Insurer, broker views on proposed optional Ontario auto accident benefits

Canada’s largest insurer is supportive of the Ontario government’s proposal to make all but two private auto insurance accident benefits optional.

On Oct. 11, the provincial government proposed draft amendments to the Statutory Accident Benefits Schedule (SABS) that would make AB coverage optional, except for medical/rehabilitation and attendant care benefits.

These changes mean consumers will need to opt-in and pay extra if they want coverage for lost wages, non-earner benefits, housekeeping expenses, caregiver expenses, educational expenses, expenses for damage to personal items, death benefits and funeral benefits.

If passed, the amendments would come into effect July 1, 2026.

During a 2024 Q3 financial results conference call, Intact Financial Corporation (IFC) executives were asked about these proposals and the regulatory environment in Ontario.

Guillaume Lamy, IFC’s senior vice president of personal lines, said the insurer has been in discussions with the government over the past couple of years, “advocating for reforms that offer customers more choice and [a] personalized product.

“In Budget 2024, we saw movement on the auto reform file, particularly around optionality,” he says.

Last year, Ontario allowed drivers to opt out of direct compensation property damage on their auto insurance coverage.

Budget 2024 proposals

In Budget 2024 released this March, the Ontario government proposed making all AB benefits other than medical rehab and attendant care optional. It also proposed to make auto insurers the first payer for medical and rehab benefits following an accident. Auto insurers are currently the second payer, meaning if there’s another workplace or extended care policy in place, an accident victim must use those benefits first before claiming on their auto policy.

Lamy said optional AB benefits will provide the customer with more choice and noted the 2026 deadline for the amendments “gives quite a bit of time for the industry to react.

“Overall, we’re supportive of the change in Ontario’s budget,” he says, noting the new auto product should be simple to understand for customers and somewhat uniform across the industry as distribution is easier that way.

IFC CEO Charles Brindamour also praised the Ontario government’s proposed amendments.

“Good job on the part of the Ontario government, as far as we’re concerned, taking action…for the cost equation is pretty good,” Brindamour said during the Q3 earnings call Wednesday. “Accident benefits are in a very good space, so good work on their part.”

Amanda Dean, Insurance Bureau of Canada’s vice president of Ontario and Atlantic, told Canadian Underwriter Monday that IBC and its members have been involved in consultations, working closely with the government and the Financial Services Regulatory Authority of Ontario ever since Finance Minister Peter Bethlenfalvy first announced the auto reforms in Budget 2024.

“The consultations remain ongoing as the details are finalized. Once that process is complete, actuarial work on pricing the new product can begin,” Dean says. “We stand ready to support and enhance the government’s education initiatives to ensure that consumers understand the changes and the coverage options that will be available to them.”

David Marshall, who is a former senior advisor to the Government of Ontario on auto insurance and pension funds, acknowledged in a 2022 report “each benefit [in Ontario] has its eligibility and duration criteria, making the system complex and difficult to understand.”

After Budget 2024 was released, Marshall, who currently consults on financial management and was previously president and CEO of Ontario’s Workplace Safety and Insurance Board, says it appears the government adopted one of his recommendations.

“My recommendation that these ‘other’ benefits be made optional…should result in reduced costs for those policyholders who opt out of the additional benefits, because they don’t need them due to being covered elsewhere or simply because they choose to waive the coverage,” he told CU at the time.

Concerns raised

But not everybody supports the proposed AB amendments. After Budget 2024, Mitch Insurance CEO Adam Mitchell warned such optionality could send clients down a slippery slope.

“Giving people the easy-door option to opt out of a coverage and/or enticing them to not take the coverage could be a pretty slippery slope, because you’re just transferring the coverage from the policy over to their visa statement,” Mitchell said at the time. “And they may not be able to do that.”

During a panel discussion at the recent Insurance Brokers Association of Ontario’s IBAOCon’24, brokers pointed out that most consumers won’t be insurance-savvy enough to ensure they have adequate coverage. Instead, consumers might only see it as a chance to save on premiums.

There’s also the possibility of an increase in professional negligence or E&O claims for brokers should the reforms pass.

Enrico Mastrangeli, vice president of distribution and member innovation for The Commonwell Mutual, was also concerned about the proposals.

“I stress first that the [auto] reform discussions that are out there are draft,” Mastrangeli said during a session on personal lines at IBAOCon’24. “I would hope and expect that there will be some changes from that draft.

“If you’re looking to accomplish choice, I would say for sure the draft regulations…achieve that…” he says regarding the proposals that would make all but medical/rehab and attendant care benefits optional.

“The remaining accident benefit coverage will be consumer choice, and that creates some instant concern for me.”

Feature image by iStock.com/danijelala