Ouch! Injury Victims Get Whacked Twice with Assessment Costs: Changes to Ontario Auto Insurance as of September 1, 2010

[This is the fifth of a five part series by Patrick Brown on upcoming changes to auto insurance]

Injured accident victims will have a significant amount of their benefits reduced due to assessment costs.  Despite the dramatic slashing of benefits reported in my previous blogs, consumers will also face further reductions based on the fact that the cost of assessments will come out of the amount of benefits available.

For example, if a consumer is injured in a car accident and the injuries are not considered to be catastrophic, they presently have $100,000 in benefits for medical and rehabilitation treatment. Any assessment costs to obtain the benefit are over and above the $100,000.

Under the new standard policy without buy ups, the consumer will only have $50,000 available in benefit dollars.  That $50,000 includes assessments costs.  Therefore, if $5,000 is paid for an assessment to obtain the benefit, then the amount available to the injured person is reduced down to $45,000. 

The insurance industry has explicit knowledge that assessment costs will drastically reduce the actual benefit dollars available to the consumer.  When they made their submission to the Government they stated “we have learned that, in 2007, for every dollar of paid medical treatment, assessment costs added another 60 cents.” [page 20]

Excesive assessessment costs no doubt drain the system.  However the solution to the problem is not to make the injured person pay for these out of their treatment dollars. Assessment costs are tied directly to the denial of benefits by the insurance companies.  The more denials, the more likely the injured person requires an assessment to prove entitlement.

Therefore, in practical terms, medical and rehabilitation benefits have been cut far below $50,000.  Of course, the consumer could choose not to have any assessments to avoid reducing their own benefits.  If they elect to go this route, they would not get any worthwhile benefits because they have no meaningful assessments to support the need for such.  Catch 22. This new system is not fair; it creates an unbalanced and unequal playing field.  The consumer is restricted in their means of proving their need for the benefit. If they try to prove they need it, they eat away at the benefit they actually need.

In addition, health and treatment providers and the injured person will be placed in a conflicting position.

This law makes no sense whatsoever.

Meanwhile, Zurich Financial Services Group reported a profit of $935 million for 2010 Q1, an increase of 76%.  The company reported a return on equity of 13.2% for the first quarter.

Patrick Brown


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