Monday 1 February 1993

Insurance Statute Law Amendment Act, 1993, Bill 164

Organization for the Multi-Disabled (Thunder Bay); Head Injury Association of Thunder Bay

Alice M. Bellavance, executive director, Organization for the Multi-Disabled (Thunder Bay)

Standard Insurance Brokers Ltd

John Berringer, president

Zurich Canada

Harry Saunders, president and chief executive officer

Dante Alejandria, vice-president, claims administration

Paul Minnoch, vice-president, personal automobile underwriting

Ruttan Bolduc Adderley General Insurance Brokers

Jo-Ann Menard, insurance broker

Thunder Bay Insurance Services Ltd

David Baxter, president and general manager

Thunder Bay Chamber of Commerce

Douglas L.A. Smith, director

Rebecca Johnson, executive director

Thunder Bay Insurance Women's Association

Marjatta A. Light, insurance broker

Ontario March of Dimes

Terry Bellavance, regional director, Thunder Bay


*Chair / Président: Hansen, Ron (Lincoln ND)

*Acting Chair / Présidente suppléante: Haeck, Christel (St Catharines-Brock ND)

Vice-Chair / Vice-Président: Sutherland, Kimble (Oxford ND)

*Caplan, Elinor (Oriole L)

Carr, Gary (Oakville South/-Sud PC)

Christopherson, David (Hamilton Centre ND)

Jamison, Norm (Norfolk ND)

Kwinter, Monte (Wilson Heights L)

*Phillips, Gerry (Scarborough-Agincourt L)

Sterling, Norman W. (Carleton PC)

*Ward, Brad (Brantford ND)

Wiseman, Jim (Durham West/-Ouest ND)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Eddy, Ron (Brant-Haldimand L) for Mr Kwinter

Haeck, Christel (St Catharines-Brock ND) for Ms Ward

Harnick, Charles (Willowdale PC) for Mr Sterling

Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud ND) for Mr Christopherson

Klopp, Paul (Huron ND) for Mr Jamison

Mancini, Remo (Essex South/-Sud L) for Mrs Caplan

Owens, Stephen (Scarborough Centre ND) for Mr Sutherland

Tilson, David (Dufferin-Peel PC) for Mr Carr

Winninger, David (London South/-Sud ND) for Mr Wiseman

Also taking part / Autres participants et participantes:

Kormos, Peter (Welland-Thorold ND)

Owens, Stephen, parliamentary assistant to the Minister of Financial Institutions

Clerk pro tem / Greffier par intérim: Carrozza, Franco

Staff / Personnel: McNaught, Andrew, research officer, Legislative Research Service

The committee met at 0930 in the Valhalla Inn, Thunder Bay.


Consideration of Bill 164, An Act to amend the Insurance Act and certain other Acts in respect of Automobile Insurance and other Insurance Matters / Loi modifiant la Loi sur les assurances et certaines autres lois en ce qui concerne l'assurance-automobile et d'autres questions d'assurance.

The Chair (Mr Ron Hansen): Good morning. I'd like to welcome you all to the standing committee on finance and economic affairs. We're on day one of travelling and on day four of the hearings on Bill 164, An Act to amend the Insurance Act and certain other Acts in respect of Automobile Insurance and other Insurance Matters.


The Chair: I'd like to call the first group forward. It's the Head Injury Association of Thunder Bay and the Organization for the Multi-Disabled (Thunder Bay) Inc. Would you come forward, please, and take a seat. For the purposes of Hansard, would you identify yourself and your colleagues and you can start. We have until 10 o'clock, and if you can leave 10 or 15 minutes at the end of your presentations for questions from the committee also.

Ms Alice M. Bellavance: I'm Alice Bellavance, and I'm the executive director of the Organization for the Multi-Disabled. We're a community re-entry service that provides community-based rehabilitation services for those individuals living with the effects of acquired brain injury, which in many cases is traumatic as the result of a motor vehicle accident.

With me are Birthe Ligate, the president of the Thunder Bay Head Injury Association, and her son, Kris. As well as being involved with the Head Injury Association of Thunder Bay they are on the board of directors of the Organization for the Multi-Disabled.

The Organization for the Multi-Disabled and the Head Injury Association of Thunder Bay appreciate the opportunity to address this committee and share our commendations and concerns regarding the Insurance Act in respect to automobile insurance.

In order to understand how this legislation impacts on individuals living with the effects of traumatic brain injury it is also imperative that individuals understand the nature of injury to the brain itself. It is permanent. Once a brain cell is damaged or destroyed, it will not regenerate and the functions performed by that cell are lost.

Damage to the brain need not be severe or catastrophic to be life-altering. Trauma to the brain can cause subtle cognitive and behavioural changes and can occur even when there is no direct blow to the head. According to the current literature, a permanent brain injury can result from an individual being thrust forward and backward in an automobile accident, known as coup contre coup or whiplash, without actually striking the windshield. Many professionals call this "minor head injury," should it be diagnosed.

Damage to the frontal and temporal lobes is often common following this type of automobile accident as well as others. The frontal lobes of our brain control executive function. Executive function controls our ability to attend, concentrate, be tolerant, make good judgement, initiate, be motivated, be in control, and our ability to think in the abstract.

When individuals sustain injury to this area of the brain, they may have ongoing sequelae with dizziness, headache, fatigue, depression, an intolerance to alcohol and related substances, sleep disorders, irritability, intolerance to noise, and the list can go on endlessly. As well, cognitive deficits caused by injury to the brain often alter the individual's ability to understand his environment, and the individual often experiences difficulty with information processing. This then can lead to an inability to respond appropriately to the environment and events in their life.

When these very real results of brain injury go unrecognized and are not treated, they often lead to disruption in the individual's work environment and family relationships. I have had many individuals living with the effects of brain injury say to me that they felt they were going crazy. These are often identified as hidden or invisible disabilities, and individuals living with this type of injury are often referred to as the "walking wounded."

In the US as well as in the province of Ontario, we have now been able to identify that this is of epidemic proportion. Just to know what the numbers are like, 200 of every 100,000 individuals sustain traumatic brain injury in this province, and there are pockets where that average is even higher. If you're having hearings in Sudbury, Ontario, you'll probably hear what those numbers are, because the Ontario Head Injury Association just completed a significant package of research. There's a section of highway where the numbers are double that average, so this might say something about the highway.

Due to the fact that there is no visible disability, the individual is often perceived by the people around him as normal and they have expectations that behaviour will be appropriate. Due to neuro-cognitive damage, this is impossible and individuals are then often perceived as being uncooperative, having a bad attitude or malingering or other such oppositional or behavioural labels. Medical professionals without the necessary expertise in brain injury often diagnose individuals with these symptoms to be neurotic or overanxious when what they are really experiencing are cognitive and physical sequelae resulting from permanent injury to the brain.

The two areas that I wish to speak to specifically are attendant care benefits and access to appropriate rehabilitation.

Attendant care benefits: Attendant/personal care for someone who has sustained injury to the brain can vary, requiring a few hours per day to 24-hour support, depending on the severity of the injury and the outcome of that injury in terms of disability. Limited periods of time may be required for this type of care and support; however, it can also be a lifelong need.

Under the current proposed amendments, the cost is being limited to $3,000 per month. An Ontario Head Injury Association survey shows that supportive life costs require an average of $200 per day for someone with disabilities resulting from an injury to the brain when there are no behavioural difficulties. However, add behavioural difficulties to this and the cost could rise to as high as $600 per day.

When we look at the current rates paid out in the public sector, for example, the per diem cost of low-end chronic care facilities of $200 per day, this works out to a cost of just over $6,000 per month or $73,000 per annum. However, a more conservative cost of institutional care, whether it be acute, chronic or psychiatric care, is about $360 per day. Then the cost escalates to $11,000 per month or $131,400 per annum.

Due to the fact that the current system does not have the capacity to provide individualized, lifelong, portable and flexible services required by individuals, they often are relegated to the back wards of chronic care facilities and psychiatric facilities, putting an additional drain on the public sector.

With all of us being in tune with the escalating health and social care costs in this province, this needs to be addressed. When I, as an individual citizen, pay for insurance benefits for my home and it succumbs to fire, I anticipate that the insurance I paid out will allow me to replace my home. If I become injured in a motor vehicle accident, I would anticipate that my insurance would allow me, first of all, to be able to access in an expeditious fashion the types of rehabilitation options I may require to return to the optimum pre-accident functioning. Should that not be attainable then I would expect to have resources at my disposal to live as independently as I can with the supports that I require for the rest of my life.

In a continent that has been known to institutionalize people at an unprecedented rate, the current proposed benefit for attendant/personal care is totally inadequate. I ask individuals in the government and in the insurance industry to stop and think if it were themselves or a family member whether this is indeed the outcome that they would want to see for their loved ones.

Many of us over time do not need to access benefits that we pay into. However, a limited number of individuals do and should be provided with the opportunity of accessing real supports. The current system is not a win-win situation and impacts on real lives and real people who then face physical hardship, mental devastation and economic ruin.

It is our recommendation that the attendant/personal care benefit be a minimum of $4,500 per month and that it be indexed.

Access to proper rehabilitation: We, the Organization for the Multi-Disabled and the Head Injury Association of Thunder Bay, are pleased to see that the proposed benefits see no lifetime cap on supplementary medical and rehabilitation costs as well as no time limit. It has been demonstrated over and over again in the literature and programs that if an individual, for example, is age 16 when he or she is injured, his or her rehabilitation period may not end at 10 years, which was the case in the current system. That would therefore limit access to these benefits. Also, the costs of lifetime support or care certainly cannot be met with the $500,000 amount, but then that's now offset with the new proposal in the attendant care section.

In expanding the benefits under the new system, which we support, we also have a foreboding concern in that when the initial system was announced there was a proliferation of private for-profit rehabilitation companies and/or individuals that came into the marketplace. Much as we are in support of private enterprise, we question to whom these private companies are accountable in terms of quality assurance and standards of practice.

In the publicly funded sector, we are currently in the process of addressing the fact that we have to provide efficacious programs and services to those we purport to serve and that we are accountable to our funding source, ultimately the taxpayer of the province. There are many private rehabilitation companies that have rehabilitation or medical consultants in their employ who truly work in the best interests of the clients and take the onus upon themselves to develop some knowledge and skill when they provide case management services to individuals living with traumatic brain injury. However, there are a small number of individuals who really do not understand the sequelae following head injury and thereby do a great disservice to the individuals they represent.

We recommend that the insurance industry, along with experts in the field, provide a range of educational opportunities to develop and/or enhance their skill and knowledge in this field.


In a news release dated January 18, 1993, from the Ministry of Financial Institutions, the heading indicated that the minister was establishing a task force on auto insurance. I quote:

"The mandate of this task force was to develop regulatory standards which are sensitive to the concerns of both the costs and the needs of appropriate rehabilitation services. I have also asked for recommendations on the appropriateness of, or alternatives to, the monthly attendant care cap. I look forward to receiving the recommendations of the task force at the end of April."

In reviewing the list of names that the Honourable Mr Charlton announced, my two questions are (1) where is the representation from the consumers who speak on behalf of individuals with head injury, and (2) where lies the expertise on behalf of the professional sector in terms of individuals living with traumatic brain injury?

In consultation with the Ontario Head Injury Association, a literature review was requested for Dr Amies, Dr Corey and Mr Samis and, with no disrespect, none was found.

Currently the Ministry of Health has two advisory committees: one to address issues in acquired brain injury and the other in rehabilitation. Both of these committees are representative of the expertise in these fields in our province. Neither committee was approached with a request for a representative to this task force, nor was the Canadian Association of Rehabilitation Personnel or Chedoke-McMaster Hospital, which is the designated acquired brain injury program in the province.

Going back to my first question, what about consumer representation? The following groups could have been but were not approached: the Canadian Paraplegic Association, the Canadian Head Injury Coalition and the Ontario Head Injury Association.

Further to the fact that there may be a proliferation of qualified and educated personnel employed by the insurance company or rehabilitation corporations, the burden of wading through the morass of documentation and examination and mediation and arbitration procedures still lies with the injured person. When I, as a service provider, think about the challenges I am faced with on a day-to-day basis in dealing with the system, I can't imagine what it would be like for an individual who has to adjust to the life changes caused by head injury. It would appear to create a win-lose situation, with the insurer winning.

Since one of the outcomes of traumatic brain injury often deals with the issue of insight, the individuals themselves may not feel they have a permanent, ongoing disability and have restrictions on their lifestyle and that they have the capacity to return to their pre-morbid state of living. For the most part, for a short period of time they may be able to present in that fashion. However, in the long term, they may not be able to meet the demands of day-to-day living and thereby begin a downward spiral.

When barriers are placed upon the individual in terms of accessing appropriate mediation or supports or if he or she is working with an individual who is not educated or qualified in the field of head injury, the ability to receive effective treatment is severely compromised. Although individuals employed by the insurer may assist the client to complete forms etc, it must be remembered that there is somewhat of a conflict of interest, as it would be in the representative's responsibility realm to save costs on behalf of the insurance company. This would also constitute a manner of legal and ethical conflict of interest.

Should an individual seek to go into mediation with the insurance system, the insurance system is in a better position to afford the best legal counsel, and thereby again success is weighted in its favour. When individuals sustain neuro-cognitive impairments because of injury to the brain, the situation is much worse. Without legal counsel and/or funds to pay for expert witnesses that are equal to those of the insurance company, the injured individual literally has no hope of winning an arbitration or mediation hearing. We recommend closer collaboration with existing bodies of expertise, thereby setting the stage for a win-win scenario for all.

I'd like to thank you again for this opportunity. If you feel we can provide you with more input into this process, we certainly would like to provide that.

Mr Gerry Phillips (Scarborough-Agincourt): Thank you for the thoughtful presentation. The area I want to get your further comment on is rehabilitation. As you were leading up to your recommendation, I kind of thought you were recommending a closer scrutiny of standards and what not, but the recommendation, at least the words in the recommendation, were slightly different than that. Maybe you could just help me along a little bit with what you mean by, "We recommend that the insurance industry, along with experts in the field, provide a range of educational opportunities."

Ms Bellavance: That's one component of it, and I suppose I could have been very specific around the standards as well. Maybe it's not common knowledge at this point, but the two advisory committees that I mentioned are currently working to address those issues of standards that hopefully will apply to both the public and the private sector. That was knowledge that I just gained on Friday, but this was already typed. I'm hoping that will address it.

Mr Phillips: I actually thought that's what your recommendation was when I was listening to you, that it was going to be around closer scrutiny.

Ms Bellavance: I think it has to be twofold. You have to have the education to have the skill and the knowledge, and then you can develop the standards as well. If you don't know what you're working towards, it's difficult to develop standards. So you have to do both, hand in glove. I just received a call from the Ministry of Health, and I believe there's going to be a workshop March 4 with the Ministry of Health, with some of the experts in the field, along with the insurance industry, to look at how we can develop those types of standards.

Mr Phillips: That's useful. Thank you.

Mr Remo Mancini (Essex South): Can I say to the organization that your brief is quite good. The head injury organizations must be working closely together, because we heard from the Chedoke-McMaster people in Toronto and they had quite an outstanding brief too. I would like to say to you that I appreciate the information you've given us concerning attendant care, rehabilitation, the possibility of moving ahead with important educational matters etc, but you haven't touched at all on what Bill 164 does for people who are severely, permanently injured or disabled in regard to their economic loss.

Are you aware that this bill takes away the rights of all people to sue for economic loss? In some of the examples that you've given in this particular brief, one would assume that a person could sue for economic loss for hundreds of thousands of dollars.

Ms Bellavance: That's right; they could have. My understanding in reviewing the number of documents that have been put out by the government is that --

Mr David Tilson (Dufferin-Peel): Don't believe everything you read.

Ms Bellavance: Okay. Under the current system, my understanding was that basically only 5%, who could meet the threshold, still had the ability to sue.

Mr Mancini: But that's for non-economic loss.

Ms Bellavance: That's for non-economic loss.

Mr Mancini: It's for pain and suffering and serious and permanent disabilities. Under the old legislation, which these people are going to change, those people also have the right to sue for economic loss. We're going to be the only jurisdiction in North America that has taken away the right of people to sue for economic loss. No other state, no other province in North America has --

Mr Stephen Owens (Scarborough Centre): That's not true.

Mr Mancini: Can I please have the floor without interruptions from the parliamentary assistant?

The Chair: Go ahead.

Mr Mancini: We're going to be the only jurisdiction --

Mr Owens: Point of order.

The Chair: Mr Owens?

Mr Owens: Quebec also does not allow suits for economic loss.

Mr Charles Harnick (Willowdale): Wrong.

The Chair: I'm sorry, Mr Mancini has the floor now.

Mr Mancini: Not only is that not a point of order, Mr Chairman, but that's incorrect. The parliamentary assistant doesn't even know what he's talking about.

Mr Harnick: You have to buy insurance to protect yourself --

The Chair: Mr Mancini, your time's getting eaten up, so go ahead.

Mr Mancini: I can't help it if the parliamentary assistant keeps interrupting with false information. This group has come to us and this group has made a very solid presentation on matters that concern people who you're trying to represent. I've had a long history of working with head injury organizations and I know the work that you do, and I know that young people, factory workers, people who have a career ahead of them, are going to be big losers under Bill 164 because they're losing the right to sue for economic loss. If you had a son or daughter in university --

The Chair: Mr Mancini, you have 30 seconds left.

Mr Mancini: -- and if this son or daughter in university had a career ahead of them, don't you think they should be able to sue for the amount of money that they could have made in their lifetime if they're injured and if they're not at fault? I think that's only fair. Wouldn't you tend to agree?

Ms Bellavance: I'd tend to agree.

Mr Tilson: I'd like you to tell me a little bit about who's going to act for the people you represent, specifically if you're dealing with insurance companies, if this terrible bill is passed.

There's no question that one of the big issues, I guess, that you're thinking about is, will your people qualify to go over the $15,000 deductible? Probably many of them will. But if they don't, there's that whole issue of economic loss, which is probably your major thought, the individual who doesn't receive anything for loss of future income, absolutely nothing for loss of future income. That's the major blow to your individual who may partially recover but will never be adequately compensated for the loss of wages. That's the most dastardly thing that this bill is doing to the people you represent.


Having said that, you're looking at the whole issue of benefits that this package, this unbelievable -- I don't know where they are, but they're about that thick of regulations. Who is going to explain these terrible regulations, these regulations that even the insurance companies, the lawyers, almost every group that come to us says they don't understand? Who's going to explain those regulations to the people that you represent?

Ms Bellavance: That was part of the problem with the current system, in that no one could represent the individual because most lawyers, individuals who had an understanding of all the legalese in the legislation, who could explain it, often chose not to take these clients on because there was no point if they didn't meet tort. If they didn't meet tort --

Mr Tilson: They're gone.

Ms Bellavance: -- there was no cause for suing; therefore, there was no remuneration.

Mr Tilson: It doesn't matter that there's no money for the lawyers; no one is going to be representing these people. That's the whole point.

Mr Harnick: So why don't you change the bill so that somebody can represent these people?

Mr Tilson: I guess the whole question of dealing with that whole process at that time -- are you saying that you don't believe that the way the legislation has been put forward, there's no one to represent these people in dealing with the claims adjusters specifically? Because that's who they're dealing with.

Ms Bellavance: That's right. We have come across a number of situations. We're very fortunate in some ways in Thunder Bay in that we're somewhat smaller. We happen to know a lot of the individuals who are involved with the companies, and they do make it their business to know what is available and they do act in the client's best interests.

There's a very small number, if any, in this community who don't act in the client's best interests, but I hear horror stories all the time where these individuals will rush a client through the rehabilitation process, sort of do a down-and-dirty job, and be able to close the file, thereby saving the insurance company all kinds of money.

Mr Tilson: I don't mean to be indirectly taking shots at the insurance companies, because I think they're going to be put in a very difficult position.

Ms Bellavance: Sure they are.

Mr Tilson: The insurance companies are saying that because of this bill, rates are going to go up 20%. The minister says: "No, they're not. They're not going to go up a dime."

Ms Bellavance: They're going to go up 4%, or the projection.

Mr Tilson: Well, that's one of their figures: 4% to 20%. Whether it's by 4% or 20%, they're going up. The fact of the matter is, the minister says they're not going up. So we can easily see that the squeeze is going to be put on the insurance companies.

Ms Bellavance: But there has to be a balance. Excuse me, sir. There has to be a balance between the no-fault system and the adversarial system. If there isn't a balance and there is all kinds of suing going on, the insurance company is still paying out, which is still going to impact on our premiums.

