Thursday 4 February 1993

Insurance Statute Law Amendment Act, 1993, Bill 164

Ontario Mutual Insurance Association

Glen Johnson, president

Ron Perry, manager, Lambton Mutual Insurance Co

Brantford and District Head Injury Association

Lawrence Palk, board member

Hamilton Automobile Club

Catherine Newell, director of public and government affairs

Victim's Voice

Patricia Smith, coordinator

Peter Kormos, MPP

Mark Morrow, MPP

Co-operators General Insurance

Dan Thornton, senior vice-president

Bill Tait, claims manager, Hamilton

Kathy Bardswick, regional vice-president

Ontario Trial Lawyers Association

John McLeish, vice-president

Dominion of Canada General Insurance Co

George L. Cooke, president and chief executive officer

Bruce Pearson, insurance broker

Future Health Inc

Ellen A. Helden, director

United Steelworkers of America, Local 1005

Bob Sutton, president, political action committee

People Against the Insurance Nightmare

Pat Mazurek, member

Dr Doug Welland, member

Simcoe Erie Group

Malcolm Heins, president and chief operating officer


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

*Acting Chair / Présidente suppléante: Mathyssen, Irene (Middlesex 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:

Abel, Donald (Wentworth North/-Nord ND) for Mr Jamison

Cooper, Mike (Kitchener-Wilmot ND) for Mr Ward

Cordiano, Joseph (Lawrence L) for Mr Kwinter

Harnick, Charles (Willowdale PC) for Mr Sterling

Huget, Bob (Sarnia ND) for Mr Christopherson

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

Mathyssen, Irene (Middlesex ND) for Ms Ward

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)

Soth, Sylvie, interpreter

Clerk pro tem / Greffier par intérim: Carrozza, Franco

Staff / Personnel:

Chan, Rebecca, assistant to the clerk

McNaught, Andrew, research officer, Legislative Research Service

The committee met at 0959 in the Sheraton Hamilton Hotel, Hamilton.


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. This is our fourth day of travelling. It's great to be here in Hamilton. It's great to be close to home and the riding of Lincoln again. This is the standing committee on finance and economic affairs on Bill 164, An Act to amend the Insurance Act and certain other Acts in respect of Automobile Insurance and other Insurance Matters.

I'd like to welcome Mr Joe Cordiano, Mr Gerry Phillips -- you missed a great trip around Ontario but we didn't see any of it -- Mr Bob Huget from Sarnia and Mr Mike Cooper, who are joining us today. Welcome.

Mr Remo Mancini (Essex South): I think these people deserve a round of applause.


The Chair: I'd like to welcome the first group, the Ontario Mutual Insurance Association. If you wouldn't mind identifying yourselves for the purposes of Hansard, you may begin. We have until 10:30. Could you leave some time at the end of your presentation for questions from the committee. Being the first presenter, you'll find they're looking for at least 10 minutes, if you can. That will give three minutes to each caucus to ask questions. You may begin.

Mr Glen Johnson: The Ontario Mutual Insurance Association is the association of 51 farm mutuals in Ontario. These are purely mutual companies owned by the policyholders. The boards of directors are policyholders.

Presenting our brief today we have David Bailey, underwriting manager from the Farm Mutual Reinsurance Plan, which is owned by the farm mutual companies; Doug Little, manager of Elma Mutual at Atwood; Ron Perry, manager of Lambton Mutual at Watford; and I'm Glen Johnson from the association in Cambridge. I'll call on Mr Perry to present our brief.

Mr Ron Perry: For those who may be following along, I'm starting on page 2, as Glen has already done the introductory work, the bold print paragraph about partway down the page.

As mutual companies, our goal is to give our policyholders the best possible insurance protection at a price they are willing to pay, within a regulatory environment that encourages the efficiencies of a competitive marketplace.

Our first point, goals of legislation: We are in agreement with the five key goals the government set out when the legislation was introduced, those being affordable and stable insurance premium prices; reasonable and fair accident compensation; fairest driver classification system; greater insurance availability and better consumer service; and safer roads and lower costs.

These are reasonable and sensible goals and are consistent with our own. However, we are not in total agreement with the means of achieving these goals as set out in Bill 164. We would prefer to see these goals achieved through less dramatic changes to the existing auto insurance product.

We believe there is a relatively high level of satisfaction with the current system of auto insurance. It seems to have achieved many of its intended goals. Premiums have stabilized. The business of insurance has returned to an economically viable position in the short run. Claims are being settled more quickly with a greater percentage of the premium dollar going to the insureds who have had claims. Feedback from the Ontario Insurance Commission tells us the dispute resolution mechanism is working well.

Overall, we are pleased with the progress that has been made. Input from policyholders has not led us to believe there is a significant enough level of consumer dissatisfaction to warrant a major change to the existing system. This system has only been in place for two and a half years. To throw out the current system and bring in the Bill 164 product would mean we would have a third substantially different product since 1990. Any degree of understanding gained by the consumer over the past two and a half years would be lost and another expensive education program for both insurance personnel and consumers would have to be undertaken.

On the other hand, now that we have a few years' experience with the existing system, we can see that improvements could be made. We believe that any product should be continually improved and updated. We would prefer to see change by way of incorporating into the existing product some of the improvements contained within the proposed Bill 164 product.

Our second point, importance of price: It is our belief that affordable prices are of utmost importance to consumers. We also believe that stability in pricing is extremely important.

Three years ago we appeared before the committee studying the current system of auto insurance and expressed our support for a partial no-fault product as a means of controlling the dramatic increases in claims costs which in turn lead to unacceptable levels of premium increase. We continue to support the partial no-fault product as the appropriate means of achieving price stability. We also support a threshold as a means of allowing those with more serious injuries access to the courts.

Consumers should be well aware that increases in the costs of the two insurance products will lead to increases in the price of the products. Increasing benefits means increasing prices. Price is a function of the product. Control of the product rests with government in the case of auto insurance.

We have serious concerns regarding the discrepancies and assessments of the insurance industry actuaries and the government actuaries with respect to the increase in prices that a move to the Bill 164 product will cause. While the government actuaries predict an approximate 4% increase, the industry actuaries are predicting closer to 20%. Any significant increase will be unacceptable to consumers.

A report prepared by the Wyatt Co on behalf of the insurance industry indicates that the government actuaries relied exclusively on data prior to the current threshold no-fault system, assumed reductions for road safety initiatives not yet implemented and did not take into account increased interest rates and accident frequency that could result from a degree of economic recovery.

We strongly recommend that before this bill is passed, an in-depth consultative process between government and insurance industry actuaries be undertaken to ensure that the price increase associated with the Bill 164 product is not at an unacceptable level.

Our third point, verbal threshold versus deductible: We are apprehensive of the concept of a $15,000 deductible as opposed to a well-defined verbal threshold. Our apprehension revolves around the concept of what $15,000 worth of pain and suffering means.

There will be an increased administrative cost associated with the deductible concept. Because of the lack of certainty with respect to which injuries would warrant a $15,000 settlement in court, many more third parties will have to be investigated as section A third-party liability claims. This will mean setting up a third-party liability file and assigning an adjuster to maintain contact with the third party or his or her lawyer. At the same time, the third party's own insurer will be handling the section B accident benefits claim. Although many of these cases will ultimately fall below the monetary deductible, insurers will not be able to ignore cases that have the potential of surpassing the deductible.

We know from experience that where the expected legal and administrative cost warrants, insurers will settle before they go to court even though the claim itself is well below the $15,000 deductible. There will be many of these cases. In our judgement, this will be a significant administrative cost to the system, a cost that ultimately is passed on to consumers.

Determination of a monetary value for pain and suffering is very subjective. We assume Bill 164 proposes the $15,000 deductible as a method of controlling the cost to some degree. We fear that any cost-controlling effect could be eroded as settlements determined by subjective judgements creep upward.

We much prefer a verbal description of who will have the right to sue for pain and suffering. In our judgement, the verbal method is much more explicit. If a straight verbal threshold is deemed unacceptable, we believe the deductible should be at least supported by some sort of verbal explanation. This verbal explanation could describe the sort of injury that should have access to the court system or the sort of injury that should not have access to the court system.

Predetermination of the type of injuries that should have access to the court, and some sort of verbal description, can only help to control claim costs. It will also serve the purpose of giving the consumer a clearer understanding and thereby lessening dissatisfaction created by unrealistic expectations. Any verbal definition should be printed in the coverage contract wording as opposed to simply being some sort of non-binding guideline.

Our fourth point, the need for controls: Insurance must have a strong emphasis on indemnity, that is, fair and adequate compensation. However, insurance policies must also contain enough controls to guard against abuses driving up claims costs and ultimately premiums.


We agree that if insureds do not have access to the courts, we must be very careful to ensure that they are able to receive complete indemnity through the first-party benefit. We believe that it is reasonable to place adequate controls within the policy wording to help guard against abuses by an insured and medical adviser or anyone else providing medical assistance, yet not impede access to necessary coverage.

We believe that consumers understand that any system of accident, sickness, disability or unemployment insurance must have adequate controls to prevent abuses.

Specifically with respect to Bill 164, we believe that controls need to be more balanced between the insured and the insurer. As presently designed, too much control rests with the injured party and his appointed medical practitioners and advisers. More control needs to be placed with the insurer by way of giving the insurer the opportunity to request an independent medical evaluation within designated time frames. In addition, insurers should have the right to assess whether programs of treatment are effective.

We also have concerns with respect to the mechanism by which insureds are able to upgrade their status with respect to loss-of-income benefits. We agree that within a first-party compensation system, this sort of schedule reassessment is important. We agree with the theory but would like to see appropriate controls. Without adequate counterbalances by way of allowing the insurer reasonable controls, overcompensation can creep into the system, resulting in increased costs and hence increased premiums. We suggest that the task force recently formed give study to all of these issues.

We agree with the concept of allowing the self-employed and insurer to predetermine, at the time of underwriting the policy, the amount of weekly indemnity to be paid in the event of a claim. This concept lends itself well to farmers and many small businesses where the owner's earnings come from the business rather than a weekly wage. The insured will in essence be able to buy insurance to cover the cost of replacement labour. We would like to see this feature added to any changes to Ontario's auto insurance system.

Our fifth point, removal of caps: With respect to the matter of removing dollar limits and time limits on medical rehabilitation and long-term care coverage and the interest of controlling the cost of this product, we would prefer to see the limits increased and indexed with a review and assessment feature for cases where the individual reaches the policy limit.

The concept of unlimited benefits creates some difficulties. Insurers operating in Ontario, including ourselves, look to world markets for reinsurance coverages. Unlimited benefits without caps or sufficient controls will lead to higher reinsurance costs. The farm mutuals' own reinsurers, Farm Mutual Reinsurance Plan Inc, have already been served notice that their contracts will be renegotiated if Bill 164 is passed. Reinsurance cost is ultimately passed on to policy holders.

We have to believe that pricing a product which involves unlimited liability will be difficult and more expensive than it needs to be.

