Nominal rebates signal auto insurers’ reluctance to adjust rates

Insurance companies in Ontario are facing roadblocks if they attempt to increase auto insurance premiums in the near future, says Easy Legal Group of Companies President and CEO Larry Herscu.

“If anything, drivers in the province should see reduced car insurance rates beyond the patchwork of nominal rebates that have been offered as a result of COVID-19,” he says.

Herscu points to the coronavirus pandemic as a factor that has reduced the number of auto accidents in the province, therefore resulting in fewer accident benefit claims and civil lawsuits.

To date, insurance companies have provided $685 million in relief to Ontario drivers, but the province’s finance minister says more should be done, Global News reports.

The Financial Services Regulatory Authority (FSRA) — the independent regulatory agency created to improve consumer protections in the province — says about 70 per cent of policyholders are receiving some discount.

Finance Minister Rod Phillips tells Global he will look at the insurance companies not supporting their customers and will publicly name them if necessary.

“I believe there’s still more that can be done,” he tells the news outlet. “I don’t believe all of the companies are participating at the level that they should.”

Herscu says he’s heard that some insurers are requiring clients to fill out a rebate application, others are automatically applying the discount to all policyholders, while some are silent on the issue. 

“In some cases, you have to contact your insurer to find out how to receive your rebate,” he says. “It’s certainly better than nothing, but the average amount appears to be quite small.” 

However, even before the pandemic brought traffic to a halt, Herscu says claims were already on a downward trajectory following the province’s change to the Licence Appeal Tribunal (LAT) in 2016. 

“The introduction of the LAT has reduced the number of claims being pursued,” Herscu says, pointing to a recent benchmark report from the FSRA that determines whether the rate changes proposed by insurers in their filings are reasonable.

As Canadian Underwriter reports, “bodily injury claims –– mainly personal injury lawsuits against alleged at-fault drivers –– are expected to drop 8.3 per cent a year. This is compared to the immediate past benchmark of 0 per cent (or no expected change year to year).”

The article goes on to note that the decline in the expected future loss costs for bodily injury and accident benefits are partly offset by an increase in the expected cost to repair vehicles.

Herscu says that as accident benefit claims are changing so too is the LAT. 

“The laws around tribunals are evolving. Historically, you could not dispute a LAT decision, and — as evidenced in Shuttleworth v. Ontario — the Court of Appeal recently re-affirmed the importance of adjudicative independence. Essentially, the court ruled the LAT has to rehear this particular dispute over catastrophic impairment,” he says.

“As the LAT continues to handle claims, it’s likely the case law around it will grow,” Herscu adds.

While the FSRA benchmark report indicates insurance rates could be reduced, he remains skeptical.

“If you’re receiving an insurance rebate of $20 or $40 during a global pandemic — where very few drivers are on the road and tribunals and courts are at a standstill — I’m not convinced insurers will reduce rates if and when driving levels are back to normal,” Herscu says. 

The Easy Legal Group of Companies is a Canadian litigation financing firm. Its lending solutions service the personal injury sector including plaintiffs with pending injury claims, their legal representatives and the service providers involved in their cases. The firm is registered to conduct business in Ontario, B.C., Alberta and the Atlantic provinces. Services are delivered through three brands: Easy Legal Finance Inc., Rhino Legal Finance and Seahold Legal Finance.