Mr Tilson: You misunderstand what I'm saying.

Mr David Winninger (London South): I think she understands perfectly.

Mr Tilson: You misunderstand what I'm saying. What I'm saying is that it's going to become more and more difficult for the insurance companies to provide the package the government wants, and because of that, who's going to represent these people? Because it may not get as easy as you're saying. Is one of your major messages, who's going to represent these people?

Ms Bellavance: It's one of the messages, yes. Who is going to represent the individual?

The Chair: I'm sorry, but you've run out of time.

Ms Christel Haeck (St Catharines-Brock): Thank you, Mrs Bellavance, for your very competent and articulate presentation. It's going to help us with our work. The kinds of comments that you make here obviously are going to help the Ministry of Health deal with some of the rehabilitative concerns, and the task force, because obviously that's a group that you should be talking to as well, and we'll pass on your concerns.

I did want to just take a brief moment to indicate some of the things that our colleagues in opposition have been suggesting, which possibly represent their view but not necessarily the reality of what is being proposed.

Let me just state that in the case of economic loss, the Quebec plan -- and this quotation is taken from Hansard of last week, a question by Mr Johnson: "I understand that there is no right to sue for economic loss in Quebec. Is that correct?" The representative from the insurance company from Quebec said, "That is correct." Then it continues, "Are people happy" --

Mr Harnick: On a point of order, Mr Chairman: I don't mind if Ms Haeck quotes the evidence, but she's got to go through and quote the whole thing because the brief --


Mr Harnick: Now let me finish.

The Chair: It's not a point of order.

Mr Harnick: It is a point of order if she's misrepresenting the evidence. Now let me finish.

Ms Haeck: No, I'm not, Mr Harnick. I have a right --

The Chair: Let's see what the point of order is.

Mr Harnick: Let me finish and then you can rule me out of order. But the fact of the matter is that the brief specifically said that people in Quebec can purchase insurance from their own insurance company to protect themselves from excess economic loss. The next step that evolves from that is the fact that if you have a dispute with your insurance company over the value of that excess economic loss, you can sue in a court to obtain that money. The fact of the matter is, here you are taking away the right to purchase excess economic loss insurance.

The Chair: I'm sorry. You got your point across.

Mr Harnick: If she's going to quote the brief, she'd better be accurate.

The Chair: Ms Haeck.

Ms Haeck: Thank you, Mr Chair. Also, with regard to the kinds of things -- I'm sorry for these kinds of things but this happens, as you can understand, all the time.

The Chair: Ms Haeck, just carry on.

Ms Haeck: The regulations that are part of this bill are much more complete and therefore more lengthy than the previous bill because it covers many more people. It will in fact cover those individuals, like the people you serve, those people who have acquired brain injury, those people who do have psychological and emotional sequelae.


The Chair: I'm sorry. Ms Haeck has the floor.

Ms Haeck: I would think that under those circumstances the kinds of comments you've made and that the St Michael's Hospital head injury group has made -- in fact they concur with many of your comments -- this bill will cover your clients almost immediately, and not in the tort system as has been described by Mr Harnick. Your clients will be able to get the rehabilitative services that they require immediately upon having had the accident.

Ms Bellavance: I guess that's the other thing I want to comment on. In the tort system, when people are trying to access services, unless it's stuff they need to get under the Public Hospitals Act and get it in the hospitals, they may not get it.

We've just had a perfect situation with an individual who is under the system before OMPP where he definitely meets threshold. He's got severe physical and cognitive impairments and he needs to access specific services that aren't covered under OHIP, such as neuropsychological services, or if he needs speech therapy he has to wait two years because the public system doesn't have enough resources so they can buy it privately.

This young man could not access it because the insurance company wouldn't pay it because they were going to sue the insurance company. They weren't going to pay out any benefits for this gentleman's rehabilitation. He is three years post-injury. His needs are much higher than what we can provide.

He gets shipped up here from northeastern Ontario because our catchment area is that large, and we had to ship him back in chemical restraint, in air ambulance, back to his home community because we couldn't serve him. What he needs is what Chedoke can offer, but it has a waiting list of two years for its six-bed unit. Now you tell me that's fair.

The Chair: Okay. I'm sorry. Time has run out. I'd like to thank you for your presentation before this committee.

While the other group's coming forward, maybe with the clerk we can get some clarification on checkout time. Is there going to be a room available at the front to bring our bags? Okay, you can put your baggage in room 204 or the front lobby.



The Chair: Welcome. Take a seat, sir. I'd like to welcome you to the standing committee on finance and economic affairs. We have one half-hour. In that half-hour can you leave some time at the end for questions, and we'll start off with Mr Tilson as soon as you've finished your brief.

Mr John Berringer: Ready to go?

The Chair: Go right ahead.

Mr Berringer: Mr Chairman and committee members, welcome to Thunder Bay, in the great northwest. We're happy we have some warm weather for you, as opposed to what happened last week.

Thank you for allowing me this opportunity to express some views on Bill 164. My name is John Berringer and I am the president of Standard Insurance Brokers. Our offices are located in Kenora, Dryden and Fort Frances. We employ 31 people in our organizations.

Today, I would like to address some of the issues surrounding Bill 164 and leave time at the end of my presentation for questions and discussion.

Firstly, let's talk about cost. As we speak, prices for automobile insurance have stabilized greatly, and many of our clients are seeing their renewals issued at lower premiums than last year. Price does not seem to be an issue at this time, certainly in our area. However, those insureds who, for one reason or another, have poor driving records and find themselves either surcharged or exiled to the Facility certainly raise their voices regarding their premiums. On the other hand, good drivers should not be expected to subsidize these drivers to a greater extent than they are presently doing.

Let's face it: Every professional insurance broker in this great province, and I dare say in all of Canada, wants to sell the best product he can to his clients. Price, though, becomes an issue. Not everyone can afford the products proposed in Bill 164, but we all can and should work together to put in place improvements in the product that are compatible with cost.

We don't hear complaints in our office about the cost of automobile insurance since rates have stabilized, and the competition is still alive and well, certainly in the northwest. Both Mercer's study for the government and Wyatt Co's for the insurance industry indicate that costs are going up for OMPP as it is now, and after Bill 64, premiums will be higher than they are at present. How much is anybody's guess; we don't know yet. Every product, be it a lawn chair or an insurance policy, has a price, and it is based on its various component parts.

Now let's talk about complexity. Bill 164 is complex, all 68, 69 or 70 pages of the draft legislation. Bill 164 will be costly and difficult to understand and administer. We must have a system that is easy to comprehend and relay to our clients. It is my belief that if, through legislation, you attempt to define each and every accident scenario, this will lead to strict interpretations. But we're all human, and what happens when someone falls through the cracks? When coverages are described in general terms, then coverage is provided unless specifically excluded.

There have been considerable discussions about increased benefits, but let's really look at the root of the problem: What puts premium costs up? What's happened to Bill 39? The Road Ahead places a strong emphasis on the need for safer roads as a key to reducing insurance costs, let alone social costs. Road safety, changing driving habits and continued education is at the heart of everything we are talking about here today.

New Brunswick is moving towards graduated licensing. New Zealand has had this in effect for many years.

Drinking and driving is becoming socially unacceptable in many regions of our country, and the use of seatbelts is on the increase. This did not just happen, but rather came about through education. A reduction in accidents would not only save lives but cut down on medical emergency service and court and insurance costs.

The proposal to let clients sue for both economic and non-economic loss is contrary to the concept of no-fault insurance and will lead to increased costs. Deductibles are always subjective and don't necessarily serve the purpose they were intended to do.

Approximately 6% of claimants for compensation for economic and non-economic loss obtain tort access at the moment. It is estimated this will rise to 18% under Bill 164. The real winners here will be lawyers and at-fault claimants who will recover more than under OMPP, through higher benefits. The losers will be the consumers, who will pay more in the long run for this insurance.

OMPP has worked well for the last two years. The marketplace is much better than in the past, with premiums stabilized and claims being settled quickly. We do not see many unhappy insureds in our office with complaints about the product or treatment received from the industry.

As an insurance broker I wear two hats. One, of course, is for my clients, the insureds. The other is for my source of product supply, the insurance company. The withdrawal provisions, as set out in Bill 164, establish a dangerous precedent in that they impose very strict limitations on these carriers. If I lose an insurance company now or in the future, considerable disruption results, both inside my office and also for my clients, the insurance public. Also, this legislation sends out a very negative message to the business community at large and I urge you to review this area of Bill 164.

The Chair: Mr Tilson.

Mr Tilson: The reason why OMPP was, of course, introduced was because rates were on the increase and the principle of OMPP would be, yes, there would be fewer rights but that payments would be down.

Mr Mancini: Why don't you let him finish?

The Chair: I'm sorry. I haven't got a copy of your brief. I took it that you came to the end.

Mr Berringer: Not yet.

The Chair: Okay, then carry on. I'm sorry, I'm without a copy.

Mr Berringer: I'm almost finished.

The Chair: Okay, fine.

Mr Tilson: What do you want us to do, Mr Chair?

The Chair: Let him carry on. You paused at the end. I thought you were done. I'm sorry.

Mr Berringer: Brokers and insurers are working to improve the product all the time. For example, in June of 1992 the industry made a commitment to ensure that all Ontarians injured in automobile accidents would have access to standardized rehabilitation procedures wherever they live. Also, under OMPP the Facility continues to be depopulated without government intervention. The industry continues to work with the Minister of Transportation to develop the Ontario Road Safety Corp, and of course I mentioned graduated licensing.

Bill 164 contains some positive suggestions as well. For example, education disability benefits and retraining funding improvements are positive. Getting an injured person back to work should be first and foremost on everyone's mind.

Finally, let me leave you with a thought. I started my insurance career in Manitoba prior to the NDP introducing public automobile insurance. This has turned into something less than a perfect solution for the automobile public in Manitoba. More importantly, the last New Democratic government in Manitoba went down to defeat partly because it had a strong hand in establishing and implementing automobile insurance premiums. Mr Harcourt in British Columbia is also under some criticism at this moment. At present there are approximately 170 auto insurers in the province. Competition is keen. No one controls more than 10% of the market. Why do you want to have cabinet involved in rate setting? Why not distance yourself from it? Thank you.

The Chair: Mr Tilson.

Mr Tilson: Yes. How much time do we have for questions?

The Chair: Close to seven minutes.

Mr Tilson: Is that seven minutes each?

The Chair: Close to it.

Mr Tilson: The reason why OMPP was introduced, of course, was because there was a great concern with the increase in insurance rates. OMPP came along and the result of OMPP was that people had fewer rights, and supposedly rates should go down. Well, they didn't go down. In some cases the insurance companies are saying they're going down, but they haven't always. Now we have a new bill that's come along and it's supposed to provide new rights, new reforms -- reform the whole system. The difficulty, of course, is that we're guaranteed that rates are going to go up. They're going up anywhere from 4% to 20%. We're also certain that they're going to have fewer rights. People are going to have fewer individual rights, the innocent accident victims.

So, I must confess that the whole philosophy of this government that opposed OMPP when it was in opposition is now almost going in reverse. It's like they've done a complete reversal and are going backwards in time.

Mr Paul R. Johnson (Prince Edward-Lennox-South Hastings): That's your opinion.

Mr Tilson: Well, that's exactly what you're doing. So I guess my question to you is, having said that, at the same time -- and I keep harping on what the minister has said to the insurance industry -- you and the insurance industry are saying rates are going up. The minister has guaranteed us that rates are not going up. They're not going up, and there are at least two different ways I know of, and maybe the minister has some other ways that he hasn't revealed to us yet, that rates are not going to go up. What is that going to do to this whole process? What's it going to do to the insurance business and what's it going to do to the innocent accident victim?


Mr Berringer: Clearly, from a broker's standpoint, if you enhance the product, someone has to pay for it. Clearly, from our perspective or from my perspective, where I sit now, the system seems to work well. It's not perfect, but no system is perfect. But it seems to work well and costs seem to be contained. I think if you enhance and broaden out the coverages, like you're proposing on one hand, and taking certain things away on the other, but generally it's a broader package, it's going to cost more money.

The proposal in Bill 164 to limit the claimant's ability to sue for economic loss of course is negative, and that's going to put some hardship on certain individuals who find themselves in that unfortunate position.

Mr Tilson: Really, my question was directed to the issue of rates and how the system's going to operate. The insurance company needs to have money to make this system operate. The government isn't going to let you acquire the moneys that are needed to operate these very expensive benefits. The minister says rates are not going up. My question to you is, what's going to happen to the insurance companies that are going to be carrying these very expensive benefit packages if the minister carries out his threat?

Mr Berringer: I'm not an insurance company person, but it would seem to me that they will restrict their offerings and withdraw from the province. They have no choice. You can't run a business and lose money for ever.

Mr Tilson: Mr Harnick has a question, Mr Chairman.

Mr Harnick: Sir, in your experience, have you found that the rates of accident benefit payments -- in other words, the $600 a week, and the various levels of payments under OMPP -- through your experience with your insureds, are adequate levels of benefits under the no-fault aspect of the OMPP?

Mr Berringer: Generally I would say that's true, yes.

Mr Harnick: Have you found that people's weekly incomes have suffered because those rates are not high enough?

Mr Berringer: No.

Mr Harnick: And would you agree with me -- you say people generally aren't complaining -- that if they change this system and they implement Bill 164, which takes away the rights of innocent victims to claim for their actual economic losses, that in fact you're going to start hearing from insureds who've been seriously injured, saying: "Why can't I claim my excess loss? I was innocent"? Do you think that'll become a problem?

Mr Berringer: I think you're probably right. We don't see many claims that go through what we'd call the threshold, generally speaking.

Mr Harnick: Because it's pretty high.

Mr Berringer: It's very high, and there was considerable thought into this process when it originally began, to set these numbers and figures at an appropriate level that seemed to work. But I think, certainly, you're right. People will be unhappy when they're stuck.

Mr Harnick: Would you agree with me as well that under the OMPP it's been a relatively successful system, except that the threshold has been too high, and if there's anywhere you're hearing complaints they're complaints about the high threshold, "Why have they taken away my right to sue? I'm seriously injured," that kind of thing, right? Yes or no.

Mr Berringer: Yes.

Mr Harnick: Just one other thing. When Mr Tilson was asking you, you indicated that with an enhanced product you would expect people would pay more or that the cost of the product, because it's enhanced, would go up. Just in our little discussion between you and me, the fact that we've zeroed in on this taking away the right to sue if you're innocent, to me, that doesn't enhance the product. What I see with Bill 164 is a more complicated product, a product that takes away more rights from innocent victims and in fact is going to end up costing us more. Would you agree with that?

Mr Berringer: The product will cost more, I think, because if you look at the other side of the equation, with the ability to go back and sue now for pain and suffering, subject to a $15,000 deductible, I think that's going to blow it up.

Mr Owens: I'd like to thank you for your presentation. I'd like to address a couple of things you mentioned in your brief. First of all, you mentioned that the depopulation of the Facility Association is ongoing, without the assistance of the government. Are you aware that an agreement was reached with the Facility Association and the Ontario Insurance Commission as to how that depopulation would take place, and the categories by which people would fall into the FA rather than what currently happens under OMPP?

Mr Berringer: Yes.

Mr Owens: All right. In terms of costs, you're talking about benefits versus costs. Do you think it's reasonable under the current plan that some of our most catastrophically injured, perhaps some of those who were addressed by the head injury groups today, are capped at $500,000?

Mr Berringer: The problem really becomes, where do you set a cap that's reasonable and compatible with what the product costs? I think you have to set a limit somewhere, because when you exceed that amount of money, whatever that amount of money is, then really that particular individual moves to a different --

Mr Owens: So it would be your view that if a person at the age of 16, shortly after getting his or her driver's licence, is involved in an accident and that individual is catastrophically injured, say, at around 30, that person would be left to hang out to dry.

Mr Berringer: We have a social responsibility in this province and this country to look after people, and we do.

Mr Owens: In terms of the indexation of benefits, do you believe it's a good thing that benefits are indexed?

Mr Berringer: There again, I think you have to set a limit to how far you're going to go.

Mr Owens: The benefits index with respect to CPI and rates of inflation: Is that a reasonable measure to take?

Mr Berringer: Yes.

Mr Owens: You're aware that we've done that?

Mr Berringer: Yes.

Mr Owens: Just in terms of dependant care benefits that we've extended to working people -- also increasing the dependant care benefits of those who are not working -- do you think that's a reasonable extension of a benefit?

Mr Berringer: Yes.

Mr Owens: All in all, in terms of the benefits we've talked about in this short time that we have together, do you think that's a reasonable enhancement of benefits that people would require in fact if they became victims of an accident in this province?

Mr Berringer: Within limitation.

Mr Paul Klopp (Huron): Thank you for your brief. On one of your pages you talked about the withdrawal provisions. In the first draft that came out from the ministry, are you aware that in further consultation with the industry it changed that regulation and has amended it to with just a notice of withdrawal? Are you aware of that, first off?

Mr Berringer: Not totally; I haven't read it.

Mr Klopp: That was one of the issues, that they have to give a timely notice. I guess the commission actually reviews it and then can delay it for a further maximum of 90 days, but cannot stop them if they want to move out of an area.

You as a broker, but I as one of your people who has insurance -- I have known people who all of a sudden were told, like an hour after that: "Oh, the insurance company doesn't want you any more. They sent a letter yesterday. Didn't you get it?" Do you not agree that this puts people in a really bad position, maybe even yourself, with an insurance person phoning you up and --

Mr Berringer: Short notice is difficult. There's no question about it.

Mr Klopp: I think it's a fair thing for the industry to give good, long-range notice to you as a broker but also to the person who has been paying insurance.

Mr Berringer: Of course.


Mr Klopp: One other, really quick: You mentioned about the graduated licences and that whole issue. I come from rural Ontario. It's Bill 39 you referred to, and that part of government is working towards these goals. Do you have any suggestions? My argument is that Toronto has got lots of people. People can get on a bus or whatever, but myself in rural Ontario, or even here in the north -- do you have any suggestions for help with graduated licences or whatever?

Mr Berringer: I live, obviously, in rural Ontario as well. In our community, it could potentially pose some problems but I think you can work around that by making exceptions for a rural area. For example, if I was eight miles from school and the school buses weren't on schedule and so on and so forth, if one of my kids could drive my car and go to school and have to stay late for a basketball game, I'm sure provisions could be made for that. I think the whole concept of graduated licensing, though, is that when you turn a 16-year-old loose on Highway 401 at 4 o'clock in the afternoon, it's awesome. It's awesome for just about everybody in this room. You've got to consider that.

But certainly there are ways I think you could work this, depending on the region and the area you live in. Most 16-year-old children probably shouldn't be out after midnight anyway; they should be home.

The Chair: Mr Phillips.

Mr Peter Kormos (Welland-Thorold): A point of order, Chair.

The Chair: Yes, Mr Kormos.

Mr Kormos: There is one minute left in the government time slot and I expected to be able to address --

The Chair: Are you saying that the Chair can't tell time?

Mr Kormos: Yes.

The Chair: Mr Phillips.

Mr Kormos: Among other things.

The Chair: Mr Phillips.

Mr Phillips: The thing that we are really questioning is the cost-benefit analysis of this bill. In many respects, it'll be people like yourself who will be the first to face it when you send your bill out and then the phone call comes back, saying, "What in the world happened?" I think, based on all analyses, government analysis as well as other industry analysis, there are a whole bunch of people who will be facing increases in excess of 20%.

My question to you is this: Seniors, under this bill, look like they'll face very dramatic increases, well in excess of 20%, and many of them live on fixed incomes. When that bill goes out and someone phones you back and says, "My premium has gone up and it looks to me like it will be going up well in excess of 20%, well over $150," how will you respond to them when they say, "Why did this bill go up $150; I had no accidents; nothing happened to me; it just came to me out of the blue"? What will your explanation be and what should we, in the elected positions, who have passed this bill, expect from seniors?

Mr Berringer: I suppose I'd have to be honest and straightforward and say: "This is new government-driven legislation that's put your insurance premium where it is. We have no other choice."

Mr Phillips: I appreciate that. Believe me, I went through this several years ago when the previous bill was being contemplated, and the elimination of age. I don't think I had a more vocal group than the seniors, who really resented the thought of paying substantially increased premiums through no fault of their own. You're suggesting to us that it will rebound very quickly to the elected people. You'll say, "Listen, it was because of this bill that your rates went up well in excess of 20%."

Mr Berringer: I would think so.