Our sixth point, increased emphasis on rehabilitation: Certainly the emphasis of any benefit program should be on rehabilitating injured individuals and reintegrating them to their pre-accident lifestyle. Any changes to the auto insurance product should contain a strong commitment to that goal. We concur with government's commitment to rehabilitation and we're pleased to see formation of the task force on rehabilitation and long-term care benefits.

We are encouraged to see a greater commitment by insurers to rehabilitation. The insurance industry has already pledged its commitment to developing rehabilitation guidelines and increased education for its personnel in the area of rehabilitation.

We recognize that, within an environment of no-fault insurance, it is incumbent upon us as insurers to provide the best possible management of the rehabilitation needs of our insureds. At the request of the auto insurers in Ontario, the Insurance Institute of Ontario has established a certificate program to educate claims staff to a level of certified insurance rehabilitation coordinators.

In addition, Farm Mutual Reinsurance Plan Inc, as a service to its farm mutual members, has commenced a study seeking input from individual mutual companies to study how we can best meet the rehabilitation needs of our insureds.

These are only a few initiatives; we expect to see more happen in this area. First-party delivery of benefits fosters improved rehabilitation initiatives. Within a first-party benefit system, there is an incentive for insurers to compete to provide the best service to their insureds. We look forward to the recommendations of the newly formed task force which will study rehabilitation.

Our seventh point, fairest clarification system: We are in favour of the fairest possible driver classification system. But what constitutes fair? Is it fair for categories of drivers such as seniors or females to be classified with young males while statistics show that seniors and females are less likely to be involved in automobile accidents?

This is a difficult issue to deal with. In 1988, the farm mutuals made representation before government bodies studying this issue. At that time, we expressed our opinion that a classification system that recognizes age, sex and marital status is preferable to one that results in cross-subsidization.

We support the implementation of a uniform class plan that is acceptable to consumers. However, we believe any such change would only be accepted by consumers if it did not result in extensive rate dislocation.

We are all aware that the previous government experienced opposition from particular segments of the public, for example, senior citizens, females etc, which caused it to rethink the changes it was planning for the classification system. That experience should not be ignored.

We are certainly willing to implement whatever the government deems to be socially appropriate for Ontario. However, we have to object to cabinet being given powers through Bill 164 to make these decisions without input from the public or the insurance industry. The Ontario Insurance Commission is currently empowered with policing the rating and classification process. We believe the OIC is the appropriate body to perform that task.

We do not agree to uniform formulas for settings rates, as was proposed in subsection 12(12) of Bill 164. We are pleased to see that the government is withdrawing this subsection. This would have only compounded foreseeable rate dislocation.

Road safety: We believe that initiatives related to preventing automobile accidents are of equal importance and urgency compared with changes to the system of insurance. Traffic collisions cause more than 1,200 deaths and more than 120,000 injuries each year in Ontario. First and foremost, increased emphasis on road safety will prevent needless human suffering caused by automobile accidents. As a byproduct, the cost of automobile insurance, and therefore prices, will be positively affected.

The Ontario Mutual Insurance Association strongly supports the concept of graduated licensing. The injury and death caused by inexperienced drivers makes a compassionate argument for doing something to improve the situation immediately. Some of the models for graduated licensing put forth so far include such features as supervision by a licensed adult, zero blood alcohol content, night-driving curfews, limitation of where inexperienced drivers can drive and a minimum period of accident- and conviction-free driving to graduate to a non-restricted licence, all of which seem very sensible.

Graduated licensing has a significant level of public support. It is also supported by the organizations which know best the effects of inexperienced drivers: police, insurers and organizations formed to combat drunk driving.

We applaud the government's initiative of introducing a bill to form a road safety agency. However, this bill has not seen second reading and graduated licensing still has not become a reality in Ontario. We encourage you to move all road safety initiatives forward quickly. We certainly believe that if Bill 164 moves ahead, placing significant upward pressure on premiums, specific road safety programs must move ahead with it. We repeat, road safety initiatives are as urgently needed as changes to the insurance product.

Our ninth point, education and understanding: We would like to see more emphasis on the use of education for loss-prevention purposes by way of a compulsory, structured driver training program which would include a component aimed at explaining the cost of the system, the fundamentals of how insurance works and instruction on the coverage provided by the Ontario statutory auto insurance policy.

We believe that the government must recognize that almost every high school student in Ontario will eventually operate an automobile on the ever more congested roads in our province. Therefore, we believe that a major part of the long-term solution is to make appropriate instruction mandatory in the curriculum of all Ontario high schools.

We also believe that consumers must be educated with respect to the effect that various factors have on the price of insurance. We believe this is not only important to the insurance industry but also to the government, which, in the case of automobile insurance, virtually controls the price by controlling the extent of coverage provided by the statutory product.


Even a minimal amount of instruction within a compulsory, structured driver training program pertaining to the coverage provided by the Ontario statutory auto policy could go a long way to promote public understanding. While expanded coverage is desired by everyone, it is essential that everyone understands that broader coverage has a higher cost. It is also important for the public to understand the upward pressures which claim costs put on premiums. We believe specific initiatives aimed at educating the public should move ahead if Bill 164 is implemented.

In conclusion, the changes in the system of auto insurance as set out in Bill 164 will increase some areas of coverage, and it is our opinion that the price will be substantially affected. We believe that careful study must be given to the effects on price before this bill becomes law. Especially now in recessionary times, the public will not readily accept a significant increase in the cost of auto insurance.

We believe that a thorough, renewed consultation between government actuaries and insurance industry actuaries is in order. If this process bears out that the cost will indeed increase substantially, we must focus on how we can implement modifications that will bring the price increase to an acceptable level. This must be done before any expanded product is implemented. We highly recommend that the deductible concept be re-evaluated.

We would also recommend that further thought should be given to the complexity issues of the new legislation. The public wants not only a product which is affordable but also understandable.

Any road safety initiatives that are taken into account in the government's costing of the Bill 164 product must be implemented before the new product takes effect.

We appreciate the opportunity of expressing our views on Bill 164.

The Chair: A very excellent brief, especially on education and safe driving.

Mr Mancini: How much time do we have?

The Chair: We have about two and a half minutes per caucus.

Mr Mancini: I'd like to thank you for what I also consider to be a very excellent brief. I'm going to ask you a series of short questions, because time is limited.

For the record, the Ontario Mutual Insurance Association basically sells insurance to farm families. Is that correct?

Mr Perry: Farm mutuals and people living in rural Ontario.

Mr Mancini: And income on the farm has gone down and not up over the last few years and many farmers are under financial stress, so an increase in insurance to farmers would not be a very good thing at this time. Would you agree with me?

Mr Perry: That's true.

Mr Mancini: You would also agree with me that these 68 pages of draft regulations that have been prepared by the government as an attachment to Bill 164 are very complex. Even the most learned people in the insurance industry have had great difficulty in understanding what these regulations mean, and therefore consumers would have a great deal of difficulty in understanding what they would mean.

Mr Perry: That would be my opinion, yes.

Mr Mancini: Do you agree with me that if the government goes ahead and removes age and gender from the factors which make up the amount of money that consumers must pay for insurance, senior citizens will be hard hit and women will pay more for their insurance also, if they go ahead with removing age and gender factors?

Mr Perry: That appeared to come out when it was studied before, that that was one of the problems that would happen: Other classes, as there was a levelling-out effect, would probably be going up in rate to offset the premiums that were paid by those higher risks.

Mr Mancini: I would like to go back to your initial comments on page 2, where you gave five goals for this legislation: affordability, reasonable and fair accident compensation; fairer driver classification; greater insurance availability, and safer roads. I would contend that Bill 164 fails on every point you've made.

Bill 164 fails on affordability because both the government consultants and other --

The Chair: Mr Mancini, time is running out. Just make it a short one.

Mr Mancini: It's difficult to make the whole thing as short as you'd like, Mr Chair, but I believe the point has already been made that based on the five goals the mutual association is espousing, the bill fails.

Mr David Tilson (Dufferin-Peel): You're right. I thank you for your comments this morning and your opening remarks about the desire of the public for rates to be stable and affordable. We've certainly heard testimony from all across this province, from insurance companies -- in fact, anyone who looks at this bill at all knows that rates are going up, from the unexplainable benefit packages -- no one really knows what they're going to do to us -- the bureaucracy that's going to be increased, not only within the insurance industry but within the insurance commission, within the government and probably the increased adversarial system. It's ironic that we're trying to replace an adversarial system and in many respects I believe we're going to be creating another adversarial system.

We know that rates are going up as high as 20%. We know that. What no one has given us any facts or predictions on is what's going to happen after that. In other words, once these benefits get all figured out, these unexplainable benefit packages that Mr Mancini has told us about, which none of us understand what they mean, have you any predictions as to where we go after that first 20% increase?

Mr Perry: I wouldn't have any cost. It's certainly a serious concern of ours with this bill. As we say, there's a great discrepancy between what the government people feel it's worth and what the industry people do. We're relying on their expertise to come up with these.

Mr Tilson: I wouldn't do that. Don't do that.

Mr Perry: We're suggesting that we think there should be further study of this. Somehow we've got to get closer between the two viewpoints as to what cost is. From that point on, that would be hard to answer.

The Chair: I've got to go on to Ms Mathyssen.

Mrs Irene Mathyssen (Middlesex): I would like to say that I think your brief, your recommendations, reflect the kind of concern you have traditionally, as farm mutuals, demonstrated for a very important community in Ontario, and I want to thank you.

A couple of quick questions. You talk about the importance of education. I come from a rural riding, and I was a teacher in a former life, so I understand the importance of that. Do you plan to become involved in any way in terms of education, providing ideas or input? Do you have a program of any kind?

Mr Perry: I'll turn that over to Glen Johnson from our association office.

Mr Glen Johnson: We already have been, to some extent. There's a program put out by the insurance industry, actually developed by mutuals in the US, called Choice, Chance, Control. A number of the mutuals in rural communities have been out into high schools already trying to get across the point that you have some control over your future and that safe driving prevents accidents, that sort of thing. So yes, we would take part in that actively.

Mrs Mathyssen: You mentioned the rural community. Graduated licensing I think is a very important step in that direction, but one of the things we've heard as rural members is some concern, because the reality is that very often younger drivers are needed to go do the errands for the family on the farm. Is there any way we can utilize the best of graduated licensing without causing undue hardship? Have you any suggestions?

Mr Glen Johnson: We recognize that rural people may have special needs. We are promoting the concept, not necessarily all the details. We recognize that in rural situations there may have to be certain exceptions, but we have promoted this idea throughout rural Ontario and really haven't had any degree of negative feedback.

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



The Chair: The next group is the head injury association. Would they come forward, please, and your associates. I'd like to welcome you to the standing committee on finance and economics. We have one half-hour, and in that one half-hour if you can leave some time at the end for questions. The lady on the left there, I am the Chair of this committee. I met her down in the lobby earlier, and she said, "You don't look like the Chair." I was in blue jeans at that time. We start early around here. If you don't mind identifying yourselves from left to right, or whichever way, you may begin.

