We are paying something for nothing. The mandatory accident benefits policy in Ontario provides minimal coverage for the vast number of people injured in car accidents . Presently, over 90% of victims are restricted to payment of a maximum of $3,500.00. They are forced by law to pay hundreds if not thousands of dollar PER YEAR for this coverage. Ask yourself. Would you voluntarily pay $1,000.00 per year of $3,500.00 worth of life insurance? Of course not. But the Government of Ontario forces you to pay for this very poor product. It’s time to speak to your Member of Provincial Parliament. See the full facts here. http://truthaboutinsurance.ca/drs-lazar-prisman-report/

The Ontario Trial Lawyers Association has prepared a series of blogs identifying current issues with the recent budget and how it impacts people injured by Motor vehicles. Please read the full blog here. http://otlablog.com/hidden-costs-of-the-provincial-budget/ Part One of a Three-Part Series on the 2015 Ontario Budget Last month, the Ontario Liberal government revealed its latest budget entitled “Building Ontario Up” but what it does to our auto insurance benefits is actually the opposite by significantly slashing benefits available to accident victims. This follows promises that tout more affordable insurance but do not disclose the true cost to those who find themselves in need of the coverage now, and those who will unfortunately need the protection in the future. The rationale of the Liberal government is that the reduced benefits will lower claim costs which will then be passed on to the consumer in the form of savings on premiums. A promise to reduce rates by 15% was made about two years ago but in reality, and by their own admission, has not been realized. It is estimated that since 2013 rates have decreased by only about 7%, and many of us still have not seen that reduction. On the other hand, the cuts to benefits will be effective immediately once the budget is passed. The reduced premiums come at the cost of a 50% slash to (or total elimination of) many benefits that were once part of mandatory insurance coverage prior to the 2010 reforms. The erosion of available benefits is disproportionate to any rate decrease and is unfair to consumers. According to the Liberal budget, “…costs in Ontario’s auto insurance system remain too high,” While a reduction in claim costs is welcomed by consumers and stakeholders alike, it can be achieved through other means. For example, as discussed on the OTLA blog following the release of Justice Cunningham’s review of the Dispute Resolution System late last year, insurers spent thousands of dollars on Independent Medical Assessments which account for roughly 25% of total health claims expenses. Despite this, the Liberal government made the choice to save costs by reducing available benefits rather than regulating insurer practices. The insurance industry has been crying poor through persistent lobbying (that also comes at a great cost), while profits have been on the rise since the initial cuts began in 2010. The latest benefit cuts will surely continue to boost these margins. Data released by the General Insurance Statistical Agency (GISA) suggests a dramatic reduction in Accident Benefit claims from $3.8 billion in 2009 to a low of $1.9 billion in 2012. While claims over the past year were projected to rise to $2.2 billion they are still down overall. This has allowed insurers to reap massive profits at the expense of those who need it most: accident victims. Profits remain high, payments to claimants remain low, and benefits are further restricted with trivial savings that may never end up in the consumer’s pocket. What additional cuts can we expect from this budget? The budget combines the medical and rehabilitation benefit which currently offers $50,000 of coverage and the attendant care benefit which currently offers $36,000 of coverage into one cumulative coverage limit of $65,000 – a reduction of more than $20,000. In the case of the catastrophically injured, attendant care and medical and rehabilitation benefits have been reduced from $2 million to a combined total of $1 million. This begs the question: is a 50% reduction in benefits worth a 7% reduction in premiums to some consumers in Ontario? The real kicker is that Ontario NDP leader Andrea Horwath – whose party propped up the Liberal minority in exchange for the 15% reduction to auto premiums – has publicly opposed the proposed changes stating, “…if you are talking to the insurance industry, they are going to try to paint it in a way that looks like they are really struggling. I don’t think anyone in this room believes that for a minute and I certainly don’t.” She went on further to say that “…in 2010 the (Liberal) government made changes to the policies around insurance and all that did, instead of creating an opportunity for reductions, is it created an opportunity for insurance companies to pocket more money.” So what has the Liberal government and the insurance industry offered the public in exchange for the slashing of benefits? A mandatory discount for winter tires. Think about that the next time you’re shopping for a set of Michelins. This blog post was contributed by Michael Giordano, Junior Partner and Monty Dhaliwal, Associate Lawyer of Sal Guzzo LL. B.

