Ontario's regulator estimates its à la carte accident benefits reform will cut average premiums by around 5%. The claims professionals who will handle the fallout are not convinced that is the right number to focus on.
"Personally, I'd probably lean more on the pessimistic side," said Michael McNeill, Ontario operations manager and accident benefits supervisor at Crawford Canada. "There's potential for an underinsurance crisis."
Brian Hambly, vice president of loss adjusting for Ontario at Crawford Canada, said the 5% premium saving will materialise slowly as policies renew and policyholders opt down. The underinsurance risk, by contrast, could show up immediately.
"There's much more risk of people being underinsured as opposed to the cost savings that they will see," Hambly said.
The reform, which takes effect July 1, moves most accident benefits from mandatory to optional. Medical, rehabilitation and attendant care remain compulsory. Everything else – income replacement, caregiver benefits, non-earner benefits – requires an active purchase decision.
For individual policyholders renewing existing coverage, the default is to carry forward what they already have unless they opt out. That offers some protection. The danger lies elsewhere.
New policies issued after July 1 will default to mandatory coverage only. Optional benefits will not be included unless the policyholder specifically requests and pays for them. For anyone buying insurance for the first time after the change, the baseline drops significantly – and the window to correct that closes the moment an accident happens.
"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 the risk is sharpest among young drivers purchasing their first policy, who tend to shop on premium alone rather than coverage. "They're 100% shopping for the lowest price," Roberts said.
The commercial fleet sector adds another layer of exposure.
Companies that insure their own vehicles – courier operators, logistics firms, delivery services – are widely expected to use the reform as an opportunity to reduce coverage costs. McNeill said the economics are straightforward even if the consequences for workers are not.
"You work for a courier company, and you're driving, you get involved in an accident," he said. "If you don't have the additional coverages, the only compensation you could get would be if you have your own personal policy with the optional benefits, or short-term or long-term disability coverage through your company program."
For drivers who lack that employer benefit – or whose extended health coverage does not match what the accident benefit system currently provides – the gap between what they expect and what they will receive could be significant.
Roberts pointed to another blind spot: policyholders who decline accident benefits because they have workplace disability coverage, then lose that safety net when switching jobs. Most employer plans impose a waiting period before benefits take effect, and drivers rarely think to update their auto policy in the interim. "No one's ever called me as an insurance broker to say that they changed jobs," she said.
The knock-on effect of reduced accident benefits is an expected increase in tort claims as injured parties seek compensation through the courts rather than their own policy. McNeill described the dynamic as a pressure transfer rather than a pressure release.
"It will be sort of like squeezing a balloon," he said. "By minimizing the amount of accident benefits, tort claims will be affected."
That shift has implications for the industry beyond just claims volumes. Tort claims are more complex, more expensive to defend and take longer to resolve than accident benefit claims. The adjuster skill set required is different, and the pipeline of people trained in accident benefits is already thinning.
"AB [accidents benefits] 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."
Crawford Canada said it is running masterclass sessions for staff and industry partners ahead of the July 1 implementation date, with at least one scheduled for June.
Underlying all of this, McNeill said, is a pre-existing problem the reform does nothing to address: most Ontarians have no real understanding of what their auto insurance actually covers until they need it.
"The majority of people do not know what their coverages are to begin with," he said. "To increase your coverage from $65,000 to $1 million was approximately $40 per year under the current system. It's interesting how many people, even in the industry, do not have the increased benefits."