Mr Lawrence Palk: Thank you very much, Mr Chairman. With me today is Dianne Henderson, from the Niagara Head Injury Association, and Sandy Webber, from the Brantford and District Head Injury Association. My name is Lawrence Palk, and I am representing the Brantford and District Head Injury Association. Sandy Webber and I are both on its board.

I come before this committee today as both a victim and an advocate. In May 1988 I was the victim of a hit-and-run car-bicycle accident which nearly claimed my life. In the years that followed my accident, my life has been transformed in ways I could never have imagined.

At the beginning of 1990, after being diagnosed with a permanent brain injury, I became involved in the head injury movement as a director of the Hamilton-Wentworth head injury support group and in 1991 as a founding member and director of the Brantford and District Head Injury Association.

Three years ago, I spoke at the hearings on Bill 68. Bill 68 punished victims with a grossly imperfect threshold system, delivering unrealistic income replacement benefits, and it removed the right of all but the worst 5% of accident victims to sue for pain and suffering and economic loss. The rehabilitation benefits were insufficient. In short, the bill was flawed.

In stark contrast, the record of the NDP is very different on this issue of auto insurance, beginning with Tommy Douglas in 1946. In succeeding years, Schreyer and Barrett continued to point the way on auto insurance reform.

The fight for publicly owned auto insurance with protection for victims and the right to sue began in Ontario with a former member of the Legislature, Mel Swart, the former member for Welland-Thorold. Mel Swart stood up for victims.

In the election of 1987, the term "highway robbery" was coined by the now Premier, Bob Rae. During that same campaign, David Cooke, a cabinet minister in this government, said, "Insurance companies seem to be getting away with all kinds of discrimination." In 1990, NDP members such as Ed Philip and Peter Kormos fought bravely to block Bill 68. In 1990, the NDP announced that it still supported the right of innocent victims to sue for pain and suffering and economic loss. But in Honey Harbour in 1991 all of this changed, and today we have before us Bill 164.

When our association looks at Bill 164, we see welcome improvements over Bill 68 in the areas of supplementary medical and rehabilitation care and long-term care, but in several of the most critical areas of this legislation the bill is nothing less than an assault on every citizen of this province. Specifically, I mention the provisions in the bill related to students, seniors, the removal of the right to sue for present and future economic loss, the income replacement benefits and the $15,000 deductible rule.

Let me elaborate. Under Bill 164, if you are a student, the simple message is: Don't drive a car. An example is a 24-year-old female student in her final year studying to be a teacher in an Ontario university. She is severely injured in an auto accident, sustaining a traumatic brain injury which impairs her speech, short-term memory and other cognitive functions, these rendering her permanently unemployable. However, she still has bills to pay. She's living in an apartment for which she has signed a nine-month lease, and she has numerous other expenses to pay.

The maximum she is entitled to under this bill is $4,000 plus $185 a week disability benefit. If she's living outside of Toronto, this is going to be difficult. In a large metropolitan area such as Toronto, this is going to be almost impossible. At this point she will be disabled for life without the right to sue for future economic loss. Her career prospects are ruined.

Then there is the removal of the right to sue for present and future economic loss. This is, without a doubt, the most draconian measure one can imagine. Whenever someone is involved in a major traffic accident causing significant injury of a lasting kind, the largest part of a suit is for economic loss. Under Bill 164, that alternative will be a thing of the past. Insurance companies ought to enjoy this all the way to the bank.

I also envision great difficulties for independent business owners who stand to lose their businesses unless, of course you guessed it, they pay extra insurance protection. Insurance companies will enjoy that too. The provision of the bill removing the right to sue for economic loss couldn't be better drafted, unless the insurance lobby had done it themselves.

The provision of this bill allowing for the right to sue for pain and suffering with a $15,000 deductible is nothing more than a cruel piece of deception. I say this because the minister has said that this provision will allow for more victims to sue than under Bill 68. That is hardly the full story. What the minister neglects to say is that with the $15,000 provision it probably won't be worth going to court for anything but the most major of injury cases, because a combination of time, lost income, legal costs, medical and care giver reports and psychological injury is likely to discourage most people from ever going to court.

As a result of this proposal, known as Bill 164, I wish to make the following recommendations on behalf of the board of directors of the Brantford and District Head Injury Association:

(1) That the right to sue for future economic loss be retained and not removed, as Bill 164 has recommended.

(2) That the provision of the bill relating to a $15,000 deductible on all pain and suffering awards be removed from the bill.

(3) That the $185 weekly disability benefit be enhanced for students, seniors and all others as may be found necessary.

(4) That graduated licensing be passed into legislation at your earliest possible opportunity.

(5) That the province of Ontario institute and pass into legislation a provision of law which would state that any driver in Ontario who is convicted of more than one alcohol-related driving offence automatically loses his or her driver's licence and all rights to insurance for life and that the said motorist will have his or her vehicle impounded. This type of action is long since overdue, given the many examples of this type of offence.

An example of this type of offence was reported in the Toronto Star on November 25, 1992. The example in question is the case of Renald Nadeau, age 35 from Kemptville, Ontario, who was recently convicted for the 26th time of drinking and driving, for which he received a two-year sentence and a three-year licence suspension. Why wasn't Mr Nadeau off the road for good a long time ago? Isn't it high time the repeat offenders of these crimes are penalized rather than shown the blind eyes of the justice system with a nod and a wink?

(6) That all first-time impaired driving offenders must undergo mandatory alcohol and behaviour rehabilitation and that said rehabilitation involve a mandatory visit to a hospital, where offenders could see at first hand what injured victims go through on a daily basis. This type of experiment has been carried out in other jurisdictions, and I believe it is worthy of consideration in Ontario. In addition, I would urge an automatic one-year licence suspension in such cases.


(7) That there be much stronger penalties enacted through the Highway Traffic Act and the Criminal Code relating to leaving the scene of an accident. It is astonishing to believe that in a land such as ours, there's still a law which says to every impaired driver, "The law will treat you far more lightly if you leave the scene of an accident than if you stay and help a victim." The maximum for impaired driving is 14 years, yet the maximum for leaving the scene is two years. Where is the justice in this?

(8) There must be a far greater awareness of the crime of driving without a licence. This is a crime of selfishness, and ought to be treated accordingly under law.

In conclusion, I ask you, the members of the NDP caucus on this committee, to try to understand what it is like to be permanently disabled for life. As a member of the board of directors of the Brantford and District Head Injury Association, I see the hurt that motor vehicle accidents can do. I see victims who have lost businesses, careers, income, relationships and their own personal identities. These are people like yourselves. But for a strange quirk of fate, you could be them.

In this province and in American health care institutions, there are literally thousands of traumatically brain-injured Ontarians, children and adults, living on the margins of society, clinging to life. You, the members of the Legislature, have tossed dollars and cents around and claimed that Bill 164 is better than Bill 68. Bill 164 is not the solution to Bill 68. Bill 164 is an assault on the rights of every individual to recompense in the courts of this province. For some, it is a sentence to life on the welfare rolls. This is a bill of broken promises and shattered dreams.

As New Democrats, you have a party philosophy built on respect for the underprivileged in society. Surely you are not prepared to throw it all away with the same spite and arrogance as David Peterson did only three short years ago. If you do, you will be no better than he and, in the process, you will have thrown away something far greater, your principles.


The Chair: I'm sorry, it's out of order.

Mr Peter Kormos (Welland-Thorold): So be it, but this submission isn't.

Mr Mancini: Strike the applause from the record.

Mr Palk: Mr Chairman, I've attached to this presentation an addendum based on a presentation that was given last week by the St Michael's Hospital head injury trauma unit, which I felt at the time was a very, very worthy presentation. I believe it's worthy of your further consideration. Now we would be very happy, as a group, to answer any and all questions that you may have.

The Chair: Okay, we start off with Mr Harnick. We've got about five minutes-plus per caucus.

Mr Charles Harnick (Willowdale): Mr Palk, it's interesting that you indicate that you think the insurance companies wrote this legislation because it took out economic loss. Let me tell you, to be fair to the insurance companies, that this was something totally done by the NDP. Even the Insurance Bureau of Canada and every insurer that's appeared here has said that it's wrong to take economic loss away from people, so rather than blame the insurers, you can totally blame them, because they did it on their own.

Let me ask you this: I understand from your brief that you were a victim of an accident yourself, and that in the course of that accident, you were a head-injured person.

Mr Palk: Yes.

Mr Harnick: I gather you lost some income and some future income.

Mr Palk: Yes.

Mr Harnick: Were you able, in the course of that lawsuit that you were involved with as an innocent victim, to claim your future loss of income?

Mr Palk: Yes I was, Mr Harnick. I was fortunate enough, if you can call it "fortunate," to have had this accident pre-1990.

Mr Harnick: Let me cut you off just for a second. Can you tell us please what would have happened to you if you were not able to claim your actual future loss of income? What would your life have been like?

Mr Palk: It would, quite frankly, have been ruined. There's no way of being able to compare this legislation to anything pre-1990 at all. It's just a total change.

Mr Tilson: I read your addendum and I'm sure the other members of the committee will as well. I was specifically interested in two statements: your comment that insurance company adjusters and/or investigators walk in unannounced to hospital rooms of head-injured patients so as to check up on them, or worse.

Mr Palk: Yes.

Mr Tilson: The thought brings to my mind the whole system of advocacy. The NDP, of course, has made no secret of its absolute hatred towards the legal system, the lawyers. They think that they've abused the process and that they're the cause of why auto insurance rates have gone berserk. In doing so, with Bill 164 they are reducing the ability of people to receive legal advice, to receive advice as to what their rights are, either between the person who strikes them or with the insurance company. We now will have a process where more and more people will be dealing with the insurance companies, which are well financed, well trained, well qualified. Have you any thoughts, from your association's perspective, as to who will advise the innocent accident victim in those particular situations?

Mr Palk: I think quite clearly, to somewhat digress, that the $15,000 provision in this legislation in itself is going to deter a lot of people from going to lawyers. I've concluded from my own experience and from the experience of others that it probably will not be worth going to court for anything less than $50,000. In fact, if you take that part of the bill out of the equation, I think lawyers are going to be very much deterred from getting involved in these types of cases, and innocent accident victims certainly will, because in the end it's going to cost.

Mr Tilson: Would you have been able to manage without a lawyer?

Mr Palk: No, absolutely not. It's far, far too complex a process.

Mr Tilson: Thank you, sir. Those are our questions.

The Chair: One minute.

Mr Tilson: One minute left? What a pleasant surprise. My goodness.

I'd like you to elaborate on that whole issue of the deductible; there's one final issue. You have commented on that somewhat. Our position has always been that it's almost going to be like a penalty. As you say, unless you receive $50,000, it's not going to be worth your while. So you sue for $20,000 or $25,000, you have a penalty called $15,000, so you sue for $25,000 or $30,000 and you have $15,000 taken off the top. Have you, as an organization, had any input on this whole philosophy of the deductible?

Mr Palk: We've had no input at all.

