Ontario municipalities are expected to be drawn into auto accident litigation once the province's optional accident benefits reform takes effect July 1, as injured claimants who find themselves underinsured pursue every available source of compensation, according to a senior claims executive.
Shannon Hoyt, vice-president, central Canada at ClaimsPro, said the reform will push adjusters toward earlier investigation as claimants look beyond their own policies for coverage. "The focus will be on early investigation as the claimant looks for coverage from all avenues," she said. "Not only will tort see an increase, but we anticipate municipalities will be brought into these. We are also anticipating an increase in disputes."
The expected rise in tort claims marks a shift for a system that has historically kept most accident benefit recovery inside the no-fault structure. As optional coverages fall away, more injured people will look to litigation to recover what their policies no longer provide.
For brokers and insurers, Hoyt said the immediate task is education and documentation rather than price alone. Carriers and intermediaries need to understand each client's circumstances and whether an optional benefit belongs on the policy, then record the discussion in writing. "All conversations should be followed up in writing," she said. The written-notice rule leaves no room for informal handling. "The requirement is to obtain written notice when a benefit is not being purchased, so this will need to be followed at all times."
The coverage Hoyt is most concerned about consumers dropping is income replacement. "People will look for ways to reduce their premiums to save money, but on the claims side, this will be detrimental."
The reform also narrows who can claim. Pedestrians, cyclists and certain passengers may lose eligibility for accident benefits under the new structure, leaving the courts as their only path to compensation. "The only recourse they will have to recover those benefits will be to sue the responsible party," Hoyt said.
Much of the early friction, Hoyt said, will come from claimants who do not realize what they gave up until they try to use it. "Initially, there will be people who are surprised that the new 'optional benefits' are not on their policy," she said. "This will cause a high level of frustration for the claimant when they are not able to immediately access those benefits."
That is where Hoyt expects disputes to concentrate, with brokers drawn in to show what was sold. "Brokers should be prepared to provide their file material in cases of disputes," she said.
The pressures Hoyt describes echo concerns raised by other claims professionals as the deadline nears. Insurance Business previously reported that Ontario's regulator estimates the reform will cut average premiums by around 5%, a saving that adjusters at Crawford Canada warned could be outweighed by widespread underinsurance.
"Personally, I'd probably lean more on the pessimistic side," Michael McNeill, Ontario operations manager and accident benefits supervisor at Crawford Canada, told Insurance Business. "There's potential for an underinsurance crisis."
The exposure is sharpest for new policies. Brian Hambly, vice president of loss adjusting for Ontario at Crawford Canada, said coverage issued after July 1 will default to the mandatory minimum unless a buyer actively adds the optional benefits.
"New policies by default will only include the mandatory coverages," Hambly said. "Consumers must be educated properly at the time of the policy coming into effect as to what coverages they may require, because once a claim happens, it's too late."
Morgan Roberts, VP of RH Insurance at Ratehub.ca, said first-time and young drivers are the most likely to trade protection for price. "They're 100% shopping for the lowest price," Roberts said.
Crawford also flagged a longer-term strain on the claims business itself. As mandatory accident benefit work shrinks, fewer adjusters will train in what has long been a specialized discipline, thinning a talent pool that is already aging.
"AB is a unique skill set," Hambly said. "As adjusters retire and, with claim complexity decreasing, fewer people will be going into that line of work. So there's potential for even further erosion of talent in that line of claims."
