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Government Intervention on Insurance Premiums?

Three Part Mini Series

P A R T T W O l

In the Law Times on October 7, 2013 there was an article titled, Plaintiff Lawyers Cautious About Auto Rate Cut and it was eye opening. This article highlighted the relevance of the government imposed insurance premium cut of 15% by 2015 and it featured comments by Charles Gluckstein, President of the Ontario Trial Lawyers Association (OTLA). With the significant profits insurance companies benefit from, this proposed 15% cut is quite reasonable.

In addition to the premium cut, the dramatic changes to coverage (from 2010) must be re-evaluated and revisited. To give you an idea of the changes made to insurers, Gluckstein explained;

The average injured person had access to $100,000 but now gets only $3,500 in medical coverage. Add to that the fact that there are no more administrative or assessment costs for the minor injuries and youve got extreme savings. Theres room to cut 15 per cent off premiums but there should also be room for more coverage to come back to policyholders who are victims of accidents.

Unfortunately it appears that the insurance industry wants to continue to cut; premium reductions need to be commensurate with additional cost reduction measures it is definitely a necessary next step. Ralph Palumbo, Ontario vice president of the Insurance Bureau of Canada said. Palumbo also suggested that, a new definition for catastrophic impairment would be a good place to start to take necessary costs out of the system. In response to this statement, Gluckstein said, When you see how much they took out of the system on the back of policyholders in 2010, to ask for more is just ludicrous.

Furthermore, Gluckstein explained that there are practical problems with changing the definition since it would wipe out almost 20 years of jurisprudence on the term. In any case, insurers have shown no evidence that theres a problem with the current definition and notes that catastrophically impaired claimants already face rigorous checks to get additional benefits. Gluckstein said,

Just because someone is entitled to extended coverage, it doesnt mean they get it all. Every time a new treatment plan is submitted, they have to prove that each treatment is reasonable and necessary to get the benefits.

The insurance industry is constantly trying to push blame onto the victims, which is not at all fair or just.

R E F E R E N C E S l

1. The Lawyers Weekly: Jury Out On Whether Civil Panels Can Speak by: Donalee Moulton, September 27, 2013

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