Mr Mancini: First of all, I'd like to thank the witness for his brief. It was well done and the answers have been straightforward. Are you aware of the Coopers and Lybrand report that has been made public over the last couple of weeks that has estimated the premium increase, the rate cost increase for Ontario consumers, and are you aware, sir, that in Thunder Bay in the annual increase per household, insurance rates are going to go up $170? Are you aware of that report?

Mr Berringer: I haven't read the report cover to cover.

Mr Mancini: I have a copy of the report here and I'd be most pleased to make it available to you. Do you think the people in Thunder Bay region are in the financial position to pay $170 more per household for their insurance benefits, while at the same time losing the right to sue for economic loss? Do you think that's a fair exchange?

Mr Berringer: No, I don't, because I think the present system is serving them well.

Mr Mancini: Are you as disappointed as I am that the government is moving so slowly with the road safety program?

Mr Berringer: Yes.

Mr Mancini: Do you believe that a solid road safety program could in fact not only save lives and save people from being injured, but could put a cap on the rate increases of people's premiums?

Mr Berringer: Yes, I do.

Mr Mancini: Do you believe the government would be better spending its time working on road safety than trying to save face over its flip-flop on government-owned automobile insurance, and move ahead with road safety instead of with Bill 164?

Mr Berringer: I think continuing education is the key. This is what is starting to work for us now. It's called risk management.

Mr Mancini: Mr Phillips has another question.

Mr Phillips: I was curious about your comment about the reaction you're getting from people you deal with in terms of the rates they're currently paying on their insurance, and indicating, from your brief, that perhaps they're feeling a little less angry about the rates than they might have been three or four years ago. Has that been your experience?

Mr Berringer: There's no question. The great majority of our insureds are quite happy. When prices have been soaring around them, they've seen stability in their renewals, assuming they kept the same automobile and didn't have an accident or a conviction. All things being equal, they're very happy.

Mr Phillips: That has been my experience in my constituency. What, in your judgement, then, would lead a government, in one of the few areas where people are not complaining vigorously, to want to stir up an area that seems to have calmed down slightly when there are so many other areas that already have been stirred up?

Mr Berringer: I have no idea.

Mr Kormos: Panic? Hysteria?

Mr Berringer: I don't know.

Mr Phillips: Mr Kormos has given us two choices: panic or hysteria. I am curious about that because I think right across the province, people's incomes are going up very little, if at all. Average incomes are going up less than inflation just because of the number of people unemployed, and yet we would look at taking something as fundamental -- it's almost that if you want to be in the economy in Ontario, you've got to have auto insurance. Why a government would want to take out of the pockets of the taxpayers -- their own estimates, by the way, indicate at least a $200-million increase.

Mr Owens: Not true.

Mr Phillips: Well, it is true. It's 5% of the premiums. The parliamentary assistant continues to interrupt, and with information that's incorrect. I'm trying to deal with, trying to get the benefit of --

The Chair: I'm sorry, Mr Phillips; your time's running out. Get to the question and try not to listen to anyone else. You've got the floor.

Mr Phillips: The government itself says that the increase will go up 5%. Five per cent on premiums is $200 million, as you know and any sensible person in the province knows. Why would we want to take $200 million out of the hands of taxpaying people at a time when the economy needs as much disposable income as possible in their hands?

Mr Berringer: That's a very good observation. That other one that to me is even more enlightening is that the OIC has said it will have to hire another 100 people and spend $5 million to sort that part of it out.

The Chair: I'm sorry, but we've run out of time. I'd like to thank you for coming before this committee.


The Chair: The next presentation is from Zurich Canada.

Mr Harnick: Zurich. It's a place in Switzerland.

The Chair: My wife being German, she pronounces things a little different.

I'd like to welcome you before the committee. We have half an hour, and for the time left over, I guess the three caucuses can argue over it and give the Chair direction on how many minutes each they have. You may begin.

Mr Harry Saunders: Thank you, Mr Chairman and members of the panel. My name is Harry Saunders. I'm the president of Zurich Canada. I'd like to introduce my two colleagues who will be assisting me in my presentation this morning: Dante Alejandria, vice-president, claims administration; and Paul Minnoch, vice-president, personal automobile underwriting.

We appreciate the opportunity to participate in these hearings on Bill 164. You may be pleased to learn that we can be brief this morning because you gentlemen and ladies heard the presentation of the Insurance Bureau of Canada last week, and in large measure we support the position it put forward. In fact, we made a strong contribution to its development over the last few months.


We are not here to present an alternative plan -- we could do so if that were appropriate -- but rather to emphasize the significance of five areas of Bill 164 in the hope that you will consider them in your final decisions. They are: the cost of the proposed new system; the dangers inherent in the proposed changes to access to tort for non-economic loss; instability that will be created by uncontrolled costs for rehabilitation services; to encourage the establishment of a uniform classification system which the consumer could better understand; and, finally, to urge a joint commitment to action on road safety reforms.

Surely at the root of everyone's concern is how to provide Ontario motorists with the best value for their money in automobile insurance coverage. We at Zurich are willing and able to provide insurance under any number of forms or combination of forms: pure tort, on the one hand, pure no-fault on the other, or various combinations in between.

At the same time, we must be straightforward in reminding all concerned -- motorists, politicians, brokers, insurers, lawyers, care providers and taxpayers and residents of Ontario at large -- that for every benefit there is a cost to be borne. Our experience leads us to believe that the best value for the consumer can be achieved through a combination of tort rights, however modified, and no-fault benefits, however generous, which indeed is the basis of both OMPP and Bill 164, although those two approaches differ significantly in the implementation of the principle.

Turning to the cost of the new legislation, why are we concerned about the cost of the new legislative proposals? Ample evidence has already been presented that shows that the increases under Bill 164 suggested by the Mercer research, the government's actuaries, are inaccurate and lower than what could reasonably be expected. They're based on irrelevant and non-current information and indeed were targeted to go into effect on July 1, 1992, so already they are seven months out of date.

Furthermore, the fact that the industry results since the introduction of OMPP have been profitable have led some to believe that automobile insurance is overpriced and that increases can be absorbed. We would like to argue that, in effect, this is not the case. Current rates have become inadequate for the existing system and will be more dramatically affected by the proposed legislation if certain issues are not addressed.

Part of the reason for this is that any premium we charge today must be adequate to cover claims in the future. A change in rate does not generate overnight an immediate increase in revenue. It takes two full years for a change in rate to be fully reflected in revenues. This time lapse can distort one's view of results today and makes addressing future premium levels an issue of concern.

I'd now like to refer you to Mr Alejandria, who will speak to weaknesses in the proposed changes to tort and, secondly, rehabilitation and long-term care costs.

Mr Dante Alejandria: One of our greatest concerns is the uncertainty the new legislation will create with regard to awards for pain and suffering. Right now, there are clear legal precedents which provide indexed limitations on the amounts of awards for non-economic loss. The limits were originally established by the Supreme Court of Canada at $100,000 and have grown to a present-day value of about $240,000. It is vital to note that the court's decisions were based on the assumption that all economic loss has been satisfied.

Since Bill 164 does not necessarily provide full protection for economic loss, the basis for a limitation to pain and suffering claims will be seriously weakened. This uncertainty makes it extremely difficult for insurers to set fair and adequate rates with a reasonable degree of certainty, and until these assumptions are tested in the courts, consumers will also feel a great deal of uncertainty regarding their level of protection.

An additional area of serious concern is the proposed treatment of the deductible which would be indexed to the consumer price index. It can be demonstrated that the consumer price index grows at a rate far below the inflationary costs of bodily injury settlements.

We believe that both a stronger definition of the limitations on non-economic loss and a more realistic approach to indexing are among the adjustments required to Bill 164.

On the subject of rehabilitation costs, we know that we speak for the industry when we say we are encouraged by the creation of a task force to examine rehabilitation and long-term care benefits required for people injured in automobile accidents. An effective rehabilitation program as an essential part of claims service to our clients has been recognized by Zurich for many years and continues to be an area in which we take great pride.

We are here today to say that we believe the mere removal of limits for these coverages in no way guarantees the best possible benefit to an accident victim. It certainly does not offer the most cost-effective auto insurance system to the people of Ontario.

Unlimited and uncontrolled coverage in this area will create costing uncertainty that would be of acute immediate concern for insurers and reinsurers alike. In the longer term, unlimited and uncontrolled costs would compound the uncertainty for funding of future losses, and the lack of limits on claims would form an ever-increasing component in rate calculations.

The cost of rehabilitation needs further attention to ensure proper care for victims and affordable impact on premiums.

Mr Paul Minnoch will address our two remaining concerns, namely, in the areas of uniform classification system and road safety.

Mr Paul Minnoch: With regard to the uniform classification system, I'd like to point out that on January 1 of this year, we moved into a take-all-comers environment that allows all but clearly defined bad drivers to obtain automobile insurance from the company of their choice. This is a good start, but we believe the consumer deserves more: a uniform classification system he or she can understand.

At Zurich Canada, we feel very strongly that consumers must be able to understand easily how they have been rated and that all insurance companies should define the customer in the same way. Only then can buyers of insurance, on their own or with the help of a broker, shop with confidence for the best insurance value for their money.

The definition that would come from a uniform classification plan could exclude factors of age, sex and marital status, but a uniform classification system does not mean that age, sex and marital status must be excluded. These are two different issues. The decisive factor in the cost of insurance must be the driving record of the operators of the vehicle.

A uniform classification plan was presented to the government in October 1991 by the Insurance Bureau of Canada along with the Association of Canadian Insurers and the Ontario Mutual Insurance Association. For the benefit of the motorists of this province, we would like to see some dialogue on this issue as soon as possible.

Before we leave the subject of a uniform classification system, we must make one last observation. While we maintain that a uniform class plan is beneficial to the consumer, we must also state that these benefits can only be realized if insurers are allowed to establish their own mathematical algorithms and differentials to establish rates. Only in this way will insurance companies be forced to compete for the consumer's business on value and service. When this happens, the consumer can get the best deal.

On the topic of road safety, we would like to stress that this is one we are sure there is general agreement about in the room, yet we feel obliged to mention it at every opportunity because of its importance. It is something that will not only save money but will also save lives, especially the lives of our young people, and remove suffering on the part of their friends and families. We are talking about road safety measures.

In the government's policy document The Road Ahead: Ontario's Strategy for Insurance Reform, a great emphasis was placed on road safety. This component remains an integral part of responsible and affordable reform through the reduction of accidents.


We can say with confidence that as a company, Zurich Canada intends to stay at the forefront in road safety education. Last year, our single largest advertising effort, in partnership with Health and Welfare Canada and the Canadian Association of Chiefs of Police, was on a drinking and driving campaign which featured Wayne Gretzky and was aimed at young people. We'll be doing even more this year in areas of road safety education.

At this point, I would like to offer you two examples which came to my desk on Thursday and Friday of last week and will highlight the next portion. These are two claims underwriting summaries that came to me. The first was an accident that occurred on November 10, 1992. This accident involved an 18-year-old driver, newly licensed. He had driver training. It occurred at 11 pm. He and five friends were on their way home from a hockey rink. They were travelling at excessive speed, lost control on a curve, and one of the passengers, one of the friends, had a spinal cord injury and he will be confined to a wheelchair for the rest of his life.

The second case involved a 19-year-old daughter of one of our insureds, who also had driver training, licensed only 16 months. She and a friend were travelling down a country road at 90 kilometres per hour. They came up to a stop sign, put on the brakes, slid on loose gravel and the vehicle rolled. The friend died in the accident. That case occurred on September 30, 1992.

This brings us to the topic of graduated licensing, which the insurance industry has been advocating for some time. The government stated in its policy document that young or new drivers are significantly overrepresented in all traffic accidents. For the sake of these people and all other people on our roads, we encourage -- perhaps I could say implore -- the government to continue the approach that does not consider Bill 164 in isolation but within the whole environment of automobile usage. Graduated licensing can be an important part of what the government wants to achieve in responsible reform.

Graduated licensing would have an effect on reducing excessive loss costs produced by one recognizable group. Graduated licensing protects not only the value of the cost of insurance but, more importantly, the value of life, especially the lives of our young people.

Mr Saunders: That concludes our presentation, Mr Chairman. We will be happy to accept questions.

The Chair: We'll start off with Mr Winninger.

Mr Winninger: I certainly appreciate your well-balanced presentation. I'd like to direct my question to Mr Saunders. I know you've had extensive experience in the insurance industry, and in your brief you mentioned the fact that Zurich Insurance is used to providing insurance in a number of different forms. I'd like to deal with the issue of coverage for excess economic loss, which has come up earlier in these proceedings as well.

As you know, Mr Saunders, economic loss can take many forms. It can involve loss of future earnings, it can involve the cost of future rehabilitation and long-term care, to name a few examples. Even though our Bill 164 will actually cover 97% of full-time earners compared to 73% under the Ontario motorist protection plan, we still know there are some areas of economic loss that will not be fully compensated. There may be people for whom $1,000 a week does not provide adequate compensation for lost earnings. There may be people --

Mr Tilson: It depends on how you look at it. No matter how you look at it --

Mr Winninger: Mr Chair, it's difficult to put an important question and also deal with the wailing of the banshees in the opposition.

Just getting back to the question, there may be people who may suffer loss of competitive advantage or a loss of earning capacity; there may be people who suffer significant capital loss due to the loss of their businesses. So a proposal has been put forward, which is certainly not precluded under our legislation, for those for whom, under section 63, an agreement to pre-estimate lost earnings may not be enough. A proposal was put forward that the insurance industry could offer excess economic loss coverage. I wonder if your company has put any thought to the costing of such a proposal, as well as any practical difficulties that such a proposal may be facing.

Mr Saunders: Such coverage could be made available. I'm inclined to ask Paul Minnoch to assist me in answering the question, because he's more directly involved in product development and costing. Certainly, I see no reason why some forms of excess economic losses couldn't be layered on top of the proposed Bill 164, but it depends on what shape and form this will be presented and what the basis of arriving at settlement would be to hazard a guess as to costs. Paul, do you have anything to add to that?

Mr Minnoch: No, that does state it. We would have to see exactly what you required, what you had in mind, but as Mr Saunders mentioned, we could layer that on top of the product.

Mr Winninger: I take it that Zurich also is involved in insurance in other provinces as well, in Canada?

Mr Saunders: It is.

Mr Winninger: Has it considered excess economic loss there?

Mr Saunders: Yes, covers are available in that sense in other provinces, yes.

Mr Winninger: Certainly we've heard all kinds of wild claims about how Bill 164 is going to dramatically escalate the cost of auto insurance premiums. I take it that your industry is prepared to work with government towards containing any increases to the consumers.

Mr Saunders: I think there are some flaws in the legislation that's presented which have to be addressed. We're very concerned about the two aspects of the tort provisions, which we've already talked about this morning. We're encouraged about the task force work. I think we can put some useful controls into rehabilitation and long-term care which will still deliver a very valuable product without having the costs escalate out of all proportion to benefits, and we'll continue to work. But as it stands at the moment, I'm very concerned. We are looking at substantial increases in costs and therefore premiums.

Mr Winninger: Today you expressed some concern about expanding the right to sue for non-economic loss. There are some members of the opposition who would like to lower the deductible for pain-and-suffering lawsuits even further. Certainly that would increase premiums.

Mr Saunders: As we said in our opening remarks, we're ready to provide any level of service or any combination of coverage that the politicians and the public feel is in their best interest, provided it is reasonable and provided we can reasonably cost it.

Mr Winninger: Thank you.

Mr Saunders: There's no free lunch.

The Chair: Mr Johnson. One minute left.

Mr Johnson: That's not a lot of time. However, when one goes out to buy automobile insurance as a consumer, people often think that all insurance companies must be the same. There's a basic product you have to buy, and therefore it doesn't really matter where you go. But we know. We've heard the horror stories where people have been claimants and they've had to file a claim against an insurance company --

The Chair: Mr Johnson, get to the question.

Mr Johnson: Without a little bit of a preamble, it's very difficult. Anyway, I'll do this as quickly as I can. Insurance companies are not all the same, and some insurance companies -- I won't mention any names because I don't want to be liable -- but some insurance companies have reputations for not being known as --

The Chair: I'm sorry, Mr Johnson, you ran out of time. Mr Mancini.

Mr Tilson: Good preamble, though.

Mr Mancini: Mr Saunders, I'd like to thank you and your executives for making the presentation you have to this committee. I'd like to state for the record, and be very clear about it, that my bias is towards the consumer, the buying public. We're in the middle of a four-year recession, and even prior to the recession, before we had lost those 500,000 manufacturing jobs in Ontario, people whom I represented were, in fact, complaining loudly about the cost of their insurance.

Through the Ontario motorist protection plan, rates were in fact stabilized. Now we enter a whole new realm of instability for rates, and I'm particularly concerned about what this legislation is going to do to senior citizens.

Senior citizens have not fared well under the NDP government. They've had their drugs delisted from OHIP, they've had senior citizens' property tax --

The Chair: I'm sorry; would you wind up getting to the insurance issue?

Mr Mancini: How much time do I have, Mr Chairman?

The Chair: But keep on subject.

Mr Mancini: How much time do I have?

Mr Kormos: Stop trying to muzzle the opposition.

The Chair: I am not muzzling --

Mr Kormos: The Premier is trying hard enough to muzzle the government members, never mind the opposition members.

The Chair: Go ahead, Mr Mancini.

Mr Mancini: I'm building a case, with the Chairman's permission, to show the impact that this government has had on senior citizens. They've had their drugs delisted from OHIP, meaning they've had to pay more out of their pockets --

The Chair: Does this have anything to do with insurance?


Mr Mancini: Yes. I'm building a case, if you would stop interrupting. Mr Chair, on a point of order: You have absolutely no authority under the standing rules to frame my question. You only have authority to ensure that I do not overuse my time. Please reread the standing orders and govern yourself accordingly.

Mr Kormos: They think they can control opposition members just like they control government members. That's the problem.

Mr Mancini: It hurts the government when you point out what has been happening to senior citizens in this province. That's why we get these uncalled-for interjections from the Chair. Senior citizens have had their drugs delisted from OHIP, meaning they have to reach into their pocketbooks and pay for drugs they didn't have to pay for before. They've had their property tax grants shrunk considerably, meaning tens of thousands of senior citizens have to pay more in property taxes today than they did two and three years ago.

This, I believe, will be the last nail in the coffin for senior citizens. Documentation we have received, Mr Saunders, indicates to us that with the rate increases in Bill 164, along with the uniform classification system that the NDP government is talking about, senior citizens in the Toronto area will face at least a 24% increase in their automobile insurance; in the northern Ontario region, 21%; in Windsor, 23%.

Mr Owens: How do you know that?

Mr Mancini: Will you control the parliamentary secretary while I have the floor?

The Chair: One thing we're going to do in the next place we go, because I can hear everybody --

Mr Mancini: Mr Chairman, you and I are not going to get along in this committee if you do not follow the standing orders. The standing orders do not give you authority to frame my question or to muzzle me in how I'm going to present my case to the witnesses and to the general public who are here today. You have authority to ensure that I do not abuse my time.

The Chair: I have the authority to keep you on track.

Mr Mancini: You do not have authority to frame my question. I suggest you speak to the clerk. We are not going to get along if you continue in the abusive manner that you've demonstrated this morning. There's going to be great difficulty in this committee, let me tell you.

The Chair: Carry on.

Mr Kormos: See, now you've got him mad at you too.

Mr Winninger: Thank you, Charlie McCarthy.

Mr Mancini: Mr Winninger, if I were you I'd be quite worried about what's happening to seniors in your riding. In the Ottawa area, seniors may face increases of greater than 22%. Somebody has to be concerned about the senior citizen population. These people are not concerned about them.

I want to ask you, Mr Saunders, because you are one of the longest-serving executives in the insurance industry in Canada today, do you think that senior citizens can afford increases of anywhere from 20% to 30% in their premium rates?

Mr Saunders: Mr Mancini, we haven't taken our costing down to the individual level like that. I'm very concerned about the overall cost of Bill 164. There's no question that those costs have to be addressed and some reforms have to be put into Bill 164 before it should go into place. I think Mr Minnoch might want to add something along those lines.

Mr Minnoch: Very much so. If the program continues as it is presented at the moment, those costs will in fact impact seniors the way you've described. In the uniform classification plan that the industry submitted to the government in October 1991, which I mentioned in our brief, we did in fact pay special attention to seniors as a group, and that did form part of our submission to the government. In fact, we presented that to the Consumers' Association of Canada informally at the offices of the insurance commission, and it was very well received by the senior group represented by Helen Anderson of the Consumers' Association. So the seniors have been considered by the industry.

