Insuring catastrophic auto injuries: Recommendations for reform

Adequate coverage on a no-fault basis for catastrophically injured accident victims is probably the most value that personal injury auto insurance should deliver, says David Marshall, a financial management consultant who has served as a senior advisor to the Government of Ontario on auto insurance and pension funds.

Marshall is the author of a new report from the C.D. Howe Institute, Time for a Tune-up: Reforms to Private-Sector Auto Insurance Could Lower Costs and Add Value for Consumers. The report includes seven recommendations, including to substantially increase the no-fault entitlement for catastrophically impaired accident victims.

“My recommendation is the government do establish a way for private sector insurers to obtain an independent, competent, unbiased opinion about the condition of the individual and that nobody argues about it,” Marshall says in an interview Monday. “That should be in the law.”

Marshall recommends governments “appoint qualified independent medical evaluation centres [that] apply sound medical evidence to perform this role.

“There can be no effective private sector auto insurance system without an objective way to bring finality to the assessment of the victim’s medical condition in an injury claim,” Marshall says. “It’s that important.”

In private sector auto insurance systems, examples exist of insurers overpaying for victims with catastrophic injuries. “This is because there is no independent, unbiased way for the individual’s medical condition to be fairly determined,” Marshall says. “Instead, this is left to competing opinions from lawyers and experts on both sides. This opens the process to disputes and claims exaggeration and substantial expenses that do not even go to the victim.”

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Government-run auto insurance systems offer unlimited medical care, specialized services, attendant care, etc. even though the premiums they charge for personal injury are far below those charged by private insurers, Marshall says.

For example, Quebec (a public-private hybrid model where the government pays compensation for personal injury, while private insurers handle vehicle damage) provides lifetime care for a personal injury premium of $137 annually while Ontario’s premium for limited care is $951, the report notes. While Ontario is the only private sector province that offers special compensation for catastrophically injured victims ($1 million), that amount translates into less than that through things like lawyer costs.

“If you’re not covered for catastrophic injury, your insurance policy isn’t worth a whole lot, because that’s where you really need [the insurance],” Marshall says. “That’s where I feel the private sector systems really fall short.

“In the private sector systems, there’s continuous dispute and arguing about the diagnosis of the person’s condition,” Marshall says. “There’s no objective way to say, ‘This is what you got. This is what you need.’ That’s left to the lawyers and the experts.”

By contrast, government auto systems use independent medical experts to advise them as to the medical condition of victims. For example, Saskatchewan has three or four appointed clinics throughout the province doing assessments for the insurer.

Marshall, who was previously the president and CEO of Ontario’s Workplace Safety and Insurance Board (WSIB), says WSIB used hospital-based teams to provide an unbiased, competent opinion on the medical condition of seriously injured individuals.

“There is no such mechanism today in the private sector auto insurance systems,” Marshall says. “There needs to be a resource that the province appoints and says these people are certified to give opinions.”

Insurance Bureau of Canada (IBC) told Canadian Underwriter last week the report echoes many of the concerns private P&C insurers have been raising for decades. “Author David Marshall is well-respected and has spent years reviewing auto insurance systems and proposing solutions to reduce costs,” IBC says. “IBC is looking to work with governments open to reforming private auto insurance regimes and ultimately saving drivers money.

“In many provinces, auto insurance has been subject to years of ongoing political disputes and tinkering, but little has actually been done to improve outcomes for consumers. Money can be put back in the pockets of consumers by taking a bold approach to reforming existing private-sector auto products. Anyone calling for the status quo is putting their interests ahead of consumers.”

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