "incurred."

In this case, the examination revolved around whether the persons had sustained "an economic loss as a result of providing those goods or services to the insured person." The applicant submitted an expert opinion from a professor of economics, who opined that there are various types of economic loss, with a loss of income being just one of them. Loss of time devoted to labour or leisure is another type of economic loss, in the nature of a loss of opportunity.

The insurer argued that the words "economic loss" must be given their ordinary everyday meaning by applying the modern principle of statutory interpretation. That is, reading the words in their grammatical and ordinary senses. They also referred to a law dictionary definition of economic loss as "a monetary loss such as lost wages or lost profits…" The arbitrator found that the insurers' suggested interpretation was closer to the ordinary everyday meaning of the words.

From a factual standpoint, there were two individuals who provided attendant care, housekeeping, and home maintenance services to the applicant. The first one, JS, alleged that while continuing to work at her normal job, she would go home from work early or leave at various hours to provide services to the injured person. As a result, she said she sustained economic loss. Unfortunately, she provided no detail in terms of documentation to prove the number of hours and overtime lost and was found by the arbitrator to be a vague historian. She produced no documentation to prove any losses whatsoever.

The second individual, KS, did not attend to testify. The only evidence offered was that she lost time from her schooling. Again, no evidence was provided that any loss had been sustained.

I'm not sure whether this is a case of bad facts making bad law or not. Clearly, the arbitrator did not find the two service providers had made credible claims.

A further argument was made by the applicant. He argued that the insurer had explicitly recognized an economic loss by paying for some out-of-pocket expenses accompanied by receipts. The receipts were comprised of miscellaneous fuel charges, parking fees and restaurant bills incurred while apparently traveling from her home to the hospital where Mr. Simser was initially convalescing. The applicant argued that pursuant to the Henry decision, because some out-of-pocket expenses had been incurred and recognized by Aviva, the threshold for economic loss had been met and therefore the totality of the economic loss claim was payable.

The arbitrator found that if he were to accept this argument "every service provider would be able to circumvent the amended regulations by purchasing a single meal in a restaurant, a tank of gas or, as suggested by counsel, by paying one cent on a bus ticket...The Legislature would then have spoken needlessly and repetitively...Therefore I do not find that the mere payment of approximately $50 for gas, parking and restaurant invoices is sufficient to trigger the full payment of the attendant care."

I'm not sure whether this is a case of bad facts making bad law or not. Clearly, the arbitrator did not find the two service providers had made credible claims. On the other hand, the regulation does provide that an attendant care benefit would be payable if the individual providing the benefit had sustained "an economic loss." It doesn't say "an income loss." Why shouldn't gas, parking receipts, restaurant invoices or bus tokens be considered an economic loss?

This "incurred expense" requirement was a new concept introduced in the September 2010 amendments. It just might be that the drafters did not adequately define what was intended by "economic loss." If they meant income losses only, then they should have said so. 

The case has been appealed, and we will have to wait to see whether the original arbitration decision is upheld.

Albert Conforzi is a personal injury lawyer with Pace Law Firm in Toronto. His posts generally appear on Mondays.