Ontario auto insurance: How much worse can things get for victims? Changes in 2010 created windfall profits for insurers by slashing coverage for the vast majority. We need to restore fairness and impose a moratorium on further reductions in coverage! In September 2010, the Ontario government introduced sweeping changes to auto insurance in response to pressure from the insurance industry to contain injury costs despite the industry’s long-standing failure to address systemic fraud in the system. The MIG: Minor Injury Guideline for victims The main feature of the so-called reforms was the MIG – the Minor Injury Guideline. What did it mean? Coverage for the vast majority of policyholders was slashed from $100,000 for medical and rehabilitation treatment to the paltry level of $3,500 maximum for medical and rehab needs following an accident. The MIG currently captures up to 75 per cent of all accident victims in Ontario, often without regard for the seriousness of the injuries involved. OTLA members report that many clients in the MIG typically exhaust their maximum benefit of $3,500 very quickly, leaving them without access to needed treatment. Clients are often forced in the Minor Injury category despite having injuries that could not reasonably be considered as “minor” e.g. serious fractures and brain injuries. The MIG: Major Income Generator for insurance companies It’s really no surprise what happens when premiums are increased and insurance payments are dramatically reduced for most injured accidents victims. In fact, the “good news” for insurance companies started to become apparent almost immediately. Here’s what one insurance CEO quipped, perhaps a bit too candidly, mere months after the changes: “We are starting to see the benefits of the 2010 auto reforms in Ontario, which is combining with our recent focus on proactive broker management and underwriting discipline to generate stronger results.” The early trend that this CEO was talking about here materialized and, by the end of 2012, total auto insurance claims were down more than 20 per cent or a reduction of $4 billion. The tally for auto insurers was more than $3 billion in profits in the first two years following the 2010 changes. Early indications for 2013 indicate that auto insurance companies in Ontario continue to enjoy strong results to this day. It should come as little surprise to anyone that insurance companies are doing extremely well under this model: then again, you can’t lose when you’re charging more and paying out a lot less. Ontario, now the worst coverage in the country As a result of the September 2010 changes, Ontario emerged as the only jurisdiction in the country with a special category of insurance for so-called “minor” injuries. And, significantly, Ontario has the lowest level of compensation for this category of injury. Even the insurance industry’s own data supports this contention with average claims payouts down dramatically from previous levels and more claimants than ever being captured by the MIG. But how much worse can things get for victims? Once again, columnist Alan Shanoff has documented the steady slide in coverage over the past few years in Ontario. Read his comments here. He ends his article this way: “One thing is certain. The current system can’t get much worse for accident victims. Victims need timely, adequate accident benefits even more than they need premium cuts.” Help make things better for victims! As a candidate, here’s how you can help ensure that the system doesn’t get any worse for victims: Demand that your party impose a moratorium on further auto insurance coverage reductions It’s time for our politicians to stop worrying about how to allow insurance companies to make more money, and start concerning themselves with how to restore fairness in our automobile insurance system.

The following article appears in the Law Times In response to complaints that insurance industry financial details are impossible to pin down, the Ministry of Finance commissioned a report on transparency and accountability in the sector but perhaps surprisingly chose the accountants for the Insurance Bureau of Canada to prepare it. On April 14, the interim report became the first of three reports from financial consulting firm KPMG LLP as part of the auto insurance cost- and rate-reduction strategy. It will deliver the annual reports in August of each year of the strategy. Only months earlier, however, KPMG had done work for the Insurance Bureau of Canada to support its position that profitability is low despite the reforms of 2010. A year before that, KPMG had done work for the same organization to support a very large estimate of the cost of fraud to the insurance industry. “How can you hire the IBC’s accountant and financial advisers to do a report that is supposed to be independent?” asks Adam Wagman of Howie Sacks & Henry LLP. “Not only don’t they try to steer away from the apparent conflict, they dig right into it by repeating conclusions formed as part of doing work for them. How can that possibly be right?” Nick Gurevich, president of the Alliance of Community Medical and Rehabilitation Providers, echoes that sentiment. “The selection of the consultant is unusual given how much work they have done in the past for the IBC. They are clearly a very capable global accounting firm with a stellar reputation, but there are plenty of comparable accounting and consulting firms that could have done it without such ties to the IBC.” In response to the concerns, KPMG would only say it was the government that requested the report and it’s only obligation was to it. Wagman suggests the province’s auditor general would be a truly independent party. “I can’t imagine the auditor general coming out with an interim report that parrots the recommendations of one stakeholder. Whether or not I like what they would have to say, I would accept that they have done it independently.” The report itself is highly technical and repeats insurer arguments as to