Mr Tilson: Have you been asked?

Mr Palk: We have not been asked.

Mr Tilson: What about with respect to this task force that the government's boasting about. Have you had any requests to participate in that process?

Mr Palk: None whatsoever.

The Chair: I'm going to have to go to Mr Winninger.


Mr David Winninger (London South): I certainly appreciated a lot of your recommendations with regard to improving road safety. I would like first of all to correct something in your brief, though, that appears at the bottom of page 1 and goes on to page 2: the 24-year-old who you say would receive $4,000 plus $185 a week disability. The 24-year-old would receive an $8,000 lump sum plus $217 a week. Two years later, after two years of income replacement benefits, that 24-year-old, at the age of 26, would have a weekly benefit increase to $346, indexed, and then that would of course go up to $391 a week, indexed. I'm just indicating to you that the benefits are different.

Mr Mancini: It's still below the poverty line.

Mr Harnick: Under $20,000 for the rest of your life.

Mr Winninger: I listened carefully when you were putting your questions to the witness; I hope you'll extend the same courtesy to me. I ask for an additional 10 seconds there, Mr Chair.

We've heard from several head injury associations in Toronto, of course, and in Thunder Bay and Windsor. They told us that they had asked for several things when Bill 68 was under consideration back in 1988: better rehabilitation, and they acknowledged this bill delivers that by lifting the cap; indexing benefits, it's costly, but that's something this bill delivers; and increased loss of earnings benefits.

I'd like to come back to your comment, Mr Palk, about your own injury, which was suffered in a hit-and-run accident. I gather that they were able to apprehend the driver who left the scene.

Mr Palk: Yes.

Mr Winninger: Do you know what would have happened to you if they hadn't been able to apprehend the driver who left the scene?

Mr Harnick: He would have sued his own insurance company. He would have had underinsured coverage.

The Chair: Mr Harnick, you had your time.

Mr Harnick: He's asking him a technical legal question.

The Chair: He has that right. You had your time.

Mr Winninger: Do you know what would have happened?

Mr Harnick: He's not a lawyer. How is he supposed to know?

The Chair: Mr Harnick, this has been a whole week, and I've been very patient with you.

Mr Harnick: I've been patient with you too, sir.

Mr Winninger: I'm sorry, Mr Harnick, but you should give this witness, who has put together an excellent brief, credit for knowing a few things about how the system works. You don't have to be a lawyer.

The Chair: This is their time, not your time, Mr Harnick. It's the witness's time.

Mr Winninger: Again, Mr Chair, I hope you'll extend my time, due to these unsolicited interruptions.

Mr Harnick: Stupid questions.

Mr Winninger: We've lowered the threshold, and the head injury associations asked for that. Some acknowledged that there should be a threshold.

Mr Harnick: Who said you lowered the threshold?

The Chair: Mr Harnick, there are four corners in this room. Which one do you want to stand in?

Mr Harnick: Any one you want me to.

The Chair: Okay, Mr Winninger; carry on.

Mr Winninger: It's too bad that every time a witness agrees with something, Mr Harnick has to jump in.

Mr Harnick: Your questions are sneaky.

The Chair: Mr Harnick, one more time and I'll have you removed from the room.

Mr Winninger: The Head Injury Association acknowledged that there should be some threshold and that we've lowered the threshold to extend access to tort to three times as many people. By increasing the weekly benefit, we're covering 97% of full-time wage loss, as opposed to only 73% under the OMPP. We've extended coverage to psychological and mental injuries as well, which the old act didn't. So these are all the benefits. But as a government we walk a fine line between maintaining affordability of premiums and increasing access to better benefits.

Mr Palk: Mr Winninger, before you go on, I'd just like to say something. Without being too terribly involved, which you certainly have been, I can safely say that you're doing absolutely no favour to innocent accident victims with this bill. The $15,000 provision is bad enough, but taking away the right to sue is just absolutely scandalous.

Mr Winninger: What about the person whose car goes off the road due to a mechanical failure, a single-car accident, or a small child who darts between two cars?

Mr Harnick: That's why you have accident benefits.

Mr Winninger: Should the families of those accident victims, who aren't technically innocent, and the accident victims themselves receive less to ensure that the so-called innocent accident victim can sue for full tort?

Mr Palk: Mr Winninger, your question reminds me very much of an incident during the Bill 68 hearings when a certain member of the Liberal caucus asked me a very, very technical question, what I would term a "what if" question, which is totally unanswerable and in my mind is absolutely meaningless.

Mr Winninger: But people go off the road all the time. Single-car accidents are quite common.

Mr Palk: I'm sure those situations occur.

Mr Winninger: Those people could be totally incapacitated, could be rendered quadriplegic, but someone's got to pay for the no-fault benefits for these people.

Mr Palk: Those are small, small situations, and I'm sure that you or I could come up with any number of situations if we wanted to. But as a whole, if you look at an average case where someone incurs a brain injury, as is both my experience from statistics and my own experience, I can safely say that as an example, 50% of the impaired driving offences that are carried out in this province are done by repeat offenders. If we're to suggest examples such as yours, then it should be just as incumbent upon me to suggest other incidents which are probably more representative of the situation than the type of small incidents you're talking about.

The Chair: Mr Phillips.

Mr Winninger: You have suggested some very good recommendations for dealing with drunk drivers, but not everyone --

The Chair: Your mike is off; I'm sorry. Mr Phillips has the floor.

Mr Phillips: Thank you, Mr Palk. I want to get into some of your recommendations, but I want a kind of overview comment from you. The riveting point for me in the last election was the day the election was called, and that day Bob Rae said, "`The Premier has lied to the people,' Rae charges." It was like a laser beam at me when he said that. He said, "I don't believe a word the Premier says about auto insurance." This is Rae referring to Peterson. "Mr Peterson has lied directly to the people with respect to car insurance. He promised a very specific plan to lower car insurance, so I don't see any alternative but to say that in the last election Mr Peterson lied to the people of the province of Ontario about car insurance." Those were Mr Rae's comments about Mr Peterson.

How would your group categorize Mr Rae now in terms of his promises?

Mr Palk: I would say it's a very, very big disappointment.

Mr Phillips: If Mr Rae were characterizing himself, would he say he lied to the people?

Mr Palk: Probably not.

Mr Phillips: But if he applied the same standards he did to Mr Peterson, would he have a choice but to say that he lied?

Mr Winninger: Talk about an unfair question.

Mr Palk: Well, I think --

Interjection: Is that the issue here?

Mr Phillips: Pardon me? Well, the issue is, in your brief, Mr Palk, you point out trust, I think, and several times refer to the promises that were made to your group in the last election. So I'm suggesting, in your brief, you were promised these things, and Mr Rae said Mr Peterson lied when he didn't deliver them. I'm just trying to say I would think that if Mr Rae were now analysing his own performance against promises, he'd have no alternative.

Mr Palk: Well, Mr Phillips, I think I should be an equal opportunity critic. I think if we're going to be dumping on the Premier, it's just as incumbent upon me to say that Bill 68 was a most convenient invention of the Liberal Party.

Mr Phillips: Okay, I appreciate -- on your recommendations, you've got eight of them here and I think many of them are very good. The last five, I think, are dealing with solutions that may not be right in the bill, and there are some very good recommendations. The first three, I think, are the ones that are most directly applicable to the bill. If I might start with the first one, the right to sue for future economic loss, with the existing bill, Bill 68, would the provisions in there be acceptable to your group as they stand right now?

Mr Palk: No, they would not.


Mr Phillips: What would you like to be in the bill, then?

Mr Palk: First of all, I think that given the threshold, you have essentially eliminated 95% of the people who are involved in auto accidents, and I think that is far too high. There is no way I can in my wildest dreams imagine going through a threshold process myself, given what I went through prior to 1990 in my case.

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


The Chair: The next group is the CAA, Hamilton Automobile Club. Would they come forward, please?

I'd like to welcome you here to the standing committee on finance and economic affairs. We have until 11:30. You've been watching the proceedings going on. You can see the members love to ask questions, but don't let them make long preambles. You may begin, and would you identify yourself for the purposes of Hansard. I've got your name here, but they want to hear it.

Ms Catherine Newell: My name is Catherine Newell and I'm the director of public and government affairs at the Hamilton Automobile Club, and also the vice-chairman of public and government affairs for CAA Ontario.

The Hamilton Automobile Club is Canada's oldest auto club. At the time of its founding there were but a handful of motorists. However, our membership has grown from its humble beginnings of 19 members to over 243,000 members today.

The Hamilton Automobile Club is a not-for-profit organization which, among other things, was founded in 1903 to further and protect the interests of motorists. The club serves motorists in Hamilton-Wentworth, Halton, Brant county and Haldimand. Our membership represents a market penetration rate of 52.1%, which means that over 52.1% of all passenger cars registered in the territory served by the club belong to HAC members. The Hamilton Automobile Club's affiliates in Ontario are comprised of 10 clubs, which together with the HAC have a total membership in excess of 1.5 million members.

The Hamilton Automobile Club is affiliated with the Canadian Automobile Association, whose membership in total is 3.6 million, and the American Automobile Association, which has in excess of 33.7 million members.

One of HAC's specific objects, namely, "to engage in all activities permitted by law to further and protect the interests of the users of motor vehicles and the travelling public," is also one of our most important roles: that of being an advocate for motorists. It is in this capacity that we make our submission to you today.

For the last 10 years the Hamilton Automobile Club has been actively involved in bringing problems experienced by motorists with respect to auto insurance to the attention of the government and insurance industry. We have participated in a variety of government committees from the mid-1980s and have presented at both the public hearings into Bill 68 and the Ontario Automobile Insurance Board reference hearing into no-fault insurance systems.

The insurance crisis in the 1980s was significant. We received several thousand complaints on the spiralling costs of insurance, and these complaints were in the course of a month. Those on fixed incomes, pensioners and those on government assistance found it difficult and in many cases impossible to afford the amount they would have to pay out of their fixed budget for insurance premiums. Pensions and government assistance payments, even if tied to the consumer price index, couldn't keep pace with the cost of insurance, as it was consuming more of the total dollars available to people as disposable income.

Another group particularly hurt were newly licensed drivers, whose premiums were reflective of age, sex and marital status.

Clearly, the issue of affordability of insurance premiums remains the most important concern of motorists. However, along with affordability, we must have a system of reparation that deals effectively and compassionately with all those injured as a result of motor vehicle accidents. Increasing structured accident benefits to those injured is laudable, provided they can be enhanced without causing an escalation in insurance premiums.

We supported the threshold no-fault system proposed in Bill 68, with the proviso that it would in fact lower the cost of insurance premiums for all consumers and that it would contain future insurance costs to modest levels and that the threshold language be rewritten to provide a less restrictive threshold. In other words, we argued that the threshold wording should be amended to ensure that more of the seriously injured were able to sue.