The Chair: Mr Tilson.

Mr Tilson: Mr Harnick has a question.

Mr Harnick: My question is to Mr Saunders. Last week we heard from the deputy minister or the legal adviser, a fellow by the name of Mr Endicott, who, I understand, was pretty much responsible for writing Bill 164. He told us that a young student injured in a car accident who would never be able to work again would receive the equivalent of $391 a week for the rest of his life, which pretty much puts him at the poverty line or a little below the poverty line. In addition, he would be able to keep up to the poverty line because that generous $391 for life would be indexed.

I know that you've been in this business for a long time and that your company's been looking after injured people for a long time. In cases where an innocent young person has the rest of his working life snuffed out from him, would you agree with me that $391 a week, indexed to pay that person's lost income for his lifetime, is miserly and improper?

Mr Saunders: I'd have to agree with you, Mr Harnick. I think I would go further and state a personal opinion here. I truly, firmly believe that any effort to address all economic loss through a pure no-fault system is faulty and I think that's the fatal flaw of Bill 164. We weren't here to present alternatives. We are here to try and make Bill 164 work, but I'm extremely concerned about that aspect of the legislation.

Mr Harnick: If I can quote you then, the fatal flaw of Bill 164 is trying to pay all economic loss under a no-fault system?

Mr Saunders: Absolutely. That is my personal philosophy, 100%.

Mr Harnick: I'll be right with you.

Mr Saunders: Do you want me to repeat it?

Mr Harnick: No, I think I've got it.

Let me take this one step further, then. If you agree that you can't pay all economic loss under a no-fault system, the way the bill is presently framed, it says you can't make any claim for economic loss. In other words, it's going to be against the law. The only way you could offer coverage is if the bill was amended to permit you to offer economic loss coverage --

Mr Saunders: Excess.

Mr Harnick: -- excess coverage to individuals. Is that correct?

Mr Saunders: On an insured-option basis, you mean?

Mr Harnick: Yes.

Mr Saunders: Yes.

Mr Harnick: Much the way we do SEF 44.

Mr Saunders: Yes. I'm not an expert in legislative drafting. I doubt the technicality is that difficult or complex.

Mr Harnick: Yes. You've indicated that you thought that would be an economically viable product for the insurance industry to sell. What I want to ask you is this, and it's very important -- at least to me. The government is trying, under Bill 164, to put everybody under one roof and is saying, "What's reasonable for one should be reasonable for all."

One of the beauties of auto insurance, over the years, has been that auto insurance has been able to pay people for their particular circumstances. In other words, everyone's different and everyone can claim to what their actual or potential loss might be. What I envision, if the government responds to what it's been hearing from witness after witness for the last week, is making a product available so that individuals can protect their actual losses, so that they're not lumped in under one roof. If I pay my extra premium, as I do for my underinsured coverage, I want to be able to claim for what my actual loss might be or what my children's economic loss might be if, God forbid, they're injured in an accident. Can that kind of product be made available?

Mr Saunders: That was a rather lengthy question, Mr Harnick. I suppose the simple answer is yes, of course, but you raised a lot of questions there.

For example, you refer to the economic viability of excess economic loss. I don't think I said that. I said we would be willing to offer the product. I have some concerns about how widely it would be purchased and therefore how long it would stand the test of time in the marketplace, but in general concept what you described should be a practical proposition, sure.

Mr Harnick: Thanks.

The Chair: I'm sorry. The time has run out. I'd like to thank you, gentlemen, for coming before this committee.

Mr Saunders: What are we doing at lunchtime?

The Chair: Talking about the game last night, I guess.

Mr Harnick: I thought you were buying.

Mr Saunders: After last night, Brad had better buy.

The Chair: Some subjects we can talk about here -- football games and I think no one would object. Other issues, some members object to.

Mr Kormos: The government's in bed with the industry. They might as well eat with them too.



The Chair: The next group to come forward is Ruttan Bolduc Adderley General Insurance Brokers. I'd like to welcome you to the standing committee on finance and economic affairs. We have a half-hour; we have until 11:30, and in that half an hour, if you could leave some time for questions from the committee members, and you may begin.

Ms Jo-Ann Menard: Good morning, Mr Chairman and members of the committee. My name is Jo-Ann Menard. I have been an insurance broker in the city of Thunder Bay for the past 20 years. I have served on the boards of various industry-related associations and am presently the vice-president of the Insurance Brokers Association of Thunder Bay. My presentation today is on behalf of my firm and the clients I represent, those consumers of the auto insurance product.

As you are aware, the role of an insurance broker is to act on behalf of his or her clients, providing a product that meets their needs. The consumer is basically interested in two things: keeping insurance premiums down or at least stabilized and getting the benefits which they are entitled to have, which they have paid for, with a minimum of fuss or hassle. In my opinion, Bill 164 does not address these needs of the consumer, as it is costly, it is complex, and, above all, it's a change that the consumer on the whole has not requested.

Prior to the implementation of the Ontario motorist protection plan, either auto rates were too low or costs were too high. With double-digit increases being applied to the product in the early to mid-1980s, the consumers were not happy campers. They let the insurance industry and the government know that things were getting out of control; thus the implementation of OMPP.

OMPP has addressed those needs of the consumer. In general, consumer satisfaction with the product is high. OMPP is working. Premiums have stabilized and in some cases have been reduced. Claims have been adjusted quickly, fairly and without the hassles found in the pre-OMPP product. It is a pleasure to deal with clients who are satisfied with the product. To have a client smile when he's handing you payment for his auto renewal is a definite indication of satisfaction.

There's no solution to providing an insurance product that will be 100% satisfaction guaranteed by all consumers of that product. There will always be some deficiencies. The insurance industry has recognized these deficiencies, and under the OMPP there are provisions to modify and enhance the benefits. Why not let the insurance industry do its job? As front-line distributors of the product, the brokers are the first ones to hear of any dissatisfaction with that product. We voice our concerns not only to the insurance company but also to the Ontario Insurance Commission, and we have no reason to believe that we are not being listened to.

Bill 164 carries a large degree of uncertainty, the potential for higher costs and the need for increased premiums down the road.

When improvements are made to benefits, the average cost per claim rises. Bill 164 raises the possibility of increased adjustment costs because a higher percentage of accidents involving bodily injury will have to be thoroughly investigated, as there will now be a liability exposure. Insurers will have to look at all injured third-party claimants and may have to set reserves because a year from now they could be sued. Bill 164 seems to be taking a backward step in this regard.

The right to sue for pain and suffering beyond a $15,000 deductible will unnecessarily increase access to an already overburdened court system, thereby once again increasing the costs. The proposed deductible will have no impact. Time and time again, experience has shown that monetary thresholds merely raise the minimum claim size. The threshold becomes a target rather than a deterrent. I must once again emphasize that the consumer will not accept more than a very modest premium adjustment.

The current legislation fails to address the issue of road safety, which must be a priority. The document The Road Ahead placed significant emphasis on the need for safer roads as a key to containing both monetary and social costs. It appears that the road safety agency has been delayed. Why? The frequency and severity of accidents is a major concern not only for the insurance industry but also to the consumer. We live in a very fast paced society, which in turn is being reflected in our driving habits.

The implementation of the road safety program will lower the toll of accidents, injuries and deaths on our roads, thereby reducing the cost of claims and passing benefits on to the consumer. The campaign in Ontario for graduated licensing drew overwhelming public support, but to date there has been no action on this matter. Progress has been made and must continue to be a priority to promote seatbelt use and to reduce drinking and driving. The high-profile campaigns and strict law enforcement have had a definite impact.

I believe the government should also be focusing on an educational program for those who have been licensed over a certain period of time, say 25 years. At present, once a person is licensed to drive in this province, there is no requirement for retesting until the age of 80. There's a large gap here. People pick up bad driving habits that they are not fully aware of and these bad habits play a major role in the frequency of accidents. The road safety agency is a must.

In the first two weeks of January 1993 in Thunder Bay there were an average of 17 accidents per day. This is an alarming amount, considering the population of Thunder Bay is only 113,000. Something has to be done.

Bill 164 does not provide for any changes to the direct compensation property damage portion of the liability section, nor to the physical damage coverage. Ironically, the majority of the consumer complaints lie within these two areas and not in the no-fault accident benefits section. Areas of consumer concerns are with the way vehicles are being valued in the event of a write-off, the lack of time given for return of a rental vehicle when a write-off has been allowed and other minor but significant concerns. Another major problem that is of concern is the double pricing of body shop repairs: one price if you have collision coverage and a lower price if you don't. This problem must be addressed.

Bill 164 provides for government regulations of risk classification. In 1987 the Ontario Automobile Insurance Board examined changes to the risk classification and after much discussion and in-depth study the proposal was abandoned as not being economically feasible. As a result of a uniform rating system, women in all age categories, who have traditionally enjoyed better driving records, as well as mature drivers, will be required to share the cost of claims by younger and higher-risk drivers, specifically males under the age of 25. A change of this nature would also limit competition among the insurers. The present system allows a series of specialized discounts which benefits a variety of consumers, and a number of these discounts are especially beneficial to Ontario seniors. Seniors are on fixed incomes. They cannot afford the increased cost of such a change.

By removing the caps and time limits on supplementary medical rehabilitation and care benefits, the system could be opened up to abuse and add considerably to the costs. It is imperative that proper and accessible facilities be provided to assist injured people, wherever possible, to return to work and lead productive lives.

I'd like to share with you information received from a copy of an article out of the Detroit Free Press which states that Michigan plans to cut auto rates by 16% through the elimination of mandatory unlimited medical coverage and instead requiring a minimum of $1-million coverage with the option to buy up to $5 million. A copy of this article is attached with my presentation. This article undoubtedly gives some indication of the cost involved in giving an unlimited amount for medical coverages. I believe the government should take the same stand in enhancing medical benefits as set out in the Michigan legislation.

Addressing the changes to increasing the income replacement benefits, these benefits in their present form under OMPP seem to be sufficient for the average wage earner in the province of Ontario. Those whose earnings are in excess of $39,000 annually more than likely can afford to purchase the buy-up option which is presently in place under OMPP. Consumers of average earning capacity should not have to pay higher premiums to subsidize those above-average income earners.

In summary, the present system can be modified and improved, gaps filled, with only a modest premium adjustment. We need to deal with the existing problems and feel that government is here to look after society and not here to put on added controls.

For most of the last 30 years, especially in the past 6, there has been a political cloud hanging over the future of auto insurance in Ontario. The consumer is fed up. Let's hope reason finally prevails, that the marketplace is allowed to function and that auto insurance settles down to a long period of stability.

I thank the committee for allowing me this time to voice my concerns.


The Acting Chair (Ms Christel Haeck): Thank you. We have Mr Mancini for the Liberal Party, and in fact you've got just around six minutes.

Mr Mancini: I see from your attachment you have a news article from the Detroit Free Press, which I was looking at the other day, where in the state of Michigan a bill will be introduced, cosponsored by both Republicans and Democrats, which plans to cut the insurance rates for automobile drivers by 16%. We're doing exactly the opposite in Ontario, and I'm wondering why.

I'm wondering if we have consumers and families living in Ontario who are that much more wealthy than they are in Michigan or whether or not this legislation is ideologically driven. Whether or not we have car rate insurance increases or not seems to be not the primary concern but only a secondary or tertiary concern. I was wondering if you'd had a chance to look at that proposal that's being introduced in Michigan, cosponsored by both Democrats and Republicans, and what you think of it.

Ms Menard: I haven't had a chance to look at the proposal. This is the only piece of information I have received at this point in time.

Mr Mancini: Basically in your brief you've made four very good points. You've talked about road safety and the impact that road safety legislation would have on drivers and their insurance rates, something that the government has not done yet. You've talked about the rate increases and mentioned in your brief that people you serve cannot afford any more rate increases. You've talked about the difficulty of administration. I brought with me the new draft regulations, all 68 pages of unintelligible regulations that even senior officials in the insurance industry and top-notch lawyers have told this committee they cannot understand. Your fourth point was the removal of the right to sue for economic loss and how devastating that will be to many families and individuals.

I wanted to ask you, is there anything in the legislation that you think is worth the anywhere from 4.5% rate increase to the 23% rate increase, that all of the actuaries have said we can expect anywhere in that range? Is there anything in Bill 164 that your customers have come in to talk to you about that is worth that increase?

Ms Menard: No, there isn't.

Mr Mancini: Thank you.

Mr Phillips: I really congratulate you on a thoughtful and consumer-oriented brief. The second last paragraph in your brief, I thought, was instructive for us, essentially saying that auto insurance has been in turmoil for years, and just as it's settling down, the people's government has decided to stir it back up again. My experience will be that they're sort of on a mission of Operation Alienation. This is another group to alienate, and that, unfortunately, is all of the public.

You're in the front line. There's bound to be a normal increase in auto rates in any event, just as inflation takes hold, and I think there's agreement that the minimum increase is 5% and up to 20%, but even if we say it's just a 10% increase in premiums, how do people in your business respond to a 10% premium increase? What will be your response when they phone you back and ask you why their insurance has gone up $150?

Ms Menard: Consumers aren't happy with increases. They don't want the increases. They will take minimal amounts of increases on a regular basis. They can deal with that. But they will not accept a double-digit increase in an auto product where they cannot really see where the benefit is of that product. They're tired of hearing about the auto insurance industry, and their main question is, why is the government involved in this?

Mr Phillips: Thank you.

The Chair: Mr Eddy.

Mr Phillips: I have another question.

The Chair: Okay, Mr Phillips.

Mr Phillips: You comment on the risk classification, and my memory goes back to that 1987 period, what do you think the response of seniors will be when they find their rates are going up 25% or thereabouts?

Ms Menard: The response is going to be anger, definite anger on behalf of the seniors. They're on fixed incomes. The average person doesn't want to see a 25% increase, those who might be able to take it out of their pockets without hurting too much, but for the seniors in Ontario, there's no way. With the cutbacks and everything else they've had, a 25% increase in an auto insurance product? They will not be happy.

Mr Phillips: If, theoretically, you had the option of offering two packages, the existing package at the existing price or this package with a premium 20% higher, what do you think your sales would be on those two packages?

Ms Menard: I would most definitely be able to sell the OMPP package much more than Bill 164.

Mr Tilson: As critic for the Progressive Conservative party, I get a number of letters and telephone calls not only on this bill but also on OMPP. The concerns that come to me from the consumers you are speaking for, which I appreciate, deal not only with their remarks directed against Bill 164 but also against OMPP.

One of those criticisms is the whole process, that it's very difficult to deal with insurance companies. I don't know whether these allegations are true. I get letters, I get calls; some of them may be true and some of them may not be. But insurance companies are in the business, of course, to challenge claims to make a living. At the same time, it's becoming quite clear to me, because of the bureaucracy that's going to be created by Bill 164, that this whole relationship between the consumer and the insurance company is going to become more strained.

I'll read you portions of a typical letter I've received from an individual. I'd like you to give your comments on what I say to them. They complain about OMPP in this letter, and now Bill 164 is going to be even worse. What am I going to tell these people? The letter says this:

"On November 14, 1992, my daughter was involved in a car accident. She's a VON and was on duty, going to see a patient. The police laid no charges and stated the cause of accident as weather conditions. My daughter was in St Michael's Hospital in Toronto for three weeks with head injuries and brain damage.

"The hospital people told my son-in-law to get a lawyer, that because of the insurance and workers' compensation involved, there would be many grey areas. He did. There are.

"The hospital wanted to have follow-up care come to the house to treat my daughter at home, to start at the time of her release from the hospital. This did not happen, because the insurance company would not give the hospital the assurance that its expenses would be covered. Instead, she was cared for by family, friends and VON.

"The insurance adjuster called my son-in-law at his workplace and told him that the insurance company would not accept his claim, as the accident was my daughter's fault. The agent continued to harass him to the point that his employer relieved him of his duties for the day, as he was in an unsafe state of mind to continue working. In my opinion, by not receiving the professional services supplied by St Michael's Hospital, the insurance company has slowed my daughter's recovery and is jeopardizing her health and long-term recovery.

"If the insurance companies would cooperate at the time of an accident, there would be no need to sue. But the way they are carrying on, yes, I believe we, the people, should have the right to sue. If both parties in an accident received proper compensation, no-fault would make sense. But when the person who caused the accident can say, `Not my fault,' and walk away, I don't believe it's working."

I get a number of complaints orally and in writing about that. What am I to tell those people?

Ms Menard: There's no such thing as "not at fault" and walking away from the accident. OMPP has got a no-fault section in the accident benefits only. Any physical damage coverage and everything else are still based on fault.

Mr Tilson: These people are responding to the OMPP position.

Ms Menard: It's a misconception that unfortunately happened when OMPP was put into place. The "no-fault" scenario of OMPP misled the consumer. They were not aware that the no-fault benefits were only under the accident benefits section and not under the whole product of OMPP. That was really hard to try to address to the consumers.


Mr Tilson: The difficulty I have, of course, is that now I have to tell these people: "You're going to have even fewer rights. You're not going to have the right to sue for loss of future income, economic loss. Your difficulties with the insurance companies may accelerate." And the poor insurance companies are going to have less money to work with, obviously. They're going to have to fight to make every dollar they can. It's a mess. What are we to tell these people?

Ms Menard: It will be a fighting battle; it will be.

Mr Tilson: Now we're finding out that the government's boasting about this wonderful task force, and now the subject of a workshop has come up to try to explain to us all how this whole thing is going to operate. I don't know how much input you personally or contacts you have in the insurance industry have had into this bill, but why do you feel the government's going at it this way now? Why now?

Ms Menard: I don't have an answer for that question. I really don't think the public has requested that OMPP be changed to this extent.

Mr Tilson: So it doesn't make sense to you, at this particular time, in this recession?

Ms Menard: No, it doesn't. In the recession it makes no sense whatsoever that this is coming up.

Mr Tilson: Particularly as costs are going to go up, difficulties are going to be accelerated.

Ms Menard: Definitely.

Mr Tilson: Does any of Bill 164 make sense to you?

Ms Menard: No. Mr Tilson: I'm going to leave it at that, Mr Chairman.

The Chair: Fine; you had 30 seconds left. I'm going to go to Mr Owens.

Mr Owens: I don't think anyone in this room, whether sitting at these tables or out in the greater audience, would say they don't care about senior citizens, so my blunt question to you is, why should auto insurance premiums be based on age rather than driving record, where it really doesn't matter whether the person is 25 or over 65? If he has a bad record at 65, why would you be interested in subsidizing that bad driver instead of looking at his record directly?

Ms Menard: Those drivers at the age of 65 who have a bad driving record are being penalized for it.

Mr Owens: In terms of the uniform classification system then, we are looking clearly at doing that throughout the whole system, not looking at drivers and saying, "Because you're a married female over the age of 25, that automatically qualifies you as a better driver." Why do you think we should look at variables like that, rather than simply looking directly at a driving record?

Ms Menard: I think the stats show that those under the age of 25 -- I don't have any figures with me, but the percentages are high. The youthfulness of the driver, the inexperience of the driver: Those are the ones who are creating the majority of the havoc on our roads.

Mr Owens: So in terms of the uniform classification system, those bad drivers will get dinged and those who are good drivers won't get dinged. Is that not right?

Ms Menard: Yes, they would.

Mr Owens: Thank you. Mr Winninger.

The Chair: I'm the Chair. Mr Winninger.

Mr Winninger: I certainly appreciated your presentation, particularly a statement you made on page 4, that consumers who are of average earning capacity should not have to pay higher premiums to subsidize those above-average income earners. Many critics on the opposition side have suggested that the government was remiss in not allowing accident victims to sue for their full economic loss, which would of course mean that consumers of average earning capacity would be paying higher premiums for those who are well beyond average earning capacity.

When I suggested that the proper way to approach that is through providing contracts of insurance for excess economic loss, Mr Harnick said Bill 164 does not allow for contracts insuring excess economic loss. I think Mr Harnick, who is himself a lawyer, should read subsection 224(6) of the Insurance Act, which says quite clearly, "An insurer, with the approval of the commissioner, may offer optional benefits in excess of the benefits that must be provided under the no-fault benefits schedule." That is also restated in section 253.

So my question to you would be, given that there are policies that can be made available to insure for excess economic loss, does it not tie in quite closely with your observation that people of only average earning capacity should not subsidize those who are above the average?

Ms Menard: Yes, it does. The excess is exactly that; it would be excess. It would be an option paid by the insured. If that insured wishes to pay for that excess coverage, that's his option, and that's the way it would be placed in the bill: as an option for excess economic loss.

