January 2019 | Article

Ontario Government Auto Insurance Reform

Torkin Manes LegalPoint

On January 9, 2019 the Ontario Government issued a news release announcing that it is seeking input on how to make auto insurance more affordable.  The Government is inviting drivers and consumers to share their views on how to lower the Province’s auto insurance rates.  Vic Fedeli, Minister of Finance says “the previous government’s failed system of stretch goals on auto insurance is clearly broken.  Auto insurance rates in Ontario are among the highest in the country, and action is needed.”

The Government has invited consumers and businesses to share their views by visiting https://www.ontario.ca/form/survey-making-auto-insurance-more-accessible-and-affordable-ontario by February 15, 2019.

The Government’s consultation will coincide with the review of Ontario’s auto insurance rate regulation system which is jointly conducted by the Ministry of Finance and the Financial Services Regulatory Authority of Ontario.  The review will examine practices in other jurisdictions and identify opportunities to achieve greater efficiencies and introduce more competition in the system.

There are nearly 10 million drivers in Ontario and all drivers are required by law to have auto insurance.  Ontario’s current auto insurance system traces its origins back to 1990.  That’s when the Government of the day enacted what was called the “Ontario Motors Protection Plan” or “OMPP” as it became known.  The OMPP was designed as a trade-off: insured people with smaller claims would give up their fundamental, basic right to sue for damages and, in exchange, all people injured in car crashes were supposed to get early and full access to health care benefits and income support.  Everyone would have access to benefits regardless of who is at fault in accident.  These “no fault” insurance benefits were intended to save the industry money and provide insurance premium reductions for motorists.  Only those with serious injuries were permitted to sue. 

Giving up the right to sue in exchange for enhanced no fault benefits worked for a time.  But over time, benefits that injured people were supposed to receive through the “no fault” system had been continually and significantly eroded.  All Ontario drivers are now paying more and receiving less protection.  Since 1990, there have been restrictions in the right to sue for injured people, and reductions in the amount of no fault benefits available.  Initially, all people injured in car crashes had access to a maximum of $100,000 in treatment in exchange for reduced rights to sue.  Now the majority of injured accident victims have coverage only for $3,500 in treatment.  Even the most seriously injured accident victims – people who have sustained brain injuries and spinal cord trauma have experienced the 50% reduction in funding that is available for necessary treatment. 

Everyone wants lower auto insurance premiums but unfortunately, most people do not really think about what compensation might be available to them in the event of an accident and many are surprised to learn the realities of the situation once they are injured.  Optional additional insurance coverage is available and all drivers are well advised to consider purchasing it.

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