If the complaints we receive today are a barometer of how the public feels about insurance, the Ontario motorist protection plan had a positive effect. Since Bill 68 became law, we have noticed a dramatic decrease in the number of complaints received from our members about both the cost of insurance and the actual handling of their claim by their insurance company. Of the complaints we continue to receive, the majority deal with claims-handling or problems stemming from a lack of understanding of the current legislation. Clearly, insurers must do far more to ensure that their insureds are fully versed in their entitlements under the current no-fault regime or, if it becomes law, the system proposed in Bill 164.

Complaints also arise from a lack of understanding on the part of the claimant about the direct compensation scheme. It is imperative that the government proceed with an enhanced customer and consumer information service, along with the development of consumer advocacy mechanisms. It is very clear that consumers have little or no understanding of the current legislation and much needs to be done to educate consumers about their rights, regardless of which system is in effect.

We applaud the government's decision to proceed in the longer term with a uniform, non-discriminatory risk classification system of drivers for premium-rating purposes. The insurance product is very difficult, if not impossible, to compare from company to company because consumers can't compare products based on varying definitions and rating factors. It is imperative that the government move swiftly to enact regulations prescribing a risk classification system that must be used by all insurers. If consumers know that the ground rules are the same from company to company for rating them, they can look, for example, at a company's reputation for service or a price differential and make an informed, meaningful decision as to which insurance company they wish to place their business with.

Section 11 of Bill 164 contains the newly worded regulation-making power prescribing a risk classification system and is critical to the government being able to move forward with a uniform risk classification plan.

Bill 164 contains a new provision dealing with the risk classification system that strengthens consumer protection. Section 38 of Bill 164 provides that, "No insurer shall, as a result of" the risk classification system, "increase or decrease the rate for a class of risks" by more than the prescribed monetary amount or percentage. However, the insurer has the opportunity to apply to the commissioner for approval of a plan that would allow it to phase in an increase or decrease over a period of time. The commissioner will only grant such an application if, among other things, the plan will cause a minimum of disruption in the marketplace and would be in the public interest.

Bill 164 provides that the commission shall, at least once every three years, seek the views of interested parties regarding the risk classification system and report to the Legislative Assembly any recommendations for amendments to the system. This ensures a thorough review of the risk classification system in a public forum. Reviewing the system in this manner ensures that the government is responsive to problem areas as they arise.

Over time, we have strongly advocated in favour of the removal of discriminatory practices in rating drivers. We applaud the government's intention to remove age, sex and marital status as rate-setting criteria. We continue to support universal rating factors that emphasize driver experience and driver behaviour. We feel that drivers should enter the system free of bias and that higher premiums should be charged against those drivers whose individual experience, record and claims history is poor. These individuals should indeed be assessed higher premiums.


For several years, one of the most serious problems to confront consumers was an insurer's quick decision to put risks into the Facility Association they weren't prepared to accept. As a result, the Facility Association became populated with a large percentage of clean risks. Depopulating the Facility Association of these risks must be accelerated.

Two common situations where people were placed in Facility were those who had not kept insurance on a vehicle they weren't currently driving; for example, while they were ill or taking insurance off a motorcycle that they weren't driving during the wintertime, and when they went back to put insurance on in the spring, they would be put into Facility, and husbands and wives who had a clean record and were living in the same household as a spouse who was a bad risk.

Bill 164 strengthens consumer protection by only permitting insurers to withdraw from the business of a class of insurance in accordance with specified provisions in the legislation. As well, amendments contained in section 12 of Bill 164 which provide for regulation-making power to govern the circumstances "before an insurer declines to issue, terminates or refuses to renew a contract of automobile insurance," or "prescribing grounds for which an insurer cannot, in circumstances specified" decline to issue, terminate or refuse to renew a contract of automobile insurance" are invaluable consumer protections. We ask that the government move forward to pass regulations specifying these circumstances.

Further, section 18 of Bill 164 states that any ground for declining to accept the risk or termination or refusing to renew a contract must be filed with the commissioner, who has the ability to hold a hearing and may prohibit the use of the ground as it is subjective, arbitrary, bears little or no relationship to the risk to be borne by the insurer in respect of an insured, or is contrary to public policy.

Once again, these provisions unmistakably assist the consumer in that the commissioner is able to keep a tighter rein on insurance companies' practices and procedures.

In analysing the proposed new compensation system, it is once again appropriate to reiterate our caveat to any system chosen: It must provide equitable compensation for those injured as well as be affordable and offer future containment of premium increases. The government has a strong responsibility to ensure that both these objectives are met, particularly as the purchase of insurance is mandatory in Ontario under the Compulsory Automobile Insurance Act.

Bill 164 raises the weekly income replacement ceiling from $600 to $1,000, with the benefit being paid on 90% of net income instead of the 80% of gross income, with the minimum benefit not less than $185 and the maximum benefit not greater than $1,000 per week. The actual effect of the change for a typical wage-earning family is a reduction in benefits.

For example, someone earning $1,000 per week gross would receive $800 per week tax-free under the OMPP, assuming that person had purchased the optional coverage which is available under the OMPP. The same person, assuming she or he was a higher-income earner in a two-income family, would receive $634 per week under Bill 164, a reduction of $166 per week. A person earning $600 per week gross would receive $480 under the OMPP. Under Bill 164, that person would receive $430 per week.

It is fair to say that the higher-income earner was in a more favourable position under OMPP because he or she was not paying tax at his or her higher-income bracket, with an 80% gross weekly income tax-free benefit. However, this change affects claimants at varying wage levels, not just at the highest end.

However, by increasing the maximum weekly income replacement benefit to $1,000, retired persons, along with low- or no-income earners, would subsidize higher-income earners. In addition, the low-income earner would never qualify for the maximum wage loss benefits. In the OMPP system, higher-wage earners had the option of purchasing higher benefit limits to suit their economic circumstances and were responsible for this additional premium cost.

The indexation of benefits is a positive addition and one that we argued in favour of before Bill 68 became law.

Bill 164 removes from the not-at-fault most seriously injured the right to seek recovery in tort for economic losses, including the loss of future income, which incorporates income-earning potential over the span of a career. What Bill 164 does give is an income replacement benefit which is calculated on the person's gross annual income from employment at the time of the accident and is indexed yearly to the consumer price index. The Hamilton Automobile Club continues to support the right of those seriously injured or the families of those killed to sue for economic loss. We are not in favour of an income-based death benefit capped at $200,000.

The reimbursement for funeral expenses up to $6,000, up from $3,000, brings it more in line with the true out-of-pocket costs of funerals today.

We argued strongly at the public hearings into Bill 68 that there should be no caps on rehabilitation or long-term care benefits. We are pleased to see that Bill 164 removes these caps. We support the government's appointment of a task force to develop standards for cost control of rehabilitation and long-term care. Predictability and certainty in the setting of premium rates is critical to the containment of future insurance costs. This is necessary to ensure that the insurance product remains affordable.

We support the right of those more seriously injured to sue for pain and suffering, loss of enjoyment of life and the loss of care, guidance and companionship under the Family Law Act. Again, I reiterate that HAC was opposed to the unnecessary restrictiveness of the OMPP threshold.

We issue one note of caution with respect to the indexed deductible of $15,000 or $5,000, depending on the head of damage, and that is the possibility of an award being inflated by the amount of the deductible. If this were to occur, all gains made under Bill 68 to control insurance premium costs would be lost. In past insurance hearings, the judiciary has gone on record stating that "juries properly instructed would not simply add on the amount of the deductible," and that judges would not do so either.

With assurance that lawsuits would not be inflated by the amount of the appropriate deductible, the HAC would support this system. It is critical to the control of claims and to the continued affordability of the automobile insurance product that the less serious claims be eliminated.

Clearly we are not in support of a return to the tort system in the form that existed prior to Bill 68, with its spiralling costs and inefficiencies. Motorists simply cannot afford that again. During the course of these hearings we have heard varying reports of what premium increases could be with the implementation of this new system and, in the longer term, the use of a uniform risk classification plan.

It is imperative that the government reconcile the large discrepancies that exist between the analytical actuarial reviews conducted to date as to the anticipated costs of the new system. In this economic climate particularly, motorists will not be able to absorb any sizeable premium increase and any increases, if necessary, must be contained at a modest level.

I would not end without stating the Hamilton Automobile Club's support for safer roads in Ontario. We heartily endorse programs that will achieve greater safety on our roads. Since early 1990, we have advocated that a graduated driver's licensing system should be implemented in Ontario. We have further advocated in favour of periodic testing of all drivers, regardless of age. Safety on Ontario highways is one of HAC's highest priorities, and we will make every effort to assist in programs that will reduce traffic accidents and their coincident cost.


The Chair: Three minutes, Mr Owens.

Mr Stephen Owens (Scarborough Centre): Thank you, Ms Newell, for your excellent presentation. I think that your brief outlined in a very succinct and supportive manner issues like the uniform classification system and why it's our view that people's insurance rates should be based on a driving record rather than on a variable like whether they're married or they're over 25 or they happen to be a female.

Your brief also outlined again the reasons why the Facility Association needed to be depopulated and showed that the reasons for people being shoved into the Facility Association have very little to do with their driving experience.

I also appreciated your support on the indexation of benefits, the consumer protections that we've built into the bill with respect to the withdrawal provisions and the increase in funeral expenses.

Your last comment, with respect to road safety, is one that we heartily agree with, and we will be working with the Minister of Transportation to ensure that the road safety initiatives that have been released are put into effect as quickly as possible.

Your comment with respect to the costs and some of the -- you didn't use the word "fearmongering," but I'm going to use it -- fearmongering that's going on out there with some of the wacko predictions of 20% and upward is quite correct.

I think the industry has indicated that it's willing to work with the government, and the minister has been working behind the scenes with the insurance industry to express our concern about costs and to ensure that people get the kinds of comprehensive benefits they need and that they are delivered in as fast a manner as possible. I'll turn the floor over to the next questioner.

Mr Mancini: I appreciated the brief presented by the CAA Hamilton. I want to make sure I understood your brief correctly, that you do favour increased benefits but at the same time you're quite concerned about the cost and the premiums that increased benefits might have, the effect it might have on your members. Is that correct?

Ms Newell: Yes.

Mr Mancini: So you're not for a holus-bolus increase in benefits without a wary eye on what that's going to do to the annual premium rate, is that correct?

Ms Newell: That's right.

Mr Mancini: I disagree entirely with the parliamentary assistant who called Coopers and Lybrand wacko, who called Wyatt wacko.

Mr Tilson: So do we.

Mr Mancini: I'm not sure if he was referring to Mercer, which is the government's own New York-based consultant, as wacko because Mercer has indicated that the minimum increase in rates under Bill 164 is almost $200 million across the province. Let me put that in a little bit of perspective for you. If we accept only the government's figures and not the -- and I quote the parliamentary assistant -- wacko Coopers and Lybrand people and wacko Wyatt people, if we accept only the government's criteria for increased rates, $200 million is more than the government gave to all of the hospitals for their increased expenses in 1992. I just want you to keep that in mind.

The other point I'd like to make with you is the gender and age factoring in automobile insurance. I'm assuming that many of your members are senior citizens and many of your members are women. Is that correct?