Mr Klopp: You mentioned early in your brief, page 2 or 3, the business about the government pushing through the Ministry of Transportation things to do with reducing through education etc, and you're wondering why not. I've sat in the House and seen people spend all day reading lakes into the House. Sometimes one has to waste time doing that, and it's pretty hard for different ministries to push the process through, and that's an issue we have to look at. Here today we're dealing with the insurer, and the other side is to look at reducing through education. Do you have any thoughts or ideas, coming from a rural area, on how to do things, like graduated licences and stuff like that?

Ms Menard: I think there could always be provisions made in the graduated licensing program for different variables: different areas of the city, time schedules, time permits. It can be enhanced. The graduated licensing program will work. I'm positive it will work, and I think it's a necessity that we have it in place as soon as possible.

The Chair: I'd like to thank you for appearing before this committee today.


The Chair: Everyone has the next presenter's brief in front of them. Would Thunder Bay Insurance Services Ltd come forward, please. I'd like to welcome you to the standing committee on finance and economic affairs. We have one half-hour, until 12 noon. In that period of time, could you leave some time at the end of your presentation for questions from the committee? You may begin. Please identify yourself for the purposes of Hansard.

Mr David Baxter: Good day, Mr Chairman and members of the committee. My name is David Baxter, president and general manager of Thunder Bay Insurance Services Ltd. Thank you for the opportunity to appear before you today.

I own and operate three offices with 21 staff, servicing approximately 7,000 client families in the Thunder Bay and Nipigon region of northwestern Ontario.

I myself have been in the insurance industry for over 14 years as a general insurance broker and deal with the public on a daily basis. I also serve as a director and executive officer of the Thunder Bay Insurance Brokers Association, an affiliate of the Insurance Brokers Association of Ontario, for the past 10 years.

Today I would like to address my concerns on Bill 164 on behalf of my clients, who have entrusted their confidence in my firm. When counselling our clients, we try to provide a level of service that educates them on the products they are purchasing and helps them understand the benefits and limitations of these products in simple terms. Once we have agreed on the coverages that are necessary for their protection, we begin the process of affordability versus protection and the education of the costing of these benefits. This process that we undertake as an insurance broker aids the consumer in simplifying the insurance purchase, which makes it less confusing and less frustrating for them.

I will attempt to describe the history, as seen through my office, of the insurance problems that led up to the creation of the Ontario motorist protection plan. I will also describe the benefits this plan has had for my clients and some of the problems that have arisen. Finally, I will express my opinion on what I see as the effects of Bill 164 on my clients.

First, I would like to reflect back on the early 1980s, when the tort system was in effect. Clients in the tort system were treated as adversaries by third-party adjusters or company personnel. Because the adjuster was working in the third-party environment, his job was to keep costs down, creating a feeling in the consumer that he was not being dealt with fairly. Lawyers were involved as the public grew in their antagonistic feeling to get back at the big insurance companies for not giving them their fair shake. As frustrations grew with the rising costs, the public was caught in an endless cycle that could be best described by the expression: "I deserve to get more in my claim. I've paid plenty of money for my insurance."

By the mid-1980s, the public became more aware of settlements being paid by insurance companies for large sums due to lost wages and pain and suffering. Soon more writs were being issued in the public's attempt to fight back in frustration at the claims process and in the hope to benefit from the situation for a possible windfall. The system was being abused.


I would see a copy of a lawsuit received by one of my clients at least three times per month, and I'd be consoling my clients on the vindictive legal terms used against them in these writs. What first started out as an attempt by the consumer to receive a fair settlement had gone full cycle and had driven the insurance costs up, creating more frustration with the system. Insurance had become a product no longer of protection but one of abuse.

In the late 1980s, in an attempt to address the public outcry, the previous government, under the Ontario Automobile Insurance Board, froze insurance premiums while attempting to analyse spiralling insurance costs. Factors that were addressed were the cost of the legal system involvement and the possibility of a new classification system. After numerous studies, the Ontario motorist protection plan was introduced in June 1990. It brought back the accountability of the insurance companies to the public by making the insurance companies a first party in their client's claim settlement, taking away the adversary condition of the previous system.

OMPP has addressed a fair compensation of wage loss, medical costs and rehabilitation for the injured client. Although it is not a perfect system, it has created consumer confidence by their understanding of the Ontario motorist protection plan product. It has also brought premium rate stabilization to the consumer. OMPP is a complex enough product, but it can be understood by consumers, allowing them to know their rights.

Since the introduction of OMPP it has taken our staff many hours to explain the different options available under the plan to our clients. Generally, our clients feel that OMPP gives them fair compensation in the event of an accident. The present accident benefit levels are accurate for the majority, with only 5% of our clients opting to purchase higher limits. Those who need the increased limits are those who are in a higher income bracket and can generally afford to purchase the optional limits.

Complaints under OMPP compared to the tort system have dropped drastically. The complaints seem to be centred on the cost of repairs rather than the levels of compensation for lost wages or medical rehabilitation. It would seem that the focus should be on physical damage and direct compensation for vehicle repairs rather than the re-establishment of a new accident benefits structure.

In the fall of 1991 the government had stated that it would not start a government-run auto system due to the cost involved; it would rather focus its attention on safer roads and educating the driving public, under Bill 39 and The Road Ahead. It appears these two initiatives have been shelved in order to satisfy some self-interest groups that make up a minority of the insurance public.

Should a question at this time be asked, "What has happened to the road safety board," or is this a job that private industry must carry forward? Also, there is much money spent in the promotion of graduated licensing, which should reduce the number of serious or fatal accidents, but again this has been stalled prior to implementation. I, along with my clients, feel the money would be better spent on both of these projects rather than the cost of implementing Bill 164.

Upon reviewing the proposed changes to OMPP by Bill 164, the main focus addressed is on the improvements of accident benefits and the right to compensation for non-economic loss, pain and suffering. Other items addressed are the new classification system and the insurer withdrawal from the marketplace.

In assessing the benefits of the improved accident benefits for my clients and in discussion with some of these clients, it is an opinion that to increase income replacement beyond the average wage earner will only increase the base cost of the average wage earner and is not necessary at this time. In addressing the indexing of benefits, would it not be far simpler to review the level of benefits every three years rather than the complex formulas that are designed, which will undoubtedly not only confuse the insurance adjusters but the insurance public as well?

In these areas I feel it would be better to make minor adjustments rather than implement wholesale changes that would increase the cost of the product. Another cost factor in these changes is the increased cost of advising the public of their new rights, either by the Ontario Insurance Commission, independent brokers or through a legal system.

Under supplementary medical rehabilitation and attendant care: By taking away the cap of $500,000, are we trying to solve a threshold problem or create another one? Also, by unlimiting the time for rehabilitation, does this not create an incentive that people will not want to be rehabilitated? Under the death benefits, by increasing from $25,000 for a spouse to $50,000 upwards to $200,000, are we not interfering with the life insurance industry by creating an over-sense of security under an auto policy? In addressing funeral benefits, I believe the present gives a very cost-effective option for compensation and that an automatic increase is only forcing the consumer to absorb that cost.

Overall, I feel the present accident benefit structure may need minor adjustments and not the changes that are proposed by Bill 164, because of the potential cost to the consumer.

Now I'd like to address the proposal for the right to sue for non-pecuniary loss. I feel bringing back this section for a debatable issue such as pain and suffering would only bring back the windfall-type attitude of the mid-1980s. Would this not be better served on a charted injury system that would be far fairer to all victims throughout the province, rather than leaving it up to the courts in different jurisdictions and the availability of the best lawyer to get the best settlement?

Also, under this section with the $15,000 and $5,000 deductibles respectively that are stated for the reduction of damages, will these become a benchmark in order to start the point of negotiations? Also, would the legal profession still charge a total settlement, or the settlement less the deductible? Would the consumer benefit or be at a loss?

In regard to the new classification system, at times I can fully agree that new drivers pay far above affordability in comparison with the chance to prove themselves through their driving record. But as many accident statistics still prove, after reviewing statistics as late as December 1992 for our city, new and youthful drivers still cause the majority of accidents.

Rather than having cabinet devise a new classification system, would it not be better that the ministry and the industry provide rating changes that address "innocent until proven guilty"? It is also feared that devising a new classification system may increase the cost for the average driver. This may increase the possibility of more uninsured drivers due to the increased costs, a scenario which I have not seen since the mid-1980s, whereby several times a year I would appear in provincial court testifying and showing records of those drivers driving without insurance.

Finally, in addressing the proposal regarding the insurance carrier withdrawal from the marketplace and the cost of such withdrawal, I believe some of these options have been addressed by the minister and that the cost and the waiting period for withdrawal have been amended.

In summary, I feel that Bill 164 is complex. The complexity of the bill will add a costly burden to my office, the offices of the independent adjusters, the insurance carriers and the Ontario Insurance Commission, a price which the consumer is not prepared to pay in order to understand a more complex insurance product. The consumer does not wish to have a more complex insurance product at additional cost, but rather an understandable product at a reasonable cost. With regard to the increasing benefits of Bill 164, I feel that the cost to the average consumer may be too great in comparison with the true benefit to the average consumer.

Finally, when discussing some of these changes with my clients over the past few months, the general feeling is, "Why do we need these changes and how much more am I going to pay?" As a representative for my office, my staff and my clients, I feel that the efforts could be better spent on minor improvements to OMPP and on a greater focus on the road safety board to get started in reducing the amount of claims and the implementation of graduated licensing in order to help create better drivers. Thank you for your time. I hope you take my points into consideration.

The Chair: Thank you. Mr Tilson up first.

Mr Tilson: How much time do we have?

The Chair: We have about six minutes.

Mr Tilson: You've raised the point that I have maintained over and over to this government, that the tort system, the pre-OMPP system, took years and years to develop in going to courts, and now we have the OMPP which is before us, whether this bill removes all that, and already there are a whole bunch of cases that are going to the courts on that. In fact, the insurance companies tell us -- and they may be right; I don't know -- that in time the courts will determine a proper test, that if you let this system work, whether you have one case or another case, eventually through a number of years the proper test will develop.


Now, of course, we've got Bill 164 and they're kidding themselves. The government is kidding itself that that isn't going to produce a whole raft of cases; in other words, the subject of general damages, the cap that's put on by the Supreme Court of Canada on general damages. Because there's no more economic loss, will that subject change? Will courts bend over backwards to enable people to get more than $15,000? There's going to be a whole slew of cases on that. The consumer will just be befuddled as to which situation we're going to be under. I think that seems to be one of your messages: Let's sit back, and whether OMPP was right or whether it was wrong, let's sit back. Why make it worse? Why make it worse 10 times?

I have another question for you that I haven't heard asked. Is it possible that --

Mr Baxter: Can I answer on the first part?

Mr Tilson: No, that wasn't a question.

Mr Baxter: Okay.

Mr Tilson: That was just my morning wrath against this group of people. The question I have is, do you anticipate another form of litigation, and that is by the consumer against the insurance company? I believe because of the difficulties that this government is going to be putting on them -- they are not going to be allowed any more rate increases, they're not going to have any more money and yet the benefits are going to be unbelievable -- insurance companies will be more and more difficult to deal with and I believe there will be more and more litigation against insurance companies. Have you any thoughts on that?

Mr Baxter: I feel that introducing Bill 164 will cause a frustration similar to the mid-1980s where the clients did feel it was them against the big insurance companies due to the cost factor. They're paying more and they're not getting what their fair shake is. Yes, if we could go back to the simple times where they hired a lawyer to get their fair shake. So it would be an attack against the insurance companies, which will start the same spiral in cases that we had that led up to the late 1980s problems.

Mr Tilson: That's the joke of it all because it has become quite clear that no one -- insurance companies, lawyers, even the dippers -- understands the regulations. No one understands these regulations. People are going to have to go to court because one group of people is going to say, "This is what I'm entitled to," and the insurance companies are going to say, "No." I'm being harsh on the insurance companies but I think under the circumstances that's probably what's going to happen. The result of it will be that the costs of insurance will escalate even more, even greater than these people dreamed.

Mr Baxter: When you get into complexity it does take more than one person to interpret it, so when you get more interpretations you have more people involved and thus the costs go up. The public needs to be protected. Their costs will go up through the insurance in order to interpret the product that's made for them.

Mr Tilson: So that the cost of litigation, which these people are trying to reduce, in fact will increase. It will increase on two fronts. They're saying, on their own admission, that it's going to increase as a result of the deductible principle, and there will be litigation over that subject, there will be more cases before the courts, and more importantly there will be more litigation against the insurance companies.

Mr Baxter: The insurance industry as a whole, and possibly different government officials, to try and debate the understanding of this bill.

Mr Tilson: I'd like to ask one more question and that is with respect to the elimination of age, sex and marital status. I'd just like you to comment as to your thoughts on that. That, of course, was originally proposed by the Liberals, as I understand it, with OMPP, but even they withdrew it.

Mr Baxter: Prior to OMPP, by the Ontario insurance board.

Mr Tilson: But that was withdrawn, of course, and now the concern is that in fact there's going to be a subsidization of the young, the unmarried and males. That's in effect what's going to go on. We're trying to make the premiums the same all the way across, but those who are good drivers -- the records show who are good drivers -- are going to be paying more premiums. Is that the message?

Mr Baxter: If you do try to come with a balanced system, with taking age and sex out of it, yes, there would be more of a balanced rating throughout the system. But at the same time you are looking towards the driving record as a principal cause. Factors and rate reflection on that have not been tested yet and are only in the studies, but I believe the Liberal government had not gone far enough on its study to say that it could come to conclusive evidence that it would work.

Mr Tilson: I'm going to give the rest of my time to Mr Kormos.

The Chair: I was just going to tell you that you had run out. That's why I was motioning to you.

Mr Tilson: That sounds usual. Mr Chairman, I must confess I don't always agree with Mr Kormos. I disagree with him on a lot of things.

Mr Kormos: Mr Tilson, I'm shocked.

Mr Tilson: But it seems to me that he is being shunted out of these proceedings --

The Chair: No, he hasn't.

Mr Tilson: -- and I resent that, as a member of this Legislature. I disagree. Anybody has a right to speak.

The Chair: I had already motioned to you ahead of time. The Chair has made a decision. Mr Johnson.

Mr Kormos: Mr Tilson, I thank you graciously for your offer. You are far more generous and far more democratic than --

The Chair: Mr Johnson.

Mr Johnson: Thank you very much for your presentation. It offers some interesting perspectives. Consumers, your customers -- your clients, if you will -- who have been in an accident and have to make a claim become claimants, but consumers and claimants are indeed one and the same.

Mr Baxter: Yes.

Mr Johnson: When you're a consumer and you haven't been in an accident, you want to see your rates kept as low as possible. That's common sense, that people want to see their rates as low as possible. But once you become a claimant and you've been in an accident, you want to see the maximum benefit. At least, you want to get what you think you deserve as a result of having been in an accident.

Mr Baxter: Correct.

Mr Johnson: One statement you make here is that you talk about self-interest groups that are a minority of the insurance public. Claimants are a minority, because for all the people who drive, there are fewer claimants than there are actual drivers. That's common sense.

Mr Baxter: Yes.

Mr Johnson: I think those people who have been in accidents and need rehabilitation and recovery for lost earnings and things like that want to access them as quickly as possible, and they want to maximize that. Under this new system, Bill 164, I understand that there is an improvement over the OMPP. Wouldn't you agree?

Mr Baxter: There are minor improvements, but OMPP does have some of that system covered already.

Mr Johnson: But there are some improvements so that people are going to be served more quickly, and some of the benefits have been increased for lost wages and rehabilitation.

Mr Baxter: Have they necessarily been increased for lost wages?

Mr Johnson: They have. If you look at some of the things that have been improved in the overall bill, there are certain areas where, when people have the right to claim for those things, there are increases, from $600 to $1,000 per week, for example.

Mr Baxter: Those options are presently in the OMPP system.

Mr Johnson: But there have been improvements.

Mr Baxter: Improvements at what cost?

Mr Johnson: That's what I'm getting to. In fact, there are improvements, and I know Mr Phillips offered this question earlier, but if you were to offer the OMPP plan versus the Bill 164 plan at the same cost, wouldn't the claimants be getting a better deal?

Mr Baxter: There would be a question whether claimants could understand Bill 164 enough to see the viability of the factor of whether to purchase that option, even if it is at a nominal cost or an equal cost.

Mr Johnson: But in the final analysis, there are lawyers, there are the insurance companies, there are brokers and then there is the consumer, who may be a claimant if, God help him, he's in an automobile accident. The whole purpose of this process is that we have an opportunity for people who become claimants to access some benefits, and that may be dollars or that may be rehabilitation. To get better benefits: Isn't that what we're all aiming for?

Mr Baxter: Whenever you get any product in life better, you usually pay more. There is no magical gift out there that gives you something better for free.

Mr Johnson: But the whole purpose of this is to make sure that people who are in accidents get benefits, that they get rehabilitated, that they are helped after the accident. Isn't that the point?

Mr Baxter: Which is the purpose of OMPP and that's why it was there. I agree there are minor improvements that could be done to it, but this bill does major improvements at major cost to the consumer, and my job as a broker is to protect the consumer for his costs.

Mr Johnson: But what about the claimants?

Mr Baxter: Also, as a claimant, to make sure he is getting the proper product for affordability.

Mr Johnson: Some of the claimants have said, and in fact at Queen's Park we've heard some of the horror stories about some of the claimants, about the problems they're having today, and this is under the OMPP system. They're not having a good relationship with their insurance company. I think the brokers are doing a reasonable job, but the insurance companies themselves, the ones that actually look after paying out the benefits -- some of these people have told some real horror stories about delays that have gone on for long periods of time, many years, when they've received nothing.

Isn't it the claimant who needs to be looked after immediately following an automobile accident? Don't you think that an improvement in the timeliness of responding to their needs is something that's very valuable and important?

Mr Baxter: I agree, and under OMPP there are regulations that can be enforced to improve those improvements. This does give a better improvement above that, but we have not costed the factor for this improvement. Is the public willing to pay that as a generality, compared to the minor cases that are before the courts today and have not been settled?


Mr Johnson: The consumer who becomes a complainant, or a claimant, rather -- and maybe a complainant if he's not getting serviced properly -- certainly wants to make sure he is going to get the very best benefit he can. When we look at some of the horror stories we've experienced, listening to people who have come forward at Queen's Park recently --

Mr Baxter: If I can reflect on the paragraph right after that, only 5% of the consumers I presently have have purchased increased options.

Mr Mancini: Mr Chairman, I'd like to reserve half of my time for Mr Kormos. Could you please let me know when my three minutes have expired?


Mr Mancini: Six minutes. I've got nine minutes altogether?

The Chair: Six minutes altogether.

Mr Mancini: Mr Baxter, thank you for your brief. It's clear, concise and gets right to the point. I'm interested in what just transpired. Mr Johnson used his entire time this morning to try to indicate to the members of the committee, to yourself, to the viewing public, that the reason the Ontario motorist protection plan isn't good enough and that the reason Bill 164 is being introduced is that they want to give more services, more benefits to the general public. I would say to you and to all who are listening that that's not true. I'd like to quote Mr Mel Swart. Do you know who Mel Swart is?

Mr Baxter: Yes.

Mr Mancini: Mel Swart is a former New Democratic MPP for the Welland-Thorold riding near the St Catharines-Niagara Falls area. Mr Swart and Mr Bob Rae and all of these New Democrats here today ran on an election platform that said, "We will provide the consumers of Ontario with (a) government-owned automobile insurance, (b) cheaper rates, and (c) full tort, full right to sue for both economic and non-economic loss."

They have in fact broken every one of those three promises. Mr Swart says -- not Remo Mancini and the Liberals or Mr Tilson and the Conservatives -- the reason Bill 164 is being introduced -- and I quote, "Bill 164 is before the Legislature only because, after the NDP leader and members had made so much fuss in opposition, they couldn't be seen as doing nothing now." The only reason senior citizens will face higher rates, the only reason young married couples will face higher rates, the only reason people have lost the right to sue for economic loss, the only reason for all of this and the only reason for taking, because of rate increases, anywhere from $200 million to $500 million out of the economy, is so that these five or six ladies and gentlemen can save face within the Ontario New Democratic Party. I say shame on them. Shame on each and every one of you.

Sir, could you please tell me, in your opinion, if the road safety program were in place -- if modest increases such as you've discussed this morning and changes were made to the OMPP, do you think we'd have an affordable and practical package?

Mr Baxter: Yes, I think road safety and graduated licences would improve driver safety, which would reduce the amounts of claims and claimants.