why there’s uncertainty in the figures without making any attempt to independently ascertain what they are. “I read it until my brain began to bleed,” says Wagman. “If the goal is transparency and accountability, then I ask: transparent and accountable to whom? I don’t think there’s anyone in government who would understand it either. The 10 actuaries in the province might understand what they’re talking about, but it reeks of bias and lack of objectivity.” He continues: “The purpose, dating back to the budget, was to look at the financial and economic impact of the reforms. Is there one mention of profitability? To the extent that it does talk about return on equity, it refers back to the report last year about insurance performance. There are no actual dollar figures and they fail to mention that those findings came out in a report commissioned by the IBC.” Gurevich suggests the report in general lacks objective verification. The information relied on comes from financial statements and survey results prepared by the insurance companies and the General Insurance Statistical Agency as well as certain financial and return assumptions provided by the Financial Services Commission of Ontario. “All you see is a regurgitation of information provided by the insurance industry without KPMG going in and verifying it independently. Much of the report refers to estimates and what the figures could be or might be.” Gurevich believes the lack of certainty was the catalyst for commissioning the report in the first place. “The entire point of this process is to assist the government and members of the opposition who feel they don’t have a good grasp on the financial state of the industry. What was needed was an objective third party to go in and verify and test the numbers to tell them what the actual numbers are given that the insurance industry has a vested interest to produce overly conservative figures to generate more cost-cutting measures. It is disappointing that the report didn’t do what it was supposed to do.” Specifically, the insurer information points to an improvement in the calendar-year claim ratio of 18 per cent from 2010-11, 23 per cent from 2010-12, and approximately two per cent from 2012-13 with the 2013 claim ratio being 74 per cent. Despite this, KPMG concludes the industry is still not at the break-even point. Wagman says the percentages tell the story rather than the conclusion. “See the loss ratios. They are dropping like a hot-air balloon. If you look at how the numbers have gone, it’s been very good for them. Nobody can say otherwise. To not even be at the break-even point, they must have mismanaged their book of business so badly it boggles the mind.” The report also repeats insurer estimates of a decrease in accident benefits of 46 per cent that Gurevich says is highly suspicious. “We have seen a decrease close to 82 per cent in medical rehabilitation benefits, 77 per cent of attendant-care benefits, and almost 99 per cent of housekeeping and caregiver benefits. That insurers claim they are only seeing a 46-per-cent decrease is very suspect. The benefits are just not there, so it doesn’t make any sense.” The interim report acknowledges that KPMG sought no other input apart from insurance industry players and declines to make recommendations until it has sought input from other stakeholders “who may have a different perspective to share with the government.” Wagman says he almost laughed out loud at that point. “It’s almost tongue-in-cheek to say others may have a different perspective. They clearly know full well that others have a very different perspective.” Wagman also feels that by repeating the insurers’ recommendations and then discussing them at length, the report gives credence to them. “If they needed to do more work to study the current financial viability of the industry, why list the recommendations of insurers? It’s a very shotgun approach.” Gurevich suggests insurers have good reason to paint a very bleak picture of their financial position. “This data should be carefully scrubbed, verified, and tested and not just be a repetition of what the insurers say. The nine million drivers and 65,000 accident victims each year who will rely on the findings deserve much more than just taking the insurance industry’s word at face value.”

The recent election call has terminated Bill 171 for now. For those who do not know, Bill 171 proposed legislation which, amongst other things, would have eliminated the right of people to sue their insurance companies for breach of contract in automobile first party benefits claims. In other words, if passed, no one in Ontario could sue their insurer for breaching their obligations under the accident benefits insurance contracts. This has been a right of every contracting party since insurance was invented. Let me give you an example. You are injured and off work. Your insurance company owes you $400.00 per week. They refuse to pay. You cannot sue them. Instead you would have to complain to a yet to be established arbitration system run not by the agency that ensures that insurance companies follow the law, but by some other body under the control of the Ministry of the Attorney General. As it stands, presently you have the option to mediate and arbitrate through the Financial Services Commission of Ontario, or to sue in the courts and have a judge and/or jury decide if you or the insurer is right. This is a startling change in the law. What startles is not that insurance companies want the change – of course they do. Any change that eliminates the insured’s right to obtain a remedy is always desirable. What startles is that our government representatives – those we elect to protect us as consumers – were so eager to pass this legislation that they remarkably tried to ram it quickly through the provincial parliament before the election and before anyone really had a chance to analyse what it means for consumers. As I said, the Bill has died. But expect its return and be wary.

