There are a few key things that we can take away from the 2012 Budget announcements yesterday. Should the minority government survive a number of significant auto insurance initiatives will occur. Note that the Budget also addressed on a number of initiatives that have already occurred or are underway. It is not unusual to repeat previous announcement in particular where they have no monetary impact on the government.
1. Auto Insurance Anti-Fraud Task Force
The section of the Budget document has nothing really new. The announced initiatives were included in Task Force's interim report that was released in December 2011. For example. the government notes that it has amended regulations (see Ontario Regulation 194/11) to ensure that treatments are provided as invoiced and issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate. The Budget document also sets out areas where the Task Force has committed to making recommendations.
2. Scientific and Evidence-Based Approaches
The government has signalled that it is moving ahead on two important projects. One is that minor injury guideline is to be developed the is evidence-based, that is, based on medical ad scientific research to be conducted by a consultant. FSCO released a Request for Proposals in November 2011 to hire the consultant but no announcement has been made regarding the successful bidder. This work should take two years to complete.
The second project is deals with the definition of catastrophic impairment found in the Statutory Accident Benefits Schedule (SABS). In December 2010 FSCO appointed a Expert Panel lead by Dr. Pierre Cote to review the SABS definition. That panel submitted two reports to the Superintendent which are both available on the FSCO website. The Budget document indicates that the Superintendent has made his final recommendations and his report will be made public. In addition, the government intends on making amendments to the SABS based on those recommendations. No time frame has been provided but regulation changes do not need to go to the Legislature for approval. Cabinet has the authority to amend the SABS.
The Expert Panel reports deal with such things as combining psychological and physical impairments, more objective tests for spinal cord, brain and psychiatric impairment and interim benefits for those waiting for a catastrophic determination. Hopefully the government will move quickly on this issue.
3. Other Initiatives
The government has signalled that it will review FSCO's Dispute Resolution System. Cracks have appeared in the system which has not undergone significant reform since it was first introduced in 1990. However just think about how much Ontario's auto insurance system has evolved over the past 22 years. Apart from the mediation backlog, a comprehensive review is likely overdue. No timeframe has been provided nor a mechanism for undertaking that review.
The government has signalled a willingness to work with insurers to explore voluntary usage-based auto insurance policies. I will likely address this issue in future postings. I feel that as traditional risk classification criteria are being chipped away at (ie, credit scoring, territories), usage-based policies may be the answer to predicting risk.
The government will harmonize the timing of statutory automobile insurance reviews. There are currently three statutory reviews in the Insurance Act. At least once every two years, the Minister is required to table a report before the Legislature in respect of the adequacy of statutory accident benefits and setting out changes made to the SABS (section 289). The Superintendent is required to undertake a review of Auto Insurance sections of the Insurance Act and related regulations at least every five years and recommend any amendments that the Superintendent believes will improve the effectiveness and administration of the Act and regulations (section 289.1). The Superintendent is also required, at least once every three years, to consult on the operation of those sections of Ontario Regulation 664 that deal with rating and risk classification and submit to the Minister a report containing the Superintendent’s recommendations for amendments to the regulations (section 417.1). A similar recommendation was made in the Superintendent's Five Year Review report in 2009 and the 2011 Auditor General's report.
The government intends to propose amendments to give the Superintendent the authority to impose administrative monetary penalties (AMPs) in the insurance sector. AMPs are monetary penalties viewed as a middle ground between a ‘slap on the wrist’ and quasi-criminal proceedings, enabling insurance regulators to issue a penalty proportionate to the infraction.