Ms Newell: No. Our population is very evenly divided, under 45 and over 45. So we have two very distinct groups, and it's not mostly senior.

Mr Mancini: Are you familiar with the United Senior Citizens of Ontario?

Ms Newell: No.

Mr Mancini: They are an organization of and for senior citizens, with over 300,000 members, and this is what they had to say about Bill 164. They presented a brief to this committee and in their conclusions they said: "We can only see the following solutions to our present dilemma: Do not implement Bill 164. Reduce the benefits in Bill 164 in order that rate increases will not be necessary to it." They made other recommendations also. You're aware that most senior citizens are on limited fixed incomes?

Ms Newell: Fixed incomes, yes.

Mr Mancini: Do you think it would be fair to sock them with a $200-a-year rate increase?

Ms Newell: No. I would say that across the board for any group, let alone just the seniors.

Mr Mancini: Do you agree with me that most women in our society earn less than men?

The Chair: Answer that and I've got to go on to the next questioner.

Mr Mancini: It's statistically proven.

Ms Newell: Yes.

The Chair: Mr Tilson.

Mr Mancini: -- rates will go up higher --

The Chair: I'm sorry. Mr Tilson.

Mr Mancini: Thank you for your help.

Mr Tilson: Thank you very much for your presentation. We in the opposition and you in the public have been sitting around since this bill was first introduced, trying to figure out why in the world they've done it. Why did they do it? Any system, I think we all acknowledge, takes a while to work out. Why did they just jump in? Was it just a political haranguing up in Honey Harbour, as has been suggested?

We may never know unless Mr Kormos has his way, but I guess what I can only assume is that the real reason they did it was to reduce rates. It surely can't be because of rights, because innocent accident victims have less rights. I can only assume it must be because of rates, yet the insurance companies, the wacko insurance companies of course, as Mr Owens has described them -- all those people are wacko according to Mr Owens -- but all of those people are saying rates are going to go up by 20%, so that doesn't make any sense either. So it gets to me.

You made one comment which sort of jumped out at me as you were talking. It was almost an aside towards the end. If it is because of rates -- and that was the whole issue of the deductible and you implied and lawyers have been suggesting it, insurance companies have been suggesting it -- but you implied that with this $15,000 deductible, the courts, juries and whoever are going to be bending over backwards to try and help people who are being penalized with this $15,000 penalty. Of course, you can pass all kinds of legislation saying they can't do that, but we all know what the legal system is and the legal system is designed to help people.

Ms Newell: I will make the comment --

Mr Tilson: If I could just finish with my question: From your organization's perspective, how real is this fear that the whole principle of the $15,000 deductible will become a joke and in fact costs will become more astronomical than these people had ever dreamed?

Ms Newell: That would be a major concern because if in fact it's inflated and although the judges have all been on record in the previous hearings saying they would never do that -- but if that in fact is what happened in practice, then the whole system would simply be reverting back to the old tort system and we would be in real trouble premiumwise and cost for everybody.

My recommendation would be to look at a less-restrictive threshold also as an alternative, because clearly we want more people to be able to sue. The 5% that can sue now is not appropriate. If we could get 15% through a threshold to sue, that would be much more appropriate. We don't want to see the right taken away to sue for loss of future earnings and their economic loss.

The Chair: Time has run out. I'd like to thank you for coming before this committee. The last accident I had and had to call the CAA, I locked my keys inside my car. I can say it here, but I couldn't say it in 151 because my wife would know it. Thank you for coming before this committee.

Ms Newell: Thank you very much, Mr Chairman.

Mr Harnick: You've got a lot of guts, Ron.

The Chair: She doesn't read Hansard, so I'm lucky.

Ms Newell: Yes, I do.

The Chair: No, my wife doesn't read Hansard.

Mr Kormos: We're sending her this volume.

The Chair: She had done it three months before, so I couldn't say anything.

Interjection: All the more reason it's in. Now she's really going to be mad at you.

The Chair: All come to order now.



The Chair: The next one is Victim's Voice, Mrs Smith. I'll guarantee you thought I would give you a hard time, but it's the committee members. I'll make sure they don't put you on the stand and fire the questions one after another. Feel at ease. You may begin.

Mrs Patricia Smith: Thank you. My name is Patricia Smith. I represent Victim's Voice. Sitting with me is Mrs Pat Leemet, who has provided you with a copy of her story to take with you to read, and Christina Butson, who is a victim. Mr Kormos, of course, needs no introduction from me. I just met all these people today for the first time, although I've talked to both of these ladies by telephone.

The Chair: Can I jump in for a minute. Mr Mark Morrow is sitting on the end there and I didn't recognize him. I don't believe he was sitting there when I recognized some new members, and Mr Abel also. Carry on.

Mrs Smith: Obviously, there is a need to reform the current auto insurance bill. However, the very people who have pointed out the need for change are the ones who are going to be neglected in the new bill. I would hope the members of this committee will pay particular attention to the plight of the victims of the current legislation and consider appropriate amendments as they examine this bill.

I am grateful for the opportunity to address this committee and to share with you some of the overwhelming problems faced by the victims of an auto accident.

Initially, at least, the prompt attention of the insurance company seems reassuring when the victim is understandably preoccupied with the pain and trauma of his or her injuries. The harsh and cruel realities of the OMPP, especially to the underemployed low-wage earner, no matter whether temporary, quickly becomes evident. His or her entire claim is based on what he or she was doing right at the time of the accident. The injured person then faces the difficulty of getting appropriate rehabilitation, funding for which is made available or terminated according to the arbitrary decision of the insurance company.

The insurance companies and their paid consultants dictate the facility for and the duration of treatment and funding. A person who sustains serious, permanent, ongoing injuries but does not meet the threshold is abandoned, first by the insurance industry and second by our government's failure to respond and protect.

I speak on behalf of Victim's Voice, a group of people connected by similar catastrophic injuries and ongoing disputes with the insurance companies. We share similar, almost identical problems dealing with the insurance industry, and those of us who are parents are left to deal, day to day, with the emotional and physical pain of the accident victim. Indeed, we also bear the financial responsibility of caring for the victim after his benefits have been terminated.

The accident victim wants to move forward, wants to take control of his or her life and regain independence. To achieve that, we rely on the government to make appropriate changes to the legislation. Because I can speak with absolute certainty of accuracy about my son's misfortune, I will present his story as an example of the devastating realities of no-fault insurance.

In October 1992, Mr Tilson, the member for Dufferin-Peel, stood in front of the House and said, "I would like to hear some of the stories that were caused by the OMPP." Those words suggested to me that perhaps it was not too late; perhaps you would listen to real people.

On September 29, 1990, our 21-year-old son David was a passenger in the back seat of an automobile, wearing his lap belt, when the driver lost control of the car, collided with the rear of the car ahead, then went off the road and hit a tree.

David's most serious injury was a two-level burst fracture of the spine. He underwent surgery for a lumbar fusion with bone graft and fixation with metal rods and screws. Moreover, a significant amount of torn and dead muscle was removed from his lower back.

It is impossible in the time I have to give you a complete picture of David's suffering and pain, but I can tell you that morphine injections offered only partial relief. David came home wearing a Jewitt brace, determined to work to ensure his complete recovery. At the time of the accident, David was working at a local gas station due to a layoff at the steel plant he worked at previously.

The at-fault driver's insurance company agreed to pay for David's medical needs, his income benefit of $224 per week, and it paid my wages to stay at home and be the primary care giver.

In March 1991, the insurance company hired a private consulting company to assist David with his rehabilitation. David was sent for therapy in May 1991. In spite of great pain, David worked hard to complete the demands of his program. We -- that's David, his father and I -- believed that the pain, headaches and profound fatigue were all a part of his recovery. David was discharged from the rehab program in June 1991 as he was fit to return to work. The insurance company terminated his funding and closed its file.

David was excited about returning to work, any work, anxious to be back to normal. David tried two different full-time jobs, but could not keep them as the physical demands of the jobs created intolerable, debilitating pain. Since September 1991, David has continued to work two nights per week at a gas station pumping gas even though his doctors have stated this is not the type of work he should do. He earns $90 a week.

David is currently waiting on standby to return to hospital for more surgery to have his rods removed. Even though the insurance company is aware of David's ongoing medical problems, it refuses to reopen his file.

Mediation failed October 26, 1992. The insurance company refused to settle the dispute based on its report from the rehab facility from June 1991.

David is 23 years old. He continues to live at home. Quite apart from the physical and psychological pain he experiences every day, he knows he faces an uncertain future, medically and economically. At 23, David lives a more sedentary lifestyle than his father and I. His doctors report that David has not plateaued. In other words, it is too soon to tell what his functional abilities will be. Knowing this, having strongly worded letters from doctors, the insurance company still refuses to reinstate even a partial weekly indemnity. They refuse to fund occupational or vocational rehabilitation.

Our next option is arbitration. David earns $90 per week. How does he pay a lawyer to represent him, because he dare not go into arbitration alone? I ask you, where do David and other victims go for help? Who can act as an advocate for the victim?

Since June 1991, I have made hundreds of phone calls looking for the answers. This is a two-and-a-half-year-long story that I've tried to deliver in a very short time. I have tried to identify some of the problems experienced by accident victims. The insurance companies and their paid consultants can and do ride roughshod over the victims.

The accident victim has no advocate. The threshold precludes most victims from seeking compensation. The injured victim serves a life sentence for an accident that was not of his making.

I'm sorry that Mr Kormos was not granted time to speak before this committee since he champions the cause of victims. I've asked him, therefore, to conclude my brief.

Mr Kormos: Thank you, ma'am, and let me applaud Victims' Voice and the courageous and tenacious people who have formed that group and carry on what must seem like an increasingly frustrating struggle, but a battle on their part -- the proverbial David and Goliath -- which is one for fairness and justice, and certainly what more could people ask for in a province like Ontario?

I indicate to this committee and to people who might be listening that my experience in provincial politics is really somewhat brief. I was elected, as some know, in 1988 after Mel Swart, who served Welland-Thorold and this province, this country I tell you, for 13 years as an MLA, was forced to retire because of ill health. No one could have been prouder than me to have served in that small opposition caucus of 19 people, and to have had as mentors and leaders people like Mel Swart, Donald MacDonald, Jim Renwick and Pat Lawlor, and oh, so many others, people like Marion Bryden, people who worked so hard for lifetimes with really the most modest of pursuits, some justice and fairness for people who perhaps weren't quite as capable of speaking for themselves.

Since I was 12 years old working in New Democratic Party campaigns, I recognized that the policies of the NDP certainly didn't always acquire universal approval, but the respect that the communities in this province, in this country, had for the CCF and the NDP, for the leadership of people like Tommy Douglas and others, that respect was shared by Conservatives and Liberals and non-partisans alike.

It was clear, was recognized by so many, that, well, the NDP may never fulfil its goal of serving as government but may be relinquished to the opposition benches; it was recognized none the less that the NDP performed a vital role in the democratic institutions that have developed in this country and in this province, and that, again, was to speak out for the people whom on occasion the other parties perhaps didn't speak loudly enough for.


