The Road to Reform - Ontario Auto Insurance by ps94506

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									The Road to Reform:
Ontario Auto Insurance

September 2010

Heather Mack
Manager
Government Relations, Ontario
                          Outline


The Road to Reform
    About IBC
    Misconceptions
    Industry in Crisis
    Insurance Crime
    Reforms and Beyond



                                    2
      Insurance Bureau of Canada (IBC)


IBC represents 90% of Canada’s private
  P & C home, car and business insurers




                        Be Smart. Be Safe. Tour
                   13




                                                  3
                 Misconceptions

The Stereotype




                                  4
                 Misconceptions

Media Coverage




                                  5
                                 Industry in Crisis

Reality of Ontario Auto Insurance
•  Between 2004 and 2009, average
   accident benefits claims costs
   increased 102%
•  In 2009, insurers lost over
   $900,000,000
•  For every $1.00 collected in
   premiums, $1.42 is spent on accident
   benefit claims costs

                                                      6
Industry in Crisis




                     7
                             Industry in Crisis

Ontario Auto Cost Breakdown




Source: IBC Fact Book, MSA


                                                  8
                                    Industry in Crisis


    Prior to Sept. 1 reforms, Ontario had most generous—
     and expensive—auto insurance system in North
     America
    Ontarians taking longer and longer to heal
    Ontario drivers pay 25% more for auto insurance




                                                            9
                                               Industry in Crisis




                                           -3.0%




                                  -16.0%




Source: IBC with data from GISA
                                                                    10
                                    Insurance Crime


Insurance Fraud
  Staged collisions are multi-million-dollar organized
   crime scams
  A variety of participants:

     Tow truck drivers

     Medical and rehabilitation clinic owners/health-
      care professionals
     Outright criminals



                                                          11
Insurance Crime




              12
                                  Insurance Fraud


    Staged collisions on the rise
    Reforms aim to control claims costs resulting
     from fraud
        Project 92




                                                     13
                                        Insurance Fraud

              AVERAGE CLAIM COST

                 Accident Benefits        Total Coverage

                                                    Non-
                 GTA       Non-GTA        GTA
                                                    GTA

   2005          $30,162      $30,088     $10,994    $8,778


   2009          $60,581      $45,899     $17,341   $10,192

2005-2009 %
                 100.8%        52.5%       57.7%     16.1%
   change

2008-2009 %
                  19.7%        17.9%       17.9%      7.2%
   change

                                                              14
                                   Insurance Fraud

Between 2004 and 2009:
     Med/rehab costs per policy increased 130%

     Med/rehab costs per claim increased from $26K to
      more than $56K
     Total cost of attendant care benefits nearly doubled
      to $460 million
     Total housekeeping benefits rose to more
      than $300 million



                                                             15
                                                                        Insurance Fraud
       Growth in Med/Rehab Costs
                                                        Avg. cost     Change
                                      Avg. cost per    per claim $    2009 vs.   Total Claim Amount $
       Coverage/Kind of Loss          claim $ 2004        2009          2004              2009
Supplementary Med                            11,317        21,611        91.0%           1,187,010,253
Dependant Care                                7,741        18,384      137.5%                 1,709,718
Housekeeping                                  5,247        10,199        94.4%             315,676,886
Assessments                                   7,033        20,748      195.0%              986,714,006
Attendant Care                               53,323        28,851       -45.9%             459,676,248
All Med/Rehab                                25,909        55,867      115.6%            3,068,554,581


Med/Rehab claim cost per
car                                           204.6          471.5     130.5%
 1.     Majority of AB dollars are for medical, examination and attendant care
 2.     Decline in Attendant Care average cost per claim is the result of a 267% increase in the
        number of these claims over the 5-yr period, many coming from minor injuries.

 Source: IBC with data from GISA
                                                                                                          16
                                       Insurance Crime


Auto Theft
    Costs insurers over $465,000,000
     each year
    Costs Canadians over $1 billion
     each year
    Organized theft rings
    Steals lives
    IBC lobbying for stiffer sentences (Bill S9)

                                                         17
                       Auto Insurance Reforms


IBC Pressed for Changes
    Building relationships
    Leveraging allies
    Consumer-centred arguments




                                                18
                       Auto Insurance Reforms


 Reforms  effective Sept. 1, 2010
 Government of Ontario/FSCO

 Choice, flexibility and stability




                                                19
Coverage Changes




                   20
                                 Coverage Changes


    Cap of $3,500 on minor injury treatment
    Clear limit on assessments
    Option to buy caregiver, housekeeping and
     home maintenance benefits.
    Accident benefits for catastrophically injured
     remain the same



                                                      21
                                 Beyond the Reforms

    Other industries want to get around definitions and
     caps
    Reforms will potentially save $1 billion in
     first year
    55% - 65% of SABS claimants should fall within the
     Minor Injury Guideline
    Reforms only work when respected




                                                           22
                             Beyond the Reforms


Back to the future
    Fifth round of reforms
    Reforms always short-lived
    System susceptible to abuse
    Reforms must be respected




                                                  23
                                           Beyond the Reforms


 Proactively Work Together
    Open communication
         Trial lawyers
         Health care providers/clinic owners
         Media
               Editorial board meetings




                                                                24
                       Insurance and the Economy


Integral to Economy
Industry:
  Employs over 110,000
   Canadians (2008)
  Pays over $5.9 billion in taxes
   to federal & provincial
   governments



                                                   25
Thank you




            26

								
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