Insurance adjustments in Ontario intend to shield future recipients of long-term disability payments by requiring any benefit plan be protected by contract and use of licensed insurers.
These adjustments to the Insurance Act were passed by the Ontario Government on July 24, 2014. Previously recipients have seen payments reduced or eliminated when corporations faced insolvency.
Although this appears as a new area of growth for providers, concerns have been raised over sponsors finding insurance companies willing to take on the risk of the formerly self-insured programs.
Stephen Frank Vice President, policy development and health for the Canadian Life and Health Insurance Association (CLHIA) has responded to these concerns: “This is largely a perception only, as over the entire lifetime of a benefit plan, insured and uninsured plans have similar costs. One reason for this perception is the timing of costs. While insured plans require that insurers set up reserves to cover the expected LTD costs in the future, uninsured plans do not.”
Frank also questioned the legitimacy of concerns.
“It is a very competitive market and disability has continued to be very attractive for insurers," he said. "Over 20 insurers across Canada currently offer disability protection and no issues or concerns have been raised thus far.”
Ontario’s new legislation does allow for some exceptions, although the CLHIA warned there will be minimal exceptions to the rule. “Where we may see it is with quasi-government entities,” Frank said.
The opportunity to influence the final version of the regulations still exists. Sponsors should voice relevant concerns by contacting the Ministry of Finance in Ontario. Their contact details are below.
Ontario Ministry of Finance
Advisory Services
33 King Street West, 3rd Floor
Oshawa, ON L1H 8H5
T: 1 800 337-7222
E:
[email protected]