The corporate world had its spokespeople in partisan politics, there's no two ways about that, and I don't deny them those spokespeople. But who could have overlooked, who could have not understood, who could have not identified New Democrats and CCFers with the victims, with the little people, with the people who were facing big institutions and who needed help -- yes, with the Davids.

I was similarly proud in 1990 when, yes, that goal, that seemingly quixotic goal of New Democrats, of social democrats, was achieved, of forming a government, for the first time in this province's history. And I tell you, if you think for a minute that it was only New Democratic Party members who voted for New Democrat candidates and created that election victory, you're sadly mistaken. I know that not everybody voted for New Democrats -- I know that full well -- but even among those who would not accept or would not endorse NDP policies -- and what could have been more closely identified? Surely there wasn't a person in this province who didn't understand that New Democrats stood for public auto insurance, and not public auto insurance for the sake of public auto insurance but for public auto insurance because it was perceived as a vehicle to preserve and reinforce the rights of innocent victims.

While people may not be familiar in this province with some of the more esoteric of NDP policies, surely there isn't a voter who could not have been aware of our position, as New Democrats, as social democrats, as champions of little people, on the rights of innocent accident victims.

If they weren't, they were surely informed of that during one of the most heated debates the Legislature in this province ever saw, and that was the debate over Bill 68, where the two opposition parties, the Conservative Party, Bob Runciman being its spokesperson then on the issue of auto insurance, and the New Democratic Party -- 17 members in the Tory caucus; 19 members in the New Democratic Party. By God, the government was one of the largest governments this province has ever seen. They were so numerous that they occupied some of the opposition's side.

These two most modest opposition parties took on Bill 68, because in their views, that is, in the view of the Conservatives and in the view of the New Democrats, and quite frankly in the view of a whole lot of Liberals too, the attack on innocent accident victims that was inherent in Bill 68 was intolerable.

At the same time, we recognized that there was a philosophy, there was an ideology behind the threshold Bill 68. There clearly was a constituency that was calling out for a threshold. The insurance industry itself articulated that well.

But we fought, and surely that fight, those debates in a democratic forum which didn't restrict members' speeches to 30 minutes, brought the issue to the attention of every single member of this community, this community of Ontario; I tell you that.

And proud? I was oh, so proud of Bob Rae and New Democrats and their friends in September 1990 when we formed that government. I saw oh, so many who hadn't served in the Legislature before, but notwithstanding that, a collection of talent and skills and insights and the commitment to a new way of doing things.

Again, notwithstanding that there were a whole lot of people who didn't vote for New Democrats, even among those people there was a new optimism. There was hope that this government, this New Democratic Party government, would show Ontarians, would perhaps show the rest of Canada, that government doesn't have to be the way that it's always been.

My pride in September 1990 was insurmountable and, oh, was I disappointed at Honey Harbour, one year to the day of our election victory, that the Premier would abandon, flee from our commitment to public auto insurance? Of course I was. I confess I was perhaps even angry, but I obtained some solace from the fact that Bob Rae and the New Democrats were ever so clearly on the record as being in support of the restoration of the rights of innocent victims to full compensation and their right to access the courtrooms, if need be, to obtain that justice.

Some of you know I'm a lawyer. I tell you that. Now, mind you, I'm a criminal lawyer, not a personal injury lawyer, and as a criminal lawyer I practised in the courts and, quite frankly, having spent almost five years now in the Legislative Assembly, the practice of criminal law was far better preparation for dealing with politicians than any personal injury work ever could have been.

But I tell you, I'm well aware of and sensitive to some of the imperfections, some of the inadequacies of our justice system -- most of us are -- but there seem to be some peculiar arguments being made. Somehow the courtroom is a roll of the dice. It seems strange for government members to use that reference after the Premier would seem to okay and put the stamp of approval on gambling casinos.

Somehow the metaphor of a roll of the dice is used about courtrooms, yet at the same time the government purports to have preserved for innocent victims the right to use courtrooms to determine compensation for pain and suffering. How it strikes me is some pathetic sucking and blowing taking place in the arguments that are being used to peddle this particular bit of legislation.

We've betrayed the trust that Ontarians put in us. We've betrayed the innocent victims. We've launched an attack on the people whose futures are already stolen from them by a drunk driver or a careless driver or a reckless or negligent driver. We tell them no. We New Democrats say, "No, the courtroom doors are locked, bolted and barred to you." Justice in the courtroom under a New Democratic Party government is to be preserved -- what? -- only for the corporate entities and the wealthy and the powerful? That's what Bill 164 does.

I mention the constituency that sought, that advocated, that pleaded for threshold. I didn't agree with them, but they were there. Who are the advocates of Bill 164? I've travelled with this committee across Ontario this week, and not a single submission in support of this legislation. I've read and witnessed the hearings the week before in Toronto, and barely a single submission in support of this legislation.

The government can't come up with a single letter, a single phone call, a single note from any member of this community in Ontario who would ask for -- what is this government going to give them? Who would have thought New Democrats, the legacy of this government is going to be, "Yes, it will be higher premiums." That's not fearmongering, that's a reflection on the history of the relationship between the auto insurance industry and government in this province: Higher premiums for drivers and reduced benefits for innocent victims.

While people, desensitized, have come to expect some puffery on occasion, perhaps even some hyperbole from governments, lies and deceit and dishonesty are never tolerable from a democratically elected government. I tell you, it is unconscionable, and why do I say that? Because really this government is engaged in a heated selling job, one that would make Procter and Gamble blush, of a package of legislation that is ill conceived, poorly written, has no ideology or philosophy providing direction for it.

That selling job is unprecedented in the deceit and dishonesty contained in the little blurbs that are drafted up by the little spindoctors and the little media minions who travel with this committee, twisting arms of the press people, TV persons, print and radio media, pleading with them to please give the government spokespeople a 15-second clip.


Dishonesty? Well, I'll tell you, there's been a persistent effort to try to explain Bill 164 as containing higher benefits. I tell you, it contains lower benefits. The auto club and other presentations have already revealed the fallacy, the dishonesty, the great lie in discussing higher benefits.

Ninety per cent of net is the formula for wage replacement in Bill 164. If you wonder where that comes from, some of you who have had to struggle with the Workers' Compensation Board will recognize that formula because it has been plagiarized right from workers' compensation. If you like workers' compensation, you'll love Bill 164, people. What's the status quo? The status quo under Bill 68 is 80% of gross. The bottom line is that means the vast majority of injured people will receive lower benefits under Bill 164 rather than higher.

If you want to take a pencil and a piece of paper and figure it out, let's figure it out. It was discussed at the rate of $800 a week, because of course there's this spin of the $1,000 cap instead of $600. Let's take a person earning a gross weekly pay of $800. For those people in my riding who are fortunate enough to still be working, $800 a week is a not unattractive income. On the basis of the current formula of 80% of gross, 80% times $800 is $640. Oh yes, there's a $600 cap, which means it's reduced to $600 per week tax-free. Under Bill 164, that same working person, woman or man, will receive 90% of net -- and I've used a most conservative deduction -- leaving a net pay of $600, and 90% of that is $540.

Should you be so unfortunate as to be injured, you can avail yourself of the $1,000 cap when your weekly income is somewhere in the range of $1,750. Who would have thought from New Democrats? What that means is that the working people, the poor, the middle-income will be subsidizing the rich and the very rich, the very thing we attacked to vehemently when previous governments dared to do that.

The fluff -- no, the dishonesty -- about access to courts for pain and suffering awards with a $15,000 deductible: What that means is that for every successful litigant, it's the innocent victim who's going to be providing a kickback of $15,000 to the insurance industry each and every time someone is injured. Bill 164 is a victory of the guilty over the innocent.

When I was joined by Phil Edmonston yesterday in Ottawa, our only federal member from the province of Quebec, from the riding of Chambly, he mournfully spoke of how he and other New Democrats, real New Democrats, fought the no-fault system in Quebec some 15 years ago. They lost that battle. There wasn't an NDP government. They expected far more from this government in Ontario and so do the people of this province.

I'm concerned. I hear today from Mr Owens, the parliamentary assistant, that the minister is engaged in some behind-the-scenes dealing with the insurance industry. I query, is it behind the scenes or under the sheets, Mr Owens? I'm concerned about the backroom deals, because once again, whether people supported all the things New Democrats did, they believed clearly that New Democrats were opposed to the backroom dealing that had been so frequently the subject of criticism from Mel Swart, Jim Renwick, Donald MacDonald and others like them.

I say the people of this province voted for a new style of government, one that was open, one wherein the deals weren't struck behind the scenes, one wherein the freedom of information act wasn't used arbitrarily as this government has used it to deny access to the $4 million to $5 million worth of research that's been done on costing. I challenge this government to make that information available to every member of this committee, every member of the Legislature, every member of the taxpaying public in this province who paid so dearly for it so that this debate could take place.

Yes, higher premiums and lower benefits. That's not to say that some of the reforms contained in the no-fault portion of Bill 164 aren't welcome. It's been pleasing to hear even previous members of the last government acknowledge that Bill 68 as drafted may well have left some room for some improvement.

It was New Democrats, joined by their Conservative counterparts, who forced the hand of the government to increase the cap from $450 to $600. Remember? Indexation -- of course. Improving the lot of people who require and have a right to vocational and long-term rehabilitation -- of course. But that's not the guts, that's not the thrust, that's not the intent of this legislation. That could have been done in a matter of mere weeks with the cooperation of all three parties in the Legislature.

This bill is wrong. This bill is an attack on innocent accident victims. It's an attack on drivers. This bill will only serve to enhance and increase the cynicism of voters, of members of communities across this province who have learned to mistrust government greater than ever before. I tell you, it's a cynicism that's been earned by governments, this government included.

I plead with my colleagues, many of whom I know mean well, some of whom very strongly disagree with what's being done but are afraid to say so, to do the right thing. I plead with them to fulfil their obligations to their communities, which entrusted them with one of the greatest trusts you can ever have in a democratic society. I plead with them to recognize that rather than muzzling members of the Legislature, the community is calling out for members of legislative assemblies, this and others, to be freer and freer in their ability to speak out on behalf of constituents. I plead with them to reject a package of reforms that's based on lies, a package of reforms that's based on ill-conceived assumptions and a package of reforms that constitutes a complete betrayal not just of what we stood for but of what people expected from us.

I say that as a New Democrat. I've never before in my life been stronger as a New Democrat. I believe the sort of policies, insights and attitudes that New Democrats have spoken about for so long are all that much more needed to overcome these exceedingly difficult times. Now is not the time for us to become the enemy. Now is the time to be true to our commitments, to our convictions. Now is the time for us to be courageous and now is the time for us to speak out.

I say in closing, before I give the floor to Mr Morrow, I'm concerned about the misconceptions that have been generated about this bill and legislation. I say to you, Mr Owens, as parliamentary assistant, and any of you who would want to defend this legislation that I will join with you in debate in any forum, anywhere in this province, in any television studio, with any audience, a debate that should be far-reaching and wide in scope and one that I encourage members of the opposition to share in, be it Mr Harnick, Mr Tilson or members of the official opposition. I say that to you. Show us the courage of your convictions. I'm prepared to show you mine. Go ahead, Mr Morrow.