While it is quite possible that the majority of claimants can be accommodated within the MIG, averages are misleading when applied to individual cases

The recent case of Scarlett v. Belair, FSCO A12-00107, is important more for what it demonstrates in terms of the state of automobile first party insurance benefits in Ontario at the present time, than as an analysis of the application of the Minor Injury Guideline in the legal context. They key factors that support this contention are: 1. The amount of time it took Mr. Scarlett to obtain a remedy; 2. The total cost of the process; and 3. The approach of the insurer in adjusting the file. The intention of the insurance industry in convincing their regulator and the Ontario Government to gut first party benefits in Ontario can be and was only to save money. That is clear. Who pockets the savings is another issue and really cannot be dealt with here. The insurers must have hoped that some of the savings would be direct – less money paid to each applicant. They must also have hoped that the new process would have created a “C change” in the provision of treatment in the Province by reducing the number of service providers or at least limiting their expectations. The insurance industry clearly believes, as it seemingly always does, that the claims process is swimming with fraud from the applicant, to the service provider and even to the adjusting level. There are examples of each of these. Many may recall that Bob Rae’s NDP government felt that by reducing the availability of doctors – by graduating smaller numbers of physicians – they would be able to control health care costs; The thought process being that if we limit the number of doctors, and cap what they can charge, we will limit our exposure to the expense of providing health care. However, that thinking does not in any way fight disease – reduce cancer or coronary artery disease – or assist in providing timely and adequate medical care. The net result has been higher doctor’s salaries per capita and much longer wait times. One really cannot comment here about what it has done, if anything to “quality“ of service. The problem with this line of thinking is that limiting first party benefits did not prevent Mr. Scarlett from being injured. It limited his ability to seek benefits outside of the OHIP system or out of his own pocket. Since he was not entitled to those services through OHIP, his only hope was to seek first party benefits or an advance from the third party insurer. Since OHIP has a very limited ability to provide the services that Mr. Scarlett needed, and since obtaining and advance payment from third party insurers is exceedingly rare, the net result was that Mr. Scarlett had to avail himself of the Dispute resolution process. The process, designed nearly 25 years ago, was supposed to provide prompt, efficient and inexpensive remediation. The insurers must have known when they went to FSCO four years ago to gut the system that the FSCO process has become anything but prompt, efficient and inexpensive. It took Mr. Scarlett over 2.5 years to obtain a remedy. That, in and of itself, is an abomination. It took Mr. Scarlett over 2.5 years to obtain a very modest remedy (opening the door to somewhat more than $3,500.00 in first party benefits.) That makes two abominations. My guess is the insurer spent many multiples of the benefit claimed to fight Mr. Scarlett. If that is true that is a third abomination. If the purpose of first party benefits, which in Ontario are very expensive and mandatory to purchase, is to provide medical relief quickly, the case of Scarlett shows that they do not. There is a web of deception exposed by the Scarlett case –whether intentional or not. We are told that we have the premier first party benefit system in North America, if not the world. This is to convince us that the very expensive premiums we pay to fund those benefits are justified. What is exposed by the Scarlett case is the question, “Why do we pay hundreds of dollars in premiums to get such trifling benefits that can costs us years and many extra thousands of dollars to obtain?” We have been told that the regulator promised the insurance industry that the changes made in 2010 would reduce their costs significantly – maybe by 80 or 90%. That is like Bob Rae promising us that if we just eliminate the doctors, our health care costs will be reduced. What we were not told, or what wasn’t made clear was that by reducing, or in fact virtually eliminating the right to obtain first party benefits in a timely and inexpensive way, we are essentially paying something for nothing. If it was not mandatory, what educated consumer would spend six, seven or eight hundred dollars a year to buy $3,500.00 worth of coverage? This question is laid bare in the Scarlett case. It should be an embarrassment to the regulator that they have permitted this demonstration to have been made. We permit insurers the right to spend our money to eliminate our right to medical treatment. We then make the consumer, the person who the regulator is protecting, take 2.5 years to fight for minimal benefits. Recall, Scarlett is the first case. How many thousands more Scarlett cases are out there? In Ontario, we were used to premier benefits unlike many other jurisdictions that make no pretence of this. Scarlett should demonstrate to FSCO and to the Ontario Government that it now regulates a sham. There is no way that it is justifiable that someone need pay so much for a policy of insurance, take so much time and spend so much money attempting to remedy their rights to obtain so little a benefit. In a dream world, insurance companies hire educated and experienced adjusters who look at a file, listen to all the evidence presented and determine what is needed by the client within the limits of the policy. They do not look for “technical” loopholes to ensure that 80 or 90% of their cases by volume result in minimal or no payouts. It would be better if the consumer were told that they are buying $3,500.00 worth of coverage (not at the current bloated price but at a truly fair price) and if they want more they have to pay more. Scarlett demonstrates quite clearly that consumers in Ontario are paying a lot for very little.