Mr Kormos: Mr Baxter, I've got to tell you what a pleasure it is for me to be once again involved in these insurance wars. I'm a little bit of a veteran, certainly not the veteran that Mel Swart is.

Look, this is what concerns me. Everybody expects puffery and hyperbole from governments. Lord knows we had it from the Liberals and, indeed the Tories before that. The problem is that the peddling of this particular bit of legislation has descended from puffery into outright deceit and dishonesty. The line that somehow benefits are going to be increased is the greatest mistruth. To wit, 90% of net -- that was marvellously borrowed, plagiarized from the workers' compensation system. If you love workers' comp, you'll love Bill 164. I tell you, 90% of net was a hell of a lot less than 80% of gross, which is what the OMPP currently provides by way of wage replacement.

It is incredibly dishonest, it's an outright lie, to suggest that Bill 164 increases benefits for the vast majority of injured people. Their benefits will be reduced, and a simple calculation will substantiate that. It causes me great concern that the government will not speak honestly about that particular issue. It causes me great concern that somehow the government indicates that it's opened the courtroom doors to innocent victims so that they can litigate for pain and suffering, yet every successful litigant is going to have to pay a premium surcharge of $15,000 back to the insurance company. It's going to be the innocent party who's going to have $15,000 taken from his legitimate award to be paid back into the coffers of the insurance industry. It's remarkable that somehow the government can suggest that the courtroom is an adequate place to assess pain and suffering but isn't an adequate place to assess the real economic loss of the most seriously injured.

I am in the remarkable position of having to agree with more than a few of the comments from the insurance industry. Now, that's a remarkable change from some short time ago, but I agree with those people that I would far sooner see Bill 68 tested as it is in the courts now than see Bill 164 imposed, stripping away what few rights were left to innocent accident victims, especially the rights of the most seriously injured.

It's remarkable that it's an NDP government that would steal from the most seriously injured innocent accident victims their right to be compensated. At least OMPP preserved that for them, and the courts now, in Meyer and Dalgliesh, as everybody well knows, are currently testing the effect or impact of the threshold.

It's remarkable and it's shameful that it's an NDP government, which promised to restore innocent accident victims' rights, that would reduce, strip away, steal from them, lock and bolt that courtroom door for ever and ever to the most seriously injured: the paraplegic, the quadriplegic, the head-injured, all those people whose lives effectively were stolen from them on the pavement of a highway. Any remedies that they might have had under OMPP are subsequently stolen from them by a government that said it looked out for the little people. Shame, shame.

The Chair: Mr Kormos, would you like the presenter to reply?

Mr Kormos: Sure, I'd love him to reply.

The Chair: I know he can talk. I know you put a lot of words into --

Mr Owens: His mouth.

The Chair: -- his mouth. Would you mind replying? That'll be the end of the presentation.

Mr Mancini: Who's the Chair, you or Mr Owens?

The Chair: I'm the Chair.

Mr Mancini: Then have him behave.

The Chair: I'm deaf in this ear. Go ahead, sir.

Mr Baxter: In reply to some of his comments, yes, the 90% of net is lower than the 80% of gross until you get into very high wages, supposedly above the $65,000 figure. I have done a calculation on my own wage. I would end up with less if I was in an accident.

Mr Kormos: The poor people are subsidizing the rich; from the New Democrats, of all people.

The Chair: Sir, I'd like to thank you for coming before this committee.

This committee will be recessed until 1:30. It will be the Thunder Bay Chamber of Commerce up first. You can put on that nice, quiet music there.

The committee recessed at 1158.


The committee resumed at 1332.

The Chair: We will resume the standing committee on finance and economic affairs, Bill 164, An Act to amend the Insurance Act and certain other Acts in respect of Automobile Insurance and other Insurance Matters. This is day one on the road, day four in the hearings.


The Chair: I'd like to bring forward the Thunder Bay Chamber of Commerce. If you don't mind, take a seat up here. You're Mr Smith? Do you have any colleagues with you?

Mr Douglas L.A. Smith: No, I do not. I would acknowledge the executive director of the Thunder Bay Chamber of Commerce, Rebecca Johnson, in the audience.

The Chair: Have her come up and sit beside you. I'd like to welcome you to the committee. We have until 2 o'clock. In that period of time, after your presentation, can you leave some time for questions from the committee? If you were sitting here this morning, you saw there were a lot of questions. Introduce yourself and your colleague for the purposes of Hansard. You may begin.

Mr Smith: My name is Douglas Smith, and I am a director with the Thunder Bay Chamber of Commerce. Rebecca Johnson is the executive director of the Thunder Bay Chamber of Commerce.

Good afternoon, Mr Chairman and members of the committee. I have been a director of the Thunder Bay Chamber of Commerce for the past four years, which was that period of time within which the automobile insurance industry moved into the Ontario motorist protection plan, or OMPP as it is known today, following many studies and much investigation by all three political parties.

I would also inform the committee that I am a general insurance broker by profession, owning and operating a family business begun by my father here in Thunder Bay in 1946. Being closely involved with the evolution of the no-fault, first-party OMPP product, I have developed certain views upon the complex issues surrounding automobile insurance within the province of Ontario, but my remarks today will focus upon the concerns relating specifically to the business membership of the Thunder Bay Chamber of Commerce.

Before I begin those remarks, may I first welcome you to the city of Thunder Bay, site of the 1995 World Nordic Ski Championships, and applaud your decision for taking these hearings beyond the city of Toronto. We often feel it is the "province of Toronto" sometimes, rather than the province of Ontario, and we are always concerned about getting the northern voice to you. Also, I want to thank you for considering this regional centre, as represented by the city of Thunder Bay, rather than a smaller community which would have made it much more difficult for the majority of presenters to make travel arrangements.

The Thunder Bay Chamber of Commerce is an organization with approximately 800 members, 75% of which, like myself, are classified as small business. My message to you, on behalf of that membership, is quite straightforward and deals with the affordability issue of automobile insurance, not only to the business community but to consumers in general.

As I am sure you can recall, the driving force behind the automobile insurance industry's move to the first-party system of no-fault insurance was the uncontrolled escalation of costs relating to the deliverance of the product to the consumer. In a five-year period in the early 1980s, the cost of third-party claims and adjustment expenses rose 16.5% each year. This created the serious imbalance between the cost of settling claims and insurance premiums. Automobile insurers experienced substantial losses and increased rates sharply. The overall marketplace tightened, resulting in the growth of the Facility Association, of course being the industry's market of last resort.

Consumers quickly forgot about any earlier period of affordable premiums and pressured the government to act. With the average annual automobile insurance premium in the mid-1980s reaching between $700 and $800, it became apparent that fundamental changes had to occur within the industry, hence the evolution of the Ontario motorist protection plan, which commenced in June 1990. That fundamental change was from the adversarial third-party system to the rehabilitation/income-replacement first-party system, known as Bill 68.

One of the significant requirements within Bill 68 was a review of how the new product was doing at the two-year period following its introduction; that would be the time frame we are now in. That review was to include cost control concerns, particularly in rehabilitation services, to ensure not only fairness of benefits available but also continued affordability.

Given, now, the government's attempt to introduce Bill 164 and again significantly alter and complicate the existing OMPP product, the main concern of the Thunder Bay Chamber of Commerce membership continues to be stable and predictable pricing and its environment for automobile insurance, in order that premiums remain affordable and the product remains competitively available. We recognize that the current system, as represented by the Ontario motorist protection plan, can be and must be enhanced, but changes must only be made with an eye to additional benefits that consumers both want and can afford. It is the view of the Thunder Bay Chamber of Commerce that a healthy, competitive industry is the best way to obtain such results.

At this time, I would focus my remarks upon the projected estimates of automobile insurance costs within Bill 164. The Mercer study, as done at the request of the government, and the Wyatt Co report, as commissioned by the insurance industry, both illustrate the large uncertainty as to what actual cost increases will prove to be. The Mercer study acknowledges that actual costs may vary significantly from its estimates, which were politically stated by the Minister of Financial Institutions, responsible for automobile insurance, as being a minimum of 4%. It is to be noted that the minister, appearing on a Toronto radio talk show January 28, when asked by the host of the show as to the possibility of premium increases being higher than 4%, responded by stating that the government actuarial study did not reflect accurate costs of the operation of a system and that theoretically premiums could rise higher. The insurance industry's actuarial Wyatt report indicates that premium increases would be closer to 20% with the incorporation of the complex changes within Bill 164.

It is the very real concern of the Thunder Bay Chamber of Commerce that any increase of automobile insurance premiums cannot be currently absorbed, especially by small business, as the community struggles with stagnant growth and revenues but overall increased operating expenses. If automobile insurance premiums again begin to spiral, with businesses at the same time now having to handle additional recent corporate expenses like the employer health tax and the government sales tax, many, if not most, firms will find it very difficult as they struggle for their economic survival.

It is our message to you today that your decision on Bill 164 should not be driven by political ideology but rather stay focused upon what would be the reality of any cost increases to the consumers. Quite simply, nothing has changed since OMPP came to be. In fact, we are all aware that economic conditions are more adverse than two years ago. The consumers of automobile insurance cannot afford to pay much more than what they are paying now.

May I conclude my remarks on Bill 164 to you today, on behalf of the Thunder Bay Chamber of Commerce, by reaffirming that in order to maximize product benefits to the automobile consumer, a healthy competitive general insurance industry, both nationally and provincially, is required. In this way, service and product innovation will best serve the evolving needs of Ontario drivers.


As a brief overview, I would remind the committee that Canada's property and casualty insurance industry currently employs about 118,000, of whom approximately 47,500, or 40%, work in Ontario. Total industry employment is split about evenly between insurance companies on the one hand and independent agents, brokers and adjustors on the other.

Total assets in Canada for the industry were approximately $32 billion in 1991, while current industry investment in the province of Ontario was about $9 billion. In 1991, total premium income in Canada was $14.5 billion, of which $7.2 billion came from business in Ontario. Automobile insurance in this province represents 60% of this $7.2 billion, or approximately $4.3 billion.

The point to be made is that the automobile insurance industry is a vital economic component of our province and must be allowed to operate within a predictable and stable environment if the consumer is to realize optimal benefits of coverage and costs.

In September 1990, the current government announced its plan to introduce public automobile insurance in Ontario. In September 1991, after much study, the government announced that it would not introduce public automobile insurance because it would be too expensive and disruptive to the province's economy. The main reason for abandoning the government-run plan was a projected displacement of 22,000 jobs, mostly being female, the withdrawal of investment from the province and the projected $1.6 billion in startup costs that would have been required. The bottom line, given the above, was that automobile insurance premiums would not be reduced to the consumer. Indeed, the Premier of the province stated that the issue of government-run automobile insurance would not be revisited again.

Given that this decision has clearly been made, it is the position of the Thunder Bay Chamber of Commerce that the government minimize its involvement in the product if the results of such involvement would be a further escalation in premiums to the consumer, which cannot be borne during these adverse economic times. Rather, the government could play an effective role with the industry by concentrating on issues like graduated licensing, road safety, physical repairs and automobile design.

Allow a reasonable rate of return to the industry, which the Coulter Osborne study in 1986 stated was approximately 12.5%, and then the free enterprise market forces will continue to serve the best interest of the consumer. The government is requested to enhance the product of automobile insurance within the existing structure of the Ontario motorist protection plan if it is determined that any of the amendments considered within the new legislation as represented by Bill 164 would result in increased costs or eventual product availability.

On behalf of the Thunder Bay Chamber of Commerce, I respectfully submit this report.

The Chair: Thank you. Mr Johnson.

Mr Johnson: At the very beginning of your submission, you mentioned that 75% of your 800 members are small business people. Is that correct?

Mr Smith: That's right.

Mr Johnson: I was wondering if you'd had a chance to review the government amendment with regard to the withdrawal provision, or if you had any comments on this.

Mr Smith: No, I haven't, to be honest.

Mr Johnson: Then let's go on with something else. With regard to self-employed people, Bill 164 has tried to take into account the special needs and difficulties that self-employed individuals have, especially with regard to those individuals who may have the misfortune of being involved in an automobile accident. Some of the changes that take place under Bill 164 are such that, for example, there's a longer averaging period -- three years -- to address the volatility of income; as you know, income can change a lot in a private business over a period of time. It also offers the alternative of agreeing in advance with the insurer the level of income replacement that might be required if you should not be able to do your job; also, compensation for special business expenses incurred as a result of the particular accident. These are improvements over the OMPP plan, and I was just wondering what you think about that for self-employed businesspeople who have those.

Mr Smith: To respond to that, the Thunder Bay Chamber of Commerce's position has to incorporate all of its membership, and I would say it's the escalation of premiums in the competitive marketplace that we're most concerned about. As an insurance broker, clearly those are areas of enhancement that are required within the product. Certainly the product is evolving, as when OMPP came to be two years ago. That is why, after a two-year period, it has to be addressed and enhanced where possible, and certainly those are areas of enhancement that could be considered, yes.

Mr Johnson: So self-employed people do have special needs that need to be addressed; however they're addressed, they need to be addressed.

Mr Smith: That's right.

Mr Johnson: I talked about this earlier this morning. When we talk about the benefits versus the cost ratio, I think it's important to note that, especially for people who become disabled permanently or who need rehabilitation, there used to be a cap of $500,000, and also a termination after a period of time -- I think it was 10 years -- and those caps have been removed. What that means is that those people who have suffered a very debilitating mishap will now be continually compensated after those times. That means that if people who are, say, 20 years old, after 10 or 15 years, depending on exactly what the cap is, will, if they've gone over that $500,000 mark that right now the OMPP limits them to, or the 10 years, then they no longer have any kind of compensation. Do you not see that as an improvement?

Mr Smith: That is an improvement. Again, the bottom line from a chamber perspective is the cost of those improvements. The average premium in the province now I understand to be $900. If that is the case, meeting expenses is becoming exceedingly difficult for small business and business in general.

Mr Johnson: I know that when I was a kid, I paid about $600. When I was about 16, I paid about $600 for automobile insurance, and now I still pay $600 a year, but that's a different point altogether.

The Chair: Mr Klopp.

Mr Klopp: I'll stay on the same kind of discussion. We're proposing a lot of benefits changes in this bill. Paul's mentioned a couple. On page 2, you've made a comment that there needs to be some other changes. In all fairness, you mentioned the one about the self-employed. Are there any others that you are happy are proposed in this bill, from the indexation to better income for students if they are in an unfortunate accident? Can you make a comment on those?

Mr Smith: The only comment I would make there is the complexity of what is being offered within that bill. At this point in time, with no-fault as it is, again it comes down to overall premiums. All of that can be made available. It's a question of, will the consumer pay for it? I'm saying to you, from my perspective, that the consumer is very much at a point now where any higher increases would be very difficult, whether you make use of brokers offering optional coverages to provide enhancements, or deal with enhancements in another way so the industry can respond to it and price it, because if it's not priced properly then there would be other problems within the industry.

The Chair: Mr Phillips.

Mr Phillips: I appreciate the chamber's presentation. I think you've given us some good thought here. Just for your own information, we in the opposition are having difficulty in understanding the priorities of the government. On the one hand, as you know, hospitals this year will be getting no increase: 0% increase this year, 0% increase next year, frozen. They were promised a 2% increase, which would have cost about $140 million to the hospitals, but they're frozen because the government has no money. I guess we can understand how they may arrive at that conclusion.

But here we have, on the other hand, a government saying to the people of Ontario -- and they have no choice; if you want to drive a car, and most people who are in the workforce or retired and want to get around need to drive a car. The minimum this is going to take out of the pockets of the people of Ontario is $200 million; more money out of the pockets of the people of Ontario than it would have cost for the government to do what they said they were going to do on the hospitals.

Actually, if the industry estimates are right, it could take as much as $800 million out of the economy, if that 20% increase is right. Now to put a dimension on that, that's the same as taking as much money out of the economy as raising the provincial sales tax from 8% to 9%. So that's what we're talking about here; an enormous amount of buying power, if you will, disposable income, out of the hands of people.

But the government members don't seem to be able to realize that there is a direct impact. As I say, on the one hand they're saying to hospitals, "We don't have the money." On the other hand they're saying, "But we do have have the wherewithal to essentially take your taxes up" -- because this is almost like a regressive tax; you've got buy this insurance -- by at least $200 million by their own estimates, industry believing $800 million.


The reason I go through all of this is that I share the chamber's concern about the economy right now. It is not at all clear that we're out of the recession. By even the most optimistic estimates, the Ontario economy at the end of 1993 will be lower than it was at the end of 1989. So even with the modest recovery plan, we'll still have an economy below 1989.

My question to the chamber is this: If the government proceeds with this and if it takes a minimum of $200 million out of the economy, have you any feeling of what that may do to helping the economic recovery we're all hoping for?

Mr Smith: From a general economic perspective, I don't think it takes much imagination to appreciate that spiralling costs -- this is just another economic nail into a lot of businesses' coffins. Businesses are very much struggling right now to keep their nostrils above water, and any increased expenses from programs like automobile insurance just bring them that much closer to the brink.

Mr Phillips: From our perspective, we're having difficulty knowing why this is a priority for the government. In fact, if I were a government member, I'd be asking myself, "Do we really want to annoy all the people we're going to annoy?" Because believe me, I guarantee you, when those bills go out to the people and they see their premiums going up as a result of this bill, you will get hundreds of phone calls. I guarantee it. I know what will happen. I can't understand the priority of the government wanting to proceed with this bill. And it has a direct economic impact. You will run into all sorts of people who will say, "You didn't have the money to do the things you promised me in health care, in education, in community living," but you do have the wherewithal to pass a bill that's going to take out of the pockets of the people of Ontario significant sums of money.

My last question to the chamber: You people are close to the economic heartbeat. What is the current state of the economy, in your mind, in this area, and how are your members looking ahead over the next two to three years about the economy? Are they expecting a robust recovery? Are we well into a strong recovery? Or should we expect that we're going to have a slow, somewhat painful climb out of the recession?

Ms Rebecca Johnson: That's a good question, Gerry. A general comment is what I can provide for you. If you ask the average businessperson right now, I would say his gut feeling would be that he's managing. That's what they're doing: They're managing. If you talk to some businesspeople, they're not even taking home what their employees are taking home at the end of the business day. As Doug has already alluded to, they are just coping and that's all. Any more taxes of any kind, it doesn't matter what it is -- municipal, provincial or federal -- they cannot absorb. I can't say that to you any more strongly: They cannot absorb any more. It's at the point, for a lot of businesses right now, of, "Do I stay in business or do I go out?" That's probably what the average businessperson in our community would say.

There are some businesses that are doing extremely well. We are a northwestern Ontario hub, so a lot of people come into our community to do their business and some of our businesses do well because of that. That probably gives us an edge in a lot of things: in retail, in some of our small manufacturing etc. We've also been able to provide some export commodities that have done very well in the international market.

We are, of course, in a pulp and paper/forestry industry situation. If you read the papers you'll know that, as of today, it's still unknown where Provincial Paper is going to go. Our other forest products and industries are also on the brink of, "We don't know where it's going to go." If we look at the total impact of what happens if any of those close, whether it be Provincial or Canadian Pacific Forest Products Ltd or Abitibi, we are in dire straits. There is no question that we are on the brink of -- I don't know what we will do at that point in time. I guess I have to look very positively, that we will do something; there is no question that this community will rally around, and we will do something.

But make no bones about it, Thunder Bay is in a managing position. I can't lay it any stronger than that. The little businessperson out there is having a tough go of it.

The Chair: Mr Tilson.

Mr Tilson: Thank you for your presentation. I've heard your organization give a number of presentations the last number of times I happen to have been chosen to come here. I will say that in spite of all the adversity you have in this area, it always amazes me how you can find something positive to say about how small business is surviving. I congratulate you.

I have one question with respect to OHIP. Under this bill, OHIP will continue to pay all medical costs, and there's been some expression of fear that the costs will increase substantially under this bill because of the benefit packages that are being set up, and that this in turn will have a rather devastating effect on OHIP. I don't know whether you've had a chance to look at any of the papers or articles that have commented on that subject, and whether you, from your perspective in Thunder Bay, have any thoughts on that area.

Mr Smith: The issue from the industry's perspective is the unlimited cap. It's very difficult to price anything that's unlimited. I think there's a whole evolution there, as OHIP and the Workers' Compensation Board etc, and those problems feed their way into the insurance industry. Again, being able to accurately cost that and the implications if it's not accurately costed are really the concern, because the market will tighten, Facility will grow, premiums will go up and we're back into the problems we had in the mid-1980s.

Mr Tilson: But not only insurance rates could go up, but OHIP rates could go up.

Mr Smith: Yes.