Mr Mark Morrow: Thank you very much, Mr Kormos. Mr Chair, can you hear me from this point?

The Chair: You've got two minutes.

Mr Morrow: Thank you. That's about all I need.

First, let me say there are parts of this bill that I do feel are good -- rehabilitation and long-term care -- but that's not why I'm speaking today.

I'm speaking about the betrayal of the 35,000 NDP members to whom we've always promised public or driver-owned auto insurance. I'm speaking about the betrayal people in my riding of Wentworth East feel after I campaigned so vigorously for driver-owned auto insurance in the last election. I'm speaking about the betrayal this government has given to the people of Ontario, when for so many years we supported publicly owned or driver-owned auto insurance. It's nothing more than a straight denial, a straight betrayal.

I'm depressed. I'm discouraged. I'm very upset with what I see. How do I go back to my riding, how do I go back to the people of Wentworth East and say, "Well, we just flipped again"? It just doesn't make a lot of sense.

To the six government members on this committee, you all ran on a very strong driver-owned or public-owned auto insurance campaign in 1990. How do you answer the people in your ridings? What do you say to them?

I think that's all I have to say, Mr Chair.

The Chair: The time has run out. I'd just like to make some points here. Mr Kormos was recognized by the Chair in committee room 1 and in room 151, when he came into the room. It's not that he's been muzzled. He hasn't put his hand up and asked the Chair to have any time.

Mr Kormos: Oh, wait a minute, Chair.

Interjection: That's completely out of order.

The Chair: No, it's not. What you've done is muzzled this committee right now because you couldn't ask any questions.

Mr Kormos: Stop being a pathetic apologist. You're an embarrassment.

Mr Harnick: Mr Chair, with unanimous consent, I think we should stay here until 12:30 and we can ask all the questions we want.

Mr Kormos: Agreed.

Mr Harnick: The only thing that will happen is that we'll miss a half-hour of our two-hour lunch. I'm asking for unanimous consent based on what you have said. I'm not that hungry. I'm sure you're not that hungry. Let's stay here until 12:30.

The Chair: The one thing I'm going to say here is that each group has had half an hour. If I go to an hour -- I'm directed by this subcommittee. We made the rules before we even wound up coming out on the road.

Mr Harnick: Mr Chair, on a point of order: I'd just like to ask for unanimous consent based on what you have said and the denial of the opportunity to ask questions. We have two hours to do nothing. My point of order is to ask for unanimous consent to stay here until 12:30 so we can ask all the questions we want.

The Chair: That is not a point of order. I'm not going to ask it because we've already been directed by the subcommittee. We get out on the road and you want to change the rules.

Mr Harnick: I'm asking for unanimous consent.

The Chair: Is there unanimous consent?

Interjections: No.

Mr Harnick: Let's have a recorded vote.

The Chair: No, a vote is not necessary here. What I'm saying, Mr Harnick, is that Mr Kormos knew to leave time at the end of the presentation for members of the committee to ask questions.

Mr Harnick: You've got two hours. Go ahead and start asking questions. Is there anybody here who objects to spending a little extra time?

The Chair: Cut the mike. This committee is recessed until 2 o'clock. Thank you for coming before the committee.

The committee recessed at 1201.


The committee resumed at 1358.

The Chair: Good afternoon. We'll resume the hearings for the standing committee on finance and economic affairs on Bill 164, An Act to amend the Insurance Act and certain other Acts in respect of Automobile Insurance and other Insurance Matters. This young lady has a message for anyone who needs interpretation. Go ahead and identify yourself.

Mme Sylvie Soth: Bonjour. Je suis Sylvie Soth, l'une des interprètes. Je voudrais vous signaler que nous avons un service en français ; vous pouvez suivre les déliberations du comité. Il faut s'adresser ici pour obtenir un récepteur. Merci.

The Chair: Thank you. I would like to recognize the mayor of Grimsby in the back there, his worship Nick Andreychuk. If you need interpretation, she'll interpret for you, Mr Andreychuk.


The Chair: He happens to be with Dominion. My wife said, "Be nice to him, because that's where our insurance is."

Mr Harnick: That explains that he's against it too.


The Chair: The first group to come forward is Co-operators insurance financial services, Guelph. Welcome to the standing committee on finance and economic affairs. We have one half-hour. In that period of time, if you've been here this morning, the members like to have some time, if possible, at the end of your brief to ask questions. We will be starting off with the Conservative Party asking questions this afternoon. Go ahead, and please identify yourselves for the purposes of Hansard.

Mr Dan Thornton: I'm Dan Thornton, senior vice-president with Co-operators. With me are Kathy Bardswick, regional vice-president, and Bill Tait, claims manager from here in Hamilton. We appreciate the opportunity to comment on the present state of auto insurance in Ontario and to highlight our concerns about Bill 164, and then we welcome the opportunity to respond to your questions.

The Co-operators Group Ltd is a cooperative of 35 member organizations from across Canada who, through their membership structure, involve more than four million Canadians. In Ontario our members include the Ontario Federation of Agriculture, Gay Lea Foods, Credit Union Central of Ontario, United Co-operatives of Ontario, Co-operative Housing Federation of Canada, the Canadian Brotherhood of Railway, Transport and General Workers and the United Steelworkers of America, district 6. Combined, these organizations have a membership base of some 2.3 million people.

In Ontario we provide auto insurance to about 500,000 drivers and insure some 250,000 homes, farms and businesses. We provide these services through 150 offices, some 300 full-time sales representatives and 1,700 staff. These offices and staff are located in virtually all rural and urban population centres in northern and southern Ontario.

With more than $1 billion in assets invested in Ontario, our general and life insurance operations rely on earning profits to finance continuing growth.

First, let's look at the current system of insurance in Ontario. The Ontario automobile insurance consumer has enjoyed several years of rate stability now while companies are seeing, finally, the end of disastrous losses. For the Co-operators, the two and a half years of working with OMPP have been a positive experience. OMPP has allowed our staff to deal directly with policyholders in providing benefits, instead of attempting to settle claims with other companies and their insureds in an adversarial environment, as was the case in the prior system.

Since the introduction of OMPP in June 1990, we have handled approximately 150,000 claims for vehicle damage. Consumers have welcomed the change in which they deal with their own insurer, where we can arrange for repair or replacement directly, and the consumer does not have to get estimates or deal with another motorist or his insurer. OMPP has simplified the system for consumers. Since we deal only with our own customers, we have experienced a 20% reduction in the number of vehicle damage claims we process compared to the previous system.

Consumers are sensitive to the fact that following an accident, their premium would increase only to the extent they were at fault. Allocation of fault for rating purposes is simplified through use of established charts, and we provide the opportunity for the consumer to question each allocation.

We have handled some 28,000 OMPP accident benefit claims. We have developed our capabilities to deal with injured policyholders, with an emphasis on meeting their needs for both compensation and rehabilitation -- a focus on rehabilitation, not retribution. Only 125 of our claims have required mediation, and only five required arbitration services.

We have recorded 2,500 injury liability claims, an 85% reduction from the number experienced in a similar period under the old system. The claims dollars formerly directed to these liability claims have been redirected to provide more benefits for more people under accident benefits.

Prior to the introduction of OMPP, Ontario auto insurance was a losing proposition. From 1987 to 1989, the Co-operators lost some $60 million on Ontario auto insurance after investment income.

We now believe that OMPP premiums are adequate. There is no pool of excess profit to absorb any increase in benefits, but it will take several years to determine its ultimate cost. It is still too early to determine with certainty the average length of disability period, the long-term cost of other benefits and the effectiveness of the threshold.

Since OMPP began, we and the industry have advocated several improvements, such as fairer treatment of self-employed, enrichment of certain benefits, and controls on the extent of benefits. These suggestions for obvious practical and needed improvements have been passed over, while debate on Bill 164 has continued for over a year. In fact, the minister introduced 164 long before a report on how OMPP was working, which was required by Bill 68, was released.

Above all, we are disappointed in the lack of material progress in road safety. The first line of attack on the cost and the human suffering of automobile accidents should be to reduce their frequency and severity. It is government that controls the environment in which accidents occur, by its management of driver control, traffic laws and roads. The concept of graduated licensing is being adopted in Nova Scotia, but not yet in Ontario. We've seen proposals for the creation of a road safety agency, but not substance.

Our presentation here today will focus on three of our greatest concerns with Bill 164: cost, complexity and business confidence. You have received the actuarial studies from the government -- the Mercer studies -- and the insurance industry's Wyatt studies, and while we believe that the Wyatt study more fully portrays the cost impact of the legislation, both of these studies indicate great uncertainty as to how much 164 will cost consumers and companies. The bottom line is that Bill 164 and its regulations will cost more. We do not believe that consumers should have to pay more for their auto insurance at a time when they can least afford it and when there seems to be satisfaction with the current system.

Bill 164 proposes three changes to the benefit system which will result in significant cost increases to insurance consumers, both in benefits and transaction costs.

The first is the removal of limits on medical and rehabilitation expenses, which creates an unlimited liability for insurers and reinsurers, running years into the future.

The second is the replacement of a well-defined bodily injury verbal threshold with a monetary $15,000 deductible. We are concerned that this deductible will not hold, and that damages will be inflated to ensure that claimants receive at least some reward. At minimum, the deductible should include a verbal threshold, so that it is clear from the outset that only certain claims need to be investigated and monitored for potential tort action. But we believe any deductible will result in confusion and frustration for claimants by encouraging them to pursue tort settlements to focus on action against the guilty party but then receive only a part of the compensation awarded them by the courts. We believe claimants are better served by keeping money and effort focused on rehabilitation.

Third is a dramatic increase in accident benefits, both for disability income and death benefits, indexation of these benefits to the consumer price index and frequent reviews to reopen claims reassessments. We are also concerned that companies will experience increased expense for medical and rehabilitation costs for accident victims as the government reduces the scope of insured services provided by OHIP. These will provide further upward pressure on premiums.

We believe that if Bill 164 proceeds, it is essential that the regulations be substantially changed to lower costs.


As we stated previously, OMPP simplifies the insurance process for the consumer by allowing claimants to deal with their own insurer and reduce the need for legal proceedings. Bill 164 and the draft regulations, however, create a very complex claims settlement environment and, as a result of increased potential access to the courts, will return claimants to an adversarial tort environment.

The draft regulations attempt to describe compensation for a wide variety of potential losses. Detailed categorization of benefits may create certainty in the minds of those who have drafted the documents but, in fact, create confusion for consumers, claims handlers and adjudicators, and will increase insurance costs ultimately.

Complexity means there will be more errors and inconsistencies in paying benefits. The best of all intentions will not be enough to ensure that benefits are applied fairly for all. Complexity will also invite the development of consultants and advisers to help interpret these regulations, and those folks will expect