The Ontario Rehab Alliance says that a proposed regulatory amendment will create an incentive for insurers to deny benefit claims for everyone.
What Nick Gurevich of the ORA calls a ‘seemingly minor technical change’ to basic Accidents Benefits will dramatically reduce the interest rate payable by insurers on disputed claims, and will in fact have far-reaching consequences for buyers of auto insurance.
“By reducing the penalty that insurers pay for inappropriately denied claims this proposed regulatory amendment will create a financial incentive for insurers to deny every claim for benefits,” says Gurevich. “It will further impoverish legitimate claimants trying to get the benefits they paid for when they purchased their insurance.”
Currently, insurers must pay an interest rate of 12 per cent per year for claims that have been inappropriately denied. The current proposal – due to come into effect in November – will see this interest rate reduced to 1.3 per cent per year which is well below insurers return on capital invested.
The authors of the original regulation recognized the importance of checks-and-balances in a system where the insurers are financial Goliaths facing off against their injured customers, and employing every possible strategy to retain and invest cash reserves rather than pay out on claims, says Gurevich, adding that a healthy interest rate is intended to discourage insurers from arbitrarily denying claims or stalling on treatment and settlement.
“The increased number of benefit denials will also flood and overwhelm the already broken dispute resolution system,” he says, “which the government is currently trying to fix through the introduction of Bill 15.”
The ORA says that this change follows on the heels of multiple pro-insurance, profit-driven decisions which according to the General Insurance Statistical Agency (GISA) have resulted in record profitability for auto insurers in the past three years.
The ORA is calling on the government to “act decisively” and protect motor vehicle crash victims by “striking this proposed regulatory amendment in its entirety.”