Mr Tilson: Mr Chairman, the Progressive Conservative caucus would yield the rest of its time on this delegation to Mr Kormos.

Mr Kormos: How much time do I have, Chair?

The Chair: About two minutes.

Mr Kormos: I want to tell you folks again: I appreciate the hospitality Thunder Bay has shown to all of us, and I appreciate you being here.

One of the problems I have -- you know I wasn't crazy about Bill 68, the OMPP. A whole lot of us thought that the restriction on the right to full compensation for innocent victims was too rigid. It was interesting, because when the minister was making his opening comments he referred to but one court decision, Meyer, from the London area, which was a very rigid approach to the threshold. He neglected to refer to the Dagliesh decision, January 12 of this year, coming out of London, which was a far more tolerable definition of threshold. It strikes me as obvious, then, that the government, in determining this weird, wacko, unconscionable legislation, which, strangely, nobody's asked for -- people from across the province are saying, "Who was it?" There hasn't been a phone call, a letter, not a note in the mail, saying to the government, "Restrict the right to sue for innocent accident victims even further than what the Liberals did."

Let's talk about small business people. Let's talk about a small business person, because my family were small business people all my life -- my grandparents as well -- who often take modest draws from their business; whose equity, whose future, whose pension plan is in that business; who, if they're disabled from making that business work because they're struck down by a drunk or a careless or a reckless or a negligent driver. Their income is oh-so-modest; that's what their no-fault benefits are based on. Mind you, the no-fault benefits are going to be lower under this scheme then they were even under the Liberals. The benefits are lower.

You're talking about a piece of legislation that is an attack on entrepreneurs and small business people, because it will forbid you, will say you can't go to a courtroom and demonstrate to a judge or a jury that your business and your equity would have been what it could have been, had it not been stolen from you by a government that doesn't care about small business people and by a drunk driver who couldn't give a tinker's dam.

I say to you as spokespeople for entrepreneurs and for small business people, legislation that takes away from an innocent victim the right to seek justice is the last thing -- I know that not all of you voted for the New Democrats. I know that. I saw the poll results. But notwithstanding that --

The Chair: Mr Kormos, you have 15 seconds.

Mr Kormos: I'd have had longer if you hadn't interrupted here.

You know that even for those who didn't vote for the New Democrats, this was the last thing in the world they expected from the New Democrats. Had the New Democrats run on Bill 164 as a policy in the last campaign, they wouldn't have elected enough people to form --

The Chair: I'm sorry. Time.

Mr Kormos: Well, don't interrupt me next time.

The Chair: I'd like to thank you for coming before this committee. Did you have an answer for him?


The Chair: Okay, thank you.



The Chair: Is Mr Bert Alcock here? I believe he's maybe delayed on his flight coming in from Kenora, so we'll call on the Thunder Bay Insurance Women's Association. If you would come forward now. Do you have any other colleagues with you?

Ms Marjatta A. Light: No, sir, I don't.

The Chair: Okay, fine. I'd like to welcome you to the standing committee on finance and economic affairs. We're on until 2:30. In that period of time if you can leave some time at the end, as you see the members are very anxious to ask questions and make statements. You may begin.

Ms Light: Good afternoon, Mr Chairman and members of the committee. My name is Marjatta Light. I've been an insurance broker here in Thunder Bay for 14 years. Over the years, I've served on the boards of several insurance organizations, including the Thunder Bay Insurance Women's Association, the Thunder Bay Insurance Brokers Association and Insurance Institute of Canada. I've also been an instructor and speaker at local insurance courses.

I am not here today representing my employer or any insurance company. I am here today because of my concern about the impact of Bill 164 on seniors and women who represent a portion of my customers.

Some years back before the Ontario motorist protection plan, I did not particularly like contacting my clients at auto insurance renewal time. It bothered me to have to tell them that there had been another double-digit increase in their premium again. Most people were very upset and angry as they hadn't had any accidents, but their insurance rates were escalating a lot faster than their pay cheques.

There were also some insurance companies that became insolvent, and people that had paid for auto insurance already, had to be changed to different carriers and repay the premiums in order to continue protection.

But then came OMPP. It has brought stability to both premiums and the auto insurance marketplace. It has been a pleasure to contact my customers at renewal time the last few years, as premiums have stayed about the same, and in fact most of my clients have enjoyed premium decreases. The market for auto insurance has never been better since I've been in this industry. Difficulties that used to be in the system for placing newly licensed drivers or those with minor infractions are no longer there. I wholeheartedly feel the consumer is being better served.

But I am very concerned about the changes to be made by Bill 164 and their impact on the present system, especially the impact on retirees and women with low or no income. Under this bill, they will be subsidizing higher income policyholders. While both will pay the same, the low-income policyholder will not qualify for the maximum benefits. In fact, if I correctly understand this bill, those insureds earning less than $40,000 or $45,000 a year will actually receive lower benefits than under OMPP.

OMPP in its present state has provision to increase the income replacement benefits. Those earning more than $39,000 a year are able to purchase more coverage as an option. Those people earning more than $39,000 a year can better afford to pay the additional costs than seniors or women with lower incomes. The opportunity to buy additional income replacement, increased funeral and death benefits and care giver benefits is working. It is fairer to have those insureds requiring the additional coverage pay for these additional benefits, rather than place the cost on everyone.

I am also very concerned that we may be turning the clock back instead of going forward with OMPP. The Ontario driving population could no longer afford the law suits and costs associated with the old system prior to the implementation of OMPP. Many studies were done and much time was spent trying to ascertain what to do to ensure that injured parties were looked after, but yet the costs were controlled.

Will we be going back to Ontario drivers financing more paper pushing and legal costs? Will we be gaining anything by bringing back the right to sue for pain and suffering? The intent of OMPP was to channel moneys to the claimants by a system that was simple and direct, not complex and costly.

I do acknowledge that there are some situations that must be addressed and changes that have to be made to OMPP. It was known at the time OMPP was legislated that changes would probably have to be made in some areas and provision was put into the bill to make these changes, but until the system was up and running for a while, the areas of change were not known.

I believe we should be trying to modify and improve OMPP, rather than passing new legislation which will cause premiums to increase and create hardship for people on fixed incomes.

The insurance industry has suggested a schedule of benefits for pain and suffering, capped indexation of certain benefits and provision for excess economic loss, taking into consideration those who are self-employed.

Graduated licensing has proved a workable solution in other countries to protect the lives of newly licensed drivers, and road safety can no longer be put on the back burner. Government is appointed by the people to provide for our safety and this government's legacy could be to put measures in place to ensure that job gets done.

Government and the insurance industry, with input from consumers using the product, should work together as partners to make any necessary changes to OMPP.

I strongly feel that Bill 164, with its complexity and certainly its increased cost, is not the answer. Passing laws makes it harder to apply change if it is the wrong thing to do. However, OMPP has provisions already in it to make improvements that are warranted and perhaps that is the way we should be going.

On wading through the new bill, I note there is some indication that the present classification system is to be changed. Again, if this proceeds, seniors and women will bear the brunt of the increased cost. The present classification system ensures that those driver groups with the most frequency and severity of auto insurance losses pay more, while those groups with less severity and frequency pay less. To me, that seems fair.

If we proceed with changing this system, the premiums required will have to be redistributed, and those groups that pay more now will pay less. However, those groups such as seniors and young women will pay substantially more.

The present classification system has been the topic of controversy many times. However, everyone who has reviewed and delved into the situation has concluded that indeed it was fairer to charge those groups at higher risk more. Perhaps, as a progressive society, the present system's use of age, sex and marital status is a little uncomfortable, but it is a tried and proved system that is fair.

I've heard the argument that if auto insurance can't class this way, then shouldn't a 60-year-old man pay the same for life insurance as a 25-year-old man? Would that be fair? We would all probably quickly say no. Why? Because actuarially it makes sense. Well, actuarially, the present auto insurance classification system also makes sense. That's why those who previously reviewed this matter, after much thought and consideration, left it in place.

Insurance is required by society to cover economic loss. Property insurance puts you back in the same place you were in prior to the loss; no more, no less. Auto insurance was in the past perceived as giving dividends for trumped-up claims, but we can't afford to continue paying the price.

In these tough economic times, the auto insurance policyholders' budgets are strained to the limit. They do not want to pay more for coverages most do not require. They have not asked for these changes. In fact, the satisfaction rate is high with the present OMPP product. I see a lot fewer complaints than some years back. Claims are looked after on a fair and timely basis. For those who feel there are gaps in coverage as it pertains to their case, it is imperative that they let the government board know and the insurance industry know where the deficiencies are so they can be properly addressed.

I'm sure everyone agrees that legitimate claims should be handled with competence and fairness, but can Ontario drivers afford to pay for all the invisible aches and pains? The workers' compensation plan in this province is in a state of total crisis; its very viability is at stake. Is that where we want to take auto insurance in this province? I think not.

Consumers have not asked for these changes, nor are they prepared to pay for them. Let's fill the gaps there are in OMPP and go forward from here.

I'd like to thank you very much for the opportunity to appear before you here today. I would be pleased to answer any questions pertaining to my presentation.


Mr Mancini: I would like to thank the witness, Ms Light, for her brief. She's made so many good points, I'm not quite sure where I should start. I do agree with your statement that Bill 164, with its complexity, is going to increase costs because it is going to take a big room full of legal experts and others to go through these 68 pages of regulations that the government has put together to find out just exactly what you're entitled to if you become an accident victim or are involved in an accident. Why they would want to turn the Ontario insurance system into another Workers' Compensation Board is beyond me.

We have placed these questions in committee to the government members. There's not a single one of these ladies and gentlemen with the government who have joined us who has been able to explain why we need 68 pages of regulations, when before, 18 pages seemed to be enough. I want to --

Mr Owens: Hmph.

Mr Mancini: The parliamentary assistant snickers, but maybe he can afford the $200 rate increase --

Mr Owens: Give me a break.

Mr Mancini: -- but the small business people here in Thunder Bay cannot afford it; the senior citizens we know cannot afford it.

Mr Owens: What did you leave out of your regulations of 18 pages?

The Chair: Mr Owens, Mr Mancini has the floor. Mr Mancini, don't recognize Mr Owens. You have the floor.

Mr Mancini: Well then, you keep him in line.


Mr Mancini: Who's the Chair, Mr Owens or you?

The Chair: Go ahead, Mr Mancini. You're losing time.

Mr Mancini: I want the time added back for the interruption.

The Chair: Agreed.

Mr Mancini: Thank you. You stated earlier in your brief, before I was interrupted, that seniors would pay more. Today, I placed on the record some of the figures that the industry has generated as to how much more seniors will pay. Do you think in Toronto it's going to be fair for seniors to pay 24% more? Do you think it's going to be fair in Windsor that they pay 23% more, in Ottawa 22% more, in Sudbury region and other parts of northern Ontario over 21% more? Do you think that's a fair tradeoff in this bill?

Ms Light: No sir, I don't think it's a fair tradeoff.

Mr Mancini: I think you, better than anyone else, has pointed out to this committee -- and I wanted the government members to pay attention when you were saying that -- what it will do to female drivers, but they don't want to listen; they don't want to believe these statistics. I want to place on the record what will happen to rates that women pay for insurance when gender is eliminated as a rating factor. In Toronto, rates will go up 49%, in Sudbury 51%, in Windsor 50% and in Ottawa 50%. You and I know that women make less in the workplace than men. Is that not true?

Ms Light: True.

Mr Mancini: Why would any government want to increase the rates that women pay for insurance when they already have less disposable income? Is there any reason you could give me that you have found in Bill 164 that would help anyone to come to these conclusions?

Ms Light: No, sir, I don't.

Mr Mancini: Thank you.

Mr Phillips: Like my colleague, I appreciate your comments. As I said to an earlier speaker, and you may not have been here, we're having difficulty understanding -- I think you have a paragraph in here that sort of captured it for me -- why they are proceeding with this, why in the world, when in my opinion people are relatively satisfied with insurance.

There's a whole bunch of other things out there that require all our attention: jobs; getting the economy going; keeping our taxes down; finding better ways to service people. Yet here we are about to approve a piece of legislation that even by the government's own figures will take $200 million out of the pockets of the people of Ontario, and if the industry's right, it's closer to $800 million.

My question to you is the one I asked another witness, and that is, if in your business you had the current package to offer your clients or this revised package with a rate 20% higher, which of those two products do you think your clients would pick?

Ms Light: I could probably say 95% of my clients would take the OMPP product. They don't want to hear about auto insurance rate increases any more; they've got other things on their minds. Auto insurance to them is something they don't want to pay in the first place.

Mr Phillips: My final question, Mr Chair. When the phone rings, as it will, this bill's passed, somebody's insurance needs renewing, you send out their new invoice and just hope the cheque comes back in, but normally, I think, if there's a rate increase the phone rings probably about 48 hours after you mail it. When that phone rings and it's a senior, 65 years of age, phoning to say, "Why has my premium gone up 25%," how will you respond to that phone call?

Ms Light: I'll have to be honest. I'll have to say, "I tried to stop the government from doing this but they went ahead with it anyway."

The Chair: Mr Tilson.

Mr Tilson: It's ironic that it's this party that has claimed it has always stood up for the women of this province, and yet it's as if it's out to get them. We have the increases, the general increases which have been guaranteed to us by the insurance industry, and with this particular move to in fact raise the premiums of women alone, just because it's going to be fair, it's going to make it fair with everyone, even though statistics show particularly younger women have fewer accidents than younger men and so on. All the arguments that you gave. It's almost as if it's out to do the opposite of what the party platform has been putting forward. It doesn't make sense.

The question I have to you is whether you can give us any information from a local perspective as to the cost that it might be to this particular area. There's been evidence given to the hearings that there is going to be an increase in costs because of the benefits, perhaps education, perhaps more mediation, perhaps more staff, perhaps -- I'm trying to think of other examples that have been given -- but, in general, the insurance industry says that the cost is going to be substantial. Can you tell us from your own observation or any financial forecast that you have to the insurance industry in this particular area as to what that might be here?

Ms Light: No, Mr Tilson, I can't answer you because we don't know. What you do is you set rates for the future all the time and you have to make sure you're bringing in enough premium to pay out the claims, but you don't know ahead of time, and a lot of things in this bill, how are you going to cost it?

Mr Tilson: Yes.

Ms Light: So there is no way. There have been all kinds of reports, I've seen the figures, but who knows? You just don't know.

Mr Tilson: Mr Chairman, the Conservatives yield the rest of their time on this question to Mr Kormos.

Mr Kormos: How much time do I have, Chair? Quickly. When the big hand's on 12 --

The Chair: Four minutes.

Mr Kormos: Four minutes. Thank you kindly. I want to thank you for the opportunity to hear views. Now look, this struggle has been going on for a long time. I've got to tell you, though, my assessment of what this Bill 164 is, sometimes not entirely in jest, I call it "Made in Bucharest." It's that sort of East German pre-liberation mentality that really constituted a victory of the guilty driver, of the drunk driver, of the careless driver over the innocent accident victim.

You know that I wasn't entirely happy, nor were New Democrats entirely happy, with the restriction on the right to be fully compensated under Bill 68. The New Democrats campaigned -- and I'm confident you'll recall the months before September of 1990 when they campaigned right here in Thunder Bay, across the north -- on a promise to increase the rights of innocent victims and effectively reduce auto insurance premiums. However weird and wonderful it may seem, here's Ontario's first NDP government that's going to be leaving behind the legacy of having increased premiums and reduced benefits.

You recall as a broker and being active in the industry -- and sometimes I wonder whether there isn't some sort of Stalinist ghost that rewrites history there at Queen's Park because people seem to have forgotten the experiences with Osborne, one of the most significant inquiries, and Osborne had very little good to say about no fault. He indicated that it was a one-time-only savings.

Indeed Kruger, Ontario Automobile Insurance Board -- I gnawed my teeth as un enfant terrible, I admit, politician at the Kruger inquiry where Kruger told, after millions and millions of dollars of taxpayers' money, the government of the day that no-fault, the very kind that this New Democratic Party government, no-fault -- why, it's nobody's fault, which is why everybody suffers equally -- is but a one-time-only saving.


Have you had any opportunity to find out exactly who it is that this government is accommodating with Bill 164? I'm in contact with a whole lot of people who are really ticked off about insurance and premiums and benefits, but I haven't heard one of them call for an increase in premiums, for a reduction in benefits and for even more restricted access to the courts. It certainly can't be working people because they're being forced to access their sickness and accident plans before they become entitled to any no-fault benefits. Small business people are really on the hook now, aren't they, because their sickness and accident plans and LTD plans are being accessed and their premiums are going to go up too. This is a real attack --

The Chair: You have one minute to get to your question.

Mr Kormos: There's a question here, Chair, just --

The Chair: I've been trying to find it.

Mr Kormos: Well, I know, you have difficulty doing that. Who was it who solicited this attack on working people? Who is it that solicited this attack on seniors, on students, on women as victims? Can you identify any groups that are happy with the government's proposal?

Ms Light: No, sir, I don't know of anyone. All I've been getting from my customers is, they don't want this and they just want to keep things going the way it's going right now. That's the attitude I'm getting from them. I'm here to convey that to you: They do not want this and they will not pay the premiums for it.

Mr Kormos: Is there a committee that meets in the Premier's office every Monday morning to say, "Who are we going to tick off this week?" Drivers this week and victims next? Beats me. Let's keep on doing it, I agree with you. Thank you kindly.

The Chair: Thank you, Mr Kormos. Now we go on to Mr Winninger.

Mr Kormos: Better than Bill 164.

Mr Winninger: Actually, Mr Kormos's question prompted me to ask this question: Do you think your consumers would like to return to the pre-OMPP regime of the 1980s when their premiums were escalating out of sight?

Ms Light: No.

Mr Winninger: Okay. Secondly, I believe it was Mr Mancini who suggested that because you have a regulation that's 70 pages long as opposed to 17 pages long it's necessarily more complex. Do you not agree that the 17-page regulation under the OMPP was complex, if you want to call such a document complex?

Ms Light: I think any time when a new piece of legislation comes out it's going to be complex, but I found this extra complex. I teach insurance courses. I'm looking at the Insurance Act here, I'm looking at this bill, and I don't understand all --

Mr Winninger: In fact, as a lawyer what I find is that sometimes a 70-page document can spell out the contingencies in a lot clearer fashion than a 17-page document where insurance brokers and agents are rubbing their heads trying to figure out what it means.

Anyway, loss of earnings: It's been suggested that 80% of gross is always higher than 90% of net, and I would put it to you and I think you well acknowledge in your paper that it's only in a certain income range --

Mr Kormos: Yes, working people.

Mr Winninger: -- in only a certain segment -- well, you said "all people."

Mr Kormos: Working people.

Mr Winninger: In a certain segment of the population the difference may be marginal, but I'm asking you --

Mr Kormos: Working people. People you're supposed to be representing.

Mr Winninger: -- I'm asking you whether you don't agree that --

The Chair: Okay. I cut all the mikes out.

Mr Winninger: Then I'll have to get extra time.

The Chair: No, no. Hey, wait a minute. I think, Peter, that nobody interrupted you --

Mr Kormos: Mr Kormos.

The Chair: Mr Kormos. So I think the courtesy should be given to the member there also.

Mr Mancini: How come you don't say that to the parliamentary assistant when he interrupts all the time?

The Chair: Mr Winninger.

Mr Winninger: I think you would agree that it's in a certain income range where the difference is marginal, but I would put it to you that with indexation that marginal difference will, in the very near future under this regime, be eliminated, and that's what the actuaries have suggested.

As far as ratings for young people are concerned, you deal with all components of the auto insurance public, right? So you deal with young people, you deal with single, unmarried males, the whole works. You suggested that we should maintain the status quo rather than move towards a uniform class category -- that's what I understood -- and yet my constituents who call me want to pay their fair share.

So that if I go to a senior citizen and say, "Do you think John Doe down the street, who has never had an accident just like you, should be paying more than you just because he isn't married and happens to be younger than you?" And he says to me: "No. I think if he's never had an accident then he should be paying exactly what I am. Whether the person is of a different sex or different age, married or unmarried, we judge people by their accident experience."

I'm a little surprised that you would say, "Well, this bill disadvantages seniors or women," when we're looking for the best solution for all of the consumer public.

Ms Light: What will have to happen, though, is you're going to still need the same amount of premiums, so it's going to have to be redistributed and someone's going to have to pay the one that's taken away.

But I get this argument at home all the time. I have a 20-year-old son and a 17-year-old daughter, and the daughter pays a lot less for insurance. But I'm lucky; my son's studying to be an actuary, so I told him we'll have this conversation in five years again and we'll see who's correct and who's not.

