Wednesday, 27 June 2012

Trial Lawyers Quit FSCO Advisory Committee - Is That A Good Thing?

The Toronto Star reported last week that a group of prominent personal injury lawyers has resigned en masse from an informal legal advisory committee on auto insurance reform in Ontario. The protest action by the trial lawyers was in response to the release by the Ontario Minister of Finance of a report from the Superintendent of Financial Services on recommended changes to the SABS definition of "catastrophic impairment."

The contentious nature of the proposals is the Superintendent’s recommendation to preclude allowing the combination of psychological and physical impacts when determining if someone qualifies as having suffered a catastrophic impairment, in constrast to the Ontario Court of Appeal which recently said it combining should be allowed.

The lawyers contend that the number of accident victims that will meet the catastrophic impairment threshold will fall. I think that is likely undisputable. Unfortunately there isn't sufficient data to make a determination on the numbers. Other changes could possibly increase the number of catastrophic determinations but again there is no way of confirming the numbers.

The group of personal injury lawyers, who include Richard Halpern, partner at Thomson Rogers, Roger Oatley of Oatley Vigmond Personal Injury Lawyers LLP, Nigel Gilby, partner at Lerners LLP and Stephen Firestone of Lackman Firestone, resigned because their recommendations on catastrophic impairment were ignored.

The Legal Advisory Committee was one of several advisory groups set up by the Superintendent to continue the dialogue with stakeholders during the development and implementation of the 2010 auto insurance reforms. These advisory committees were not created as policy or decision making groups and I believe those participating understand that. That doesn't make the process a sham. Nonetheless, there is always an expectation that discussions with senior public servants will influence policy makers. When they don't it invariable leads to frustration.

In my 20 plus years in government, I have conducted many stakeholder consultations and outreach. It is a considerable challenge to manage expectations. My advice to groups has always been to continue dialoguing. Ongoing participation is not a sign of acceptance of the policy direction.

No doubt the trial lawyers feel that their time on the committee is a waste of time and that lobbying efforts should be concentrated elsewhere. My view is that you have a role in ensuring transparency and accountability by continuing to participate.

1 comment:

  1. From an economic perspective, the rate of return on equity that achieves the goals that FSCO has set apart is the cost of capital. If insurers are receiving their cost of capital, consumers will pay the lowest possible rates in the long run and investors will make their expected returns. If the ROE is too high, investors earn more and consumers pay more, however, in the medium term, the rates would decrease as the P and C insurers with their 80-plus competitors are very competitive. They will bring down the rates or else they will lose business. If the ROE is too low, consumers benefit in the short term, but in the longer term firms either leave the market in search of better returns or rates will have to increase. There’s no magic to it.
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