From the Hamilton Spectator The Argyll and Sutherland Highlanders of Canada have a new commander. Lieutenant-Colonel Lawrence Hatfield took charge of the regiment in a rainy parade celebration at Bayfront Park Sunday, succeeding Lieutenant-Colonel Gary Sexton. “I’m very privileged today,” Hatfield said. “Our history is time-honoured, written in battle and blood.” The Argyll and Sutherland Highlanders of Canada are a Hamilton-based army reserve unit within 31 Canadian Brigade Group. Formed in 1903, it has 34 battle honours from the First and Second World Wars. It is one of the largest army reserve units in Canada with more than 250 soldiers. More than 60 Argylls have been deployed to Afghanistan. Hatfield himself has more than 22 years in the army reserve service. He was on active service in Afghanistan from 2006 to 2007, and returned last year on a technical assistance tour to mentor at the Afghan National Army Command School. “Becoming a C.O. is not just about taking courses or putting in time,” he said. “I’m going to keep our focus on training … relevant training that will be well worth the time spent away from our families.” Outside of his army responsibilities, Hatfield, a St. John’s, N.L. native, is a personal injury lawyer and partner with the firm Flaherty Sloan and Hatfield. He lives in Ancaster with his wife Shari and their two children. mhayes@thespec.com 905-526-3214

Social Justice: Superintendent cloaks policy issue as science on catastrophic impairment Monday, September 10, 2012 | Written by Alan Shanoff | Law Times http://www.lawtimesnews.com/201209109304/Commentary/Superintendent-cloaks-policy-issue-as-science-on-catastrophic-impairment The superintendent’s report on the definition of catastrophic impairment in the statutory accident benefits schedule may seem like a dry topic, but for those suffering injuries in motor vehicle accidents, the difference between having a catastrophic impairment designation and not getting one can be a life-altering distinction. Of all of the proposals in the superintendent’s report, none is more controversial than the one rejecting the combination of physical and psychiatric impairments to determine catastrophic impairment. The origin of this proposal lies with the final report of the catastrophic impairment expert panel from April 2011. The panel conceded in its final report that it “did not have the resources to conduct a comprehensive review of the literature to determine whether valid and reliable methods of combining physical and psychological impairment exist.” Thus, it wasn’t surprising that it “did not find sufficient evidence that combined impairment ratings are more clinically meaningful than using separate criteria.” We’ve come full circle with the superintendent now concluding that “there is no scientific evidence to suggest that combining impairments is a simple additive process.” It’s also not a surprising conclusion given the constituency of the expert panel. As stated on July 9 by Dr. Harold Becker in his submission to the standing committee on finance and economic affairs, the majority of the expert panel members weren’t experts in catastrophic impairment and the two physiatrists are friendly to insurers. Becker believes the “failure to acknowledge the coexistence of traumatic brain injury and associated psychiatric impairment . . . is seriously flawed and demonstrates a serious bias against both brain-injured claimants and claimants who develop associated psychiatric reactions resultant from traumatic brain injury.” Becker’s views deserve the utmost of deference. He was responsible for leading the advisory panel that wrote the catastrophic impairment assessment guidelines for designated assessment centres in 2001. He then served as the medical representative on the advisory panel that wrote the previous report on the definition of catastrophic impairment. Is there an epidemic of claimants? Hardly. According to the 2011 annual report of the office of the auditor general of Ontario, about one per cent of all accident victims are determined to be catastrophically impaired. That’s less than 700 people a year. But perhaps there’s a potential flood of additional claimants who would satisfy the definition if we allowed the combination of physical and psychological impairments? That’s not the case. The current definition of catastrophic impairment has been interpreted to permit the combination of physical and psychological impairments and in last December’s decision in Kusnierz v. Economical Mutual Insurance Co., the Ontario Court of Appeal referred to a concession made by the insurer that “there are only a very few cases where there are permanent physical impairment and permanent psychiatric impairments that are not catastrophic if assessed separately but are catastrophic if assessed together.” So permit me to be puzzled about the pressing need to disallow combined impairment ratings. It’s also noteworthy that any decision to disallow combined impairment ratings shouldn’t be based on scientific evidence or the lack thereof. This isn’t a scientific or medical question. It’s a question of policy. The Court of Appeal said it succinctly in Kusnierz when it said the purpose of the catastrophic impairment definition is to ensure that “those with the greatest need for health care are able to recover the expenses of that health care.” If so, why is it necessary to disallow combined impairment ratings? The composition of the expert panel was problematic at the outset. It made a recommendation without conducting a comprehensive review. The superintendent has followed that recommendation and in turn made an ill-informed recommendation that cloaks a policy issue as a scientific one to the Ontario government. It’s now up to the government to do the right thing and reject it.