Mr Winninger: But the main thing is that bad drivers don't benefit from the system, and you do agree that merely by redistributing the premiums, we're not giving unfair advantage to bad drivers over good drivers?

Ms Light: You see, what happens is, we see it all the time, the frequency and severity, the statistics are there that that younger-aged category has it, and I believe sometimes it's a deterrent, the high premiums, as well, because they know that they'll go even higher if they continue to get driving infractions. So in some ways that's a deterrent, but it has been proven and continues to be proven that there are certain groups that are more high risk than others, and they should be taking more of the load.

Mr Winninger: I agree with you on that, and you seem to suggest that we should maintain the status quo with only a few changes. I think we need to go a lot further than that, particularly because there are a number of inequities that have to be addressed. But I would ask you, what are the small changes that you think should be made?

Ms Light: I believe, in respect to the self-employed, there is a gap in coverage. That has to be addressed.

Mr Winninger: You mean under the existing OMPP?

Ms Light: Yes. Certainly, there is. I don't know all the specifics and I'm not prepared to answer all the specifics; I didn't think I'd have to answer on it. But certainly there are deficiencies, and we all knew when OMPP was brought in that there were going to be some things that, once it started working, would have to be addressed, and those deficiencies will have to be addressed as they come along.

Mr Winninger: I guess you are aware that some of the deficiencies under the existing OMPP are addressed in Bill 164. For example, a small business, self-employed person would have his or her earnings possibly averaged over three years, to account for cycles in the economy and dips in income. At the same time, a self-employed person can elect, under section 63 of the regulation, to specify a fixed loss of earnings that will apply if he or she has the misfortune to be in an accident, an amount that will cover the factor that the operator of the business might not be able to operate the business and might have to hire a replacement person. It would also cover the expenses of running a business while the person is incapable of doing so. These are the kind of improvements over the OMPP that Bill 164 --

The Chair: Mr Winninger, your time is up.



The Chair: The next group to come forward is the Ontario March of Dimes. I'd like to welcome you here to the standing committee on finance and economic affairs. If anybody's looking at the schedule, we're ahead because of one participant who hasn't come in from Kenora yet, I guess with the icing going on on the planes. I know we were an hour late getting out of Toronto. I guess Mr Eddy over there had the same problem coming up today, but he said there was no hot and cold water, even, in the plane. I guess everything was frozen up.

Anyhow, if you don't mind starting, we have until 3 o'clock.

Mr Terry Bellavance: Thank you very much. My name is Terry Bellavance. I'm regional director with the Thunder Bay region of the March of Dimes.

The Ontario March of Dimes welcomes this opportunity to present its brief to the standing committee on finance and economic affairs. We thank the government of Ontario for inviting our response to the proposed amendments of certain acts respecting insurance as contained in Bill 164.

The March of Dimes has addressed this issue on two previous occasions. In April 1986, a letter brief was submitted to Mr David Slater of the insurance task force. Subsequently, the March of Dimes submitted a brief with respect to the Ontario motorist protection plan, Bill 68, in January 1990.

In previous submissions, our organization has consistently addressed three areas of concern:

-- Economic loss for present and future income: compensation for the newly disabled.

-- The threshold for pain and suffering: arbitrary limits on recoveries.

-- Attendant care: obstacles created by the system.

Our comments on Bill 164 will be principally limited to the extent that the proposed amendments address our expressed concerns and focus on the needs of two sectors of the population: those who are presently disabled and those who will be disabled as the result of a motor vehicle accident.

At the onset, it's important to point out that the March of Dimes is here today as an organization speaking for and with adults with physical disabilities across Ontario. The views and interests expressed are those of adults with physical disabilities. We are not, in any way, affiliated or allied with lawyers or the insurance industry.

The March of Dimes strongly believes that insurance coverage in all its forms must now be regarded as one of life's necessities. Without it, one cannot participate in society as an employer, employee, home owner, automobile driver and certainly cannot take on the normal obligations of care for oneself and one's family.

Motor vehicle insurance must provide for the necessities faced by an injured person. Through our work in the area of rehabilitation of persons with disabilities, we understand the real needs faced by victims of motor vehicle accidents. While we support and understand the intent of the proposed legislation, without revision it would prove unfair to those it should be protecting the most: the innocent victims.

Since the organization's formation in 1951, the mandate of the Ontario March of Dimes has evolved significantly. The original function of the Ontario March of Dimes was to fund research to find a cure for poliomyelitis. With the development of the Salk vaccine, the emphasis of the Ontario March of Dimes shifted to treatment and rehabilitation of adults who were experiencing the residual effects of polio. Over time, the population served by the March of Dimes was expanded to incorporate all adults with physical disabilities in Ontario. The mission statement of the March of Dimes is "to assist adults with physical disabilities to lead meaningful and dignified lives."

As a result of this mandate, the Ontario March of Dimes is active in over 100 communities across Ontario, both as partners with persons with physical disabilities and in the provision of services to these adults. Ontario March of Dimes services are utilized by people with post-polio syndrome, multiple sclerosis, muscular dystrophy, cerebral palsy, spinal cord injury and brain injuries, spina bifida and other conditions which hinder mobility. This group numbers over a million people, one out of every 10 Ontario residents.

The service programs offered by the March of Dimes fall into three major categories: assisted devices, employment services and independent living assistance. While 90% of the March of Dimes funding supports these three programs, there are several other valuable services offered. These include camping and recreation, post-polio program, public education, research and development. Appendix 1 outlines in a little more detail each of these programs.

In addition to the services provided by the March of Dimes, the organization has a strong history of issue advocacy. Often engaged in consumer advocacy and coalition-based efforts, the March of Dimes has been active in areas such as employment equity, human rights, transportation issues, training and employment, housing and support services, assistive devices, physical accessibility, government services in accessible form, challenges to the Immigration Act and income maintenance to persons with disabilities.

Economic loss for present and future income: Here, the Ontario March of Dimes agrees with a no-fault system of automobile insurance which is sensitive to the needs of persons with disabilities regardless of cause.

The need for compensation, rehabilitation and long-term care bears no relevance to the cause of a motor vehicle accident-related injury. Reforms in auto insurance to date have responded effectively to the needs of the relatively high percentage of our clients who have become disabled through no fault of their own, or the fault of others.

The schedule of draft benefits distributed as part of the proposed legislation continues to improve the post-accident prospects of thousands of individuals who have, until recently, subsisted on low compensation offered through their own insurance policies. The increased income, from 80% of gross earnings to 90% of net income, is one area worth noting.

Although the government has included certain measures which will benefit those who become disabled through an automobile accident, the Ontario March of Dimes has serious concerns with the unfair compensation for economic loss contained in the proposed legislation and its impact on innocent victims.

Under the current system, those who do not cause accidents can sue for compensation for economic loss, such as lost wages or salary and future wage or salary potential, as well as pain and suffering. The government proposal, while allowing more people who do not cause accidents the right to sue, will limit such compensation to recovery for pain and suffering, not for economic loss.

We are aware that a number of submissions that have been presented to you have reviewed this matter in significant detail. The Ontario March of Dimes agrees with the general thrust of these arguments, but the loss of economic opportunity is not properly addressed in the proposed legislation.

The young worker or the young student or the newly graduated professional seeking employment who becomes disabled as an innocent automobile accident victim suffers twice under the proposals set out in Bill 164.

The lifestyle of the seriously disabled individual is altered significantly as a result of an automobile accident. The government's legislation imposes an additional burden on the victim by suggesting that one's economic future is frozen in time. The compensation-for-income-loss provision contained in Bill 164 effectively sentences the accident victim to a low-income level for life. Instead of looking to career advancements and changing lifestyles, the person with a disability has a low-income lifestyle forced upon him. Even taking into account the indexing provisions in the legislation, the individual is at the lower end of economic levels for ever.

Another element which we urge the government to review stems from the suggestion that those who are employed and seek extra coverage can do so by purchasing disability insurance. This option is not open to persons with disabilities who are presently employed. Many persons with disabilities cannot qualify for such insurance.

Insurance companies not only refuse to provide coverage to the seriously disabled, they deny it to those who are disabled and active in the workforce but are living with the possibility of potentially deteriorating disabilities, like those of our members who suffer from post-polio syndrome. Clearly, something needs to be done to offer such innocent people some compensation for lost economic opportunity.

Pain and suffering: The March of Dimes emphasizes the need for insurance reform to be governed by the right of the person with a disability to return to as full and normal a life as possible. For this reason, no arbitrary limits should be placed on recoveries for persons with the most severe disabilities.

The retention of the right to recovery through the courts is an important part of any insurance reform. If the proposed legislation is to fairly serve persons with disabilities, access to the courts must be a realistic option for innocent victims of automobile accidents.

The Ontario March of Dimes understands the principle behind the government's desire to restrict access to the courts for all but the most serious cases of pain and suffering. However, it is our belief that the $15,000 deductible which the government intends to set for court awards for pain and suffering is too high a threshold figure.

The Ontario March of Dimes is aware of actions in the courts which have tried to establish a maximum threshold for pain and suffering. It is our understanding that the damage trilogy cases in 1978 resulted in the Supreme Court decision of a maximum settlement of $100,000, indexed, for the most serious cases of pain and suffering. Allowing this figure to be indexed for inflation, the figure today is commonly agreed to be around $250,000.

Obviously, the limit of $250,000 applies only to pain and suffering associated with an extremely serious permanent disability. The vast majority of pain and suffering awards would not approach this limit. It is in relation to these cases of lower settlement that the March of Dimes feels the $15,000 deductible is unrealistically high.

The figure of $15,000 which the government is proposing effectively means that the disability required in an automobile accident will have to be extremely serious before a lawsuit becomes a realistic option. Further, if there were any contributory negligence on behalf of the injured person -- ie, they are partially at fault for the accident which disabled them -- then the size of the award has to be even larger for a lawsuit to be considered.

For example, if a pain and suffering lawsuit awarded a victim $60,000, less a deductible of one third of the award for contributory negligence, the award would then be $40,000, less the proposed $15,000 deductible. The end result would be $25,000.

The Ontario March of Dimes supports the spirit of the government's intentions in this area but asks that a lower threshold be set to allow more realistic access to courts by innocent victims. A more workable figure would be $7,500.


Attendant care: The proposed legislation provides for $3,000 a month for attendant care. The Ontario March of Dimes has concerns, from experience in attendant care services, that this figure will prove inadequate often enough to become a concern.

Using conservative estimates and average figures, use of March of Dimes attendant care services for four hours a day at a cost of $25 per hour totals $3,000 per month. As one can see, the $3,000-a-month cap will purchase an average level of attendant care service for a person with a disability.

The estimates given do not begin to address the increased levels of service required by those persons with disabilities who require more than moderate care. Taking six hours a day of attendant care as an example, the monthly cost quickly balloons to $4,500, well above the indexed $3,000-a-month cap proposed by Bill 164.

Clearly, there is a need for some revision of this capped figure to ensure that the innocent victims of automobile accidents do not end up consistently exhausting the $3,000 and be forced into dipping into savings and other replacement income to purchase additional attendant care. Ultimately, these individuals could end up in a hospital bed, where the costs of care are not paid for by the insurer but by the taxpayer.

The March of Dimes is aware of the ministry task force which was announced on January 18, 1993. We salute the government for the establishment of this task force and its initiatives to address the spiralling costs of long-term care in the province. As the government looks at the whole issue of the cost of rehabilitation, the March of Dimes would like to offer its input and assistance to ensure that persons with disabilities will be able to remain in their homes whenever possible.

Amendments need to be made to the government's regulations to resolve the difficulty in obtaining optional extra coverage for disability. The proposed legislation should be amended to require insurers to offer optional endorsement coverage that would allow the insured to buy such optional coverage at a minimal cost without regard to the age or health of the driver.

In conclusion, the Ontario March of Dimes wishes to express its support for the government's initiatives and the principles underlying Bill 164. Our concerns as expressed deal primarily with the elements of the proposed legislation which we feel hurt the innocent victims of automobile accidents. These areas relate to:

-- Economic loss for present and future income: compensation for the newly disabled.

-- The threshold for pain and suffering: arbitrary limits on recoveries.

-- Attendant care: obstacles created by the system.

In principle, we support the substantial compensation benefits contained in the draft schedule of benefits. However, we believe that unless the noted revisions are made, the legislation will prove unfair to thousands of innocent victims of automobile accidents. We call on the government to make these revisions.

We close by quoting Mr Alan Hutchinson, writing in the January 8, 1990, edition of the Globe and Mail, "How we treat the victims of misfortune indicates who we are and what we aspire to be."

Mr Tilson: I want to compliment you on this presentation. I don't know whether it was you alone or whether a group of people prepared this report.

Mr Bellavance: It was a joint effort.

Mr Tilson: It's excellent. If this terrible bill ever reaches third reading, you may find part of it read back, because it's that excellent a report that I would love to use portions of it in comments to the government, because you do deal with the main issues in a very clear and concise way.

I really have just one question, and that has to do with the attendant care issue. I can't remember which page it was on, but the $3,000 cap is one that's been expressed several times in these proceedings, that complaint you've given. Can you give any further elaboration than what you've put in the paper on that topic; specific examples you know of that the $3,000 simply is not enough? You commented, for example, that it is going to run out -- you've almost given that guarantee -- and that people will be dipping into their personal savings.

Mr Bellavance: A low-level quadriplegic -- in other words, he still has a fair bit of use of his arms and fingers -- would require the four hours a day. Anybody with a more severe disability, who loses some of their finger dexterity, would probably require more.

Mr Tilson: Can you relate that to figures? I don't know what information you have about what goes on now with these types of individuals, the problems they have. Can you relate what it may cost someone today? I'm doing the very thing that I don't like them doing, and that's generalizing, but could you talk in terms of real-life examples?

Mr Bellavance: It costs the March of Dimes about $25 an hour to deliver service. It doesn't matter what the service is; that's basically what the cost is. If you were dealing with somebody who needs four hours, then you're under the threshold; if you're dealing with somebody who needs five hours, for preparing meals, personal hygiene or whatever, then they're over the threshold.

Mr Tilson: I also appreciate the comments you made with respect to economic loss. When you look at the person who is on the verge of graduating or the highly skilled worker between jobs, those people simply will never, never be compensated, ever. I don't know whether you had anything to add on that area as well. The economic loss issue is what most of the opposition feels is the main terrible part of this bill.

Mr Bellavance: In the case of the young professional, there are so many variables. If the person can be retrained -- which is my situation: I was in university studying to be an engineer when I was hurt; that was totally reversed so I had to totally start over at university again, but I still had the faculties and the mobility to do that. Depending on how severe the disability is and whether there is ever any potential for some vocation -- it's not a very cut and dried figure. If the person can work, he might make a heck of a lot less than he made before, but at the same time wouldn't be at the level he would have been at if he had continued on in his profession.

The Chair: Mr Harnick.

Mr Harnick: I'm just struck by the comment on page 7 of your brief: "This government's legislation imposes an additional burden on the victim by suggesting that one's economic future is frozen in time. The compensation for income loss provision contained in Bill 164 effectively sentences the accident victim to a low-income level for life."

We had the legal adviser to the minister here last week to tell us that this bill, this generous piece of legislation, will pay a student who would never get back into the workforce the equivalent of $391 a week for the rest of his life, indexed. My calculations tell me that's below the poverty line. How can someone with a significant disability live on that kind of money week to week?

Mr Bellavance: It's impossible.

The Chair: Mr Winninger.

Mr Winninger: I certainly appreciated your presentation and I think your goals and objectives are quite laudable: improving compensation for economic loss, lowering the threshold for pain and suffering, and improving attendant care for people. I'll deal with those one at a time and perhaps you can choose to respond.

Let's look at the economic loss issue first. You're probably aware that Bill 164 actually covers 97% of full-time earners compared to 73% under the OMPP.

Mr Harnick: At $391 a week.

Mr Winninger: We've heard cited several times the famous case of Teno v Arnold, which is one of the Supreme Court of Canada trilogy cases that established a cap for the worst forms of injury for pain and suffering at $100,000. But that same case allowed the four-and-a-half-year-old girl who was hit by the car and left mentally and physically disabled -- first of all, they awarded $7,000 per year for lost future income; that equates to, plus or minus, $17,000 in 1992. Then they took off a 20% contingency for the possibility that she might have earned less because of illness etc, and the final award for loss of income was $6,000 per year, about $13,000 in 1992 dollars.

So I would suggest to you that the system of compensation under tort for loss of income was an imperfect one at best. I think that case illustrates some of the pitfalls of that system. At least now, under our schedule of statutory accident benefits, we have fairly fixed amounts that people can turn to.


On the issue of the threshold for pain and suffering, the Ontario March of Dimes, during the hearings on Bill 68 a few years ago, supported a verbal threshold for the most seriously injured, saying, "We feel that the retention of the right to recovery through the courts is an important, in fact essential, component of the proposed OMPP." So they supported the verbal threshold of the day. Perhaps unfortunately for the March of Dimes, only a minuscule number of claims are actually being heard by the courts that meet that serious and permanent damage threshold. I think you're aware that under our proposed legislation, access to the courts to sue for pain and suffering we estimate would increase by a factor of at least three, so I submit, there's an improvement there too to the people you represent.

Third, you've acknowledged that the minister has set up a task force to study issues around rehabilitation and long-term care and whether the $3,000 proposed cap might be adequate or not. We'll have to await the outcome of that.

I wonder if you want to respond to any of the remarks I made, or whether I should ask you a specific question.

Mr Bellavance: In connection with the task force, I'd certainly like to see more consumer representation on there.

Mr Winninger: I see.

The Chair: Mr Johnson, one minute.

Mr Johnson: Do you think the changes on the cap for rehabilitation for people who have been injured significantly -- there's a cap of $500,000 right now, and that's been removed. Wouldn't you say that was a very positive thing?

Mr Bellavance: I would say that was positive, yes.

Mr Johnson: And the fact that no longer, after a period of 10 years, are you going to be left high and dry, that you're going to be compensated further?

Mr Bellavance: I would say that was positive too.

Mr Johnson: So there are definitely some positive things with regard to Bill 164.

Mr Bellavance: Yes.

Mr Johnson: That's good. Thank you.

The Chair: Mr Mancini.

Mr Mancini: How much time do I have?

The Chair: Five minutes.

Mr Mancini: Can you let me know when I've used up two and a half minutes? I want to give the other two and a half to Mr Kormos, please.

Mr Kormos: Thank you, sir.

Mr Mancini: I'd like to say to our witness how impressed I am with the brief. I had some experience in the late 1980s working very closely with organizations such as the Ontario March of Dimes, and always found them to be more than cooperative and helpful in forming government policy. I want to say to you that you're not the only witness who has been lectured to by the NDP members. Every time there's a witness who comes forward who talks about getting back or saving or maintaining the right to sue for economic loss, we get a lecture from one of the NDP government members. Usually, they have some law training. Some of them do; some of them don't. But the witnesses always get a lecture that, "We're giving you more benefits," and "You're at the vagaries of the court system," and "It's like rolling the dice," and it's all of these things, and, "You don't really deserve to have the right to sue for economic loss." I want to remind each and every one of the New Democratic Party members who are here today that it was you people who promised government-owned insurance. It was you people who promised lower rates. It was you people who promised full accessibility to the courts. You made all those promises, and it is shameful that you lecture witnesses who appear before the committee on wanting to be able to keep those rights that you said they should be able to have.


Mr Harnick: Remember those promises, going door to door telling people those things? They lied.

The Chair: Order. This is the gentleman who's here, to listen to what he has to say. I know he knows what you're going to say, but go right ahead again, without all the chorus.

Mr Mancini: Are you adding more time for this interruption?

The Chair: It was your crew.

Mr Mancini: My crew? My crew was sitting here quietly. What are you talking about? Do I get more time, yes or no?

Mr Bellavance: Can I be excused, please?

The Chair: Yes. It's your time.

Mr Bellavance: Thank you very much.

The Chair: Thank you.

Mr Mancini: Thanks a lot, Mr Chair.

The Chair: This committee will recess for five minutes, until 3 o'clock. We're waiting for Mr Alcock to come in from Kenora. He seems to have left, but he's not here yet. So we're recessed for five minutes, and if he does show up, we'll go on at 3 o'clock.

The committee recessed at 1455 and resumed at 1501.

The Chair: It is a little past three and our next witness has still not confirmed that he'll be here. We have a plane to catch. This committee is adjourned. We'll meet at 10 o'clock tomorrow in Windsor.

The committee adjourned at 1501.