Ontario proposing end to most mandatory accident benefits, and brokers are concerned

Proposed reform to Ontario’s no-fault auto insurance coverage, filed by the provincial government earlier this month, will make all but two accident benefits optional.  

And brokers are concerned that these opt-in benefits will place undue risks on their clients. 

These draft amendments to the statutory accident benefits schedule (SABS), filed on Oct. 11, 2024, will make all coverage optional, except for medical rehabilitation and attendant care benefits.  

These changes mean consumers will need to opt-in and pay extra if they want coverage for lost wages, non-earner benefits, housekeeping expenses, caregiver expenses, educational expenses, visitor expenses, expenses for damage to personal items, death benefits and funeral benefits. 

These reforms, if passed, would come into effect July 1, 2026.  

In a summary of the proposed changes, the Ontario government stated it’s making these changes to enable consumer choice.

“This could provide drivers with an opportunity to lower their auto insurance premiums by taking advantage of a range of coverage options based on their needs,” the summary reads.  

Why brokers are concerned 

But brokers, lawyers and insurance experts at an IBAOCon’24 panel on auto reform are ringing the alarm. 

“We as brokers, are going to be facing one of the most difficult auto reforms that we’ve ever faced,” says panellist Greg Robertson, president of R. Robertson Insurance Brokers Ltd.  

While consumers are being presented with a chance to save on their premiums, brokers note most won’t be insurance-savvy enough to ensure they have adequate coverage for their needs. 

For instance, if a driver opts out of lost wages coverage to save on their premium but later gets into an accident and is unable to work, they won’t be eligible to claim income replacement. If the client is in a position where they need to save on premiums, they likely aren’t in a position to go without income replacement. 

“We are now going to be in a situation for the first time ever, where coverages are gone,” says Robertson. “It’s going to be a conversation that is going to be very, very difficult with a consumer that’s becoming very price-conscious and [an] almost commodity-based [shopper].” 

But the risk of optional coverage doesn’t just lie with clients.  

Brokers also face a possible increase in professional negligence or E&O claims should these reforms pass.

If consumers find themselves in an accident without proper coverage, the client might point a finger at their broker for not properly explaining their coverage to them — true or not, panellists discussed.  

As always, brokers would need to be mindful that they document their client interactions if a client chooses to opt-out of coverages.

“But the big thing that we have to do in this situation is not just educate them on the change of what they’re losing. We have to educate our frontline staff on what those coverages actually are, how they actually work, how they actually respond,” says Robertson. 

Could insurers compete on optional coverage?

If passed, there’s also a risk of insurer coordination, panellists say. 

“So you send [an application form] to 60 insurers, we don’t know if it’s going to be standardized coverages — if bundles are going to be standardized — we don’t know if [each] insurer will ask for the each coverage to be part of the [portal] upload, or whether they want the bundles to come up as upload. What does that mean to the user interface and how those are programmed?” asks Steve Whitelaw, senior vice president and managing director of Applied Systems Canada. “So there are a lot of unknowns.” 

Whitelaw adds: “My ask to both the regulator and the insurance companies is, make yourself uncomfortable and hash through your requirements as soon as possible, so those can be distributed to the entire ecosystem.” 

Or, say insurers use optional coverage reforms to differentiate themselves from the rest of the market. 

“If the licensing body allows insurance companies to create their own message, their own limits and their own packages, that can be a very dangerous thing, not just for brokers, but for the consumer,” says Robertson. 

For example, if insurers decide to market packages of optional coverages, consumers who are shopping around run the risk of further confusion around their options. And brokers might not be able to efficiently price-compare these packages. 

“We need one-size-fits-all to help the brokers understand what they’re actually quoting against,” says Robertson. 

If there’s any upside to the impending optionality of once-mandatory AB coverage in Ontario, it’s that brokers will be able to prove their value-add to clients, panellists say.  

“I’ve always been a proponent of the broker channel,” says Whitelaw. “I think this is opportunity is going to allow brokers to really differentiate themselves from direct writers.” 

Feature image by iStock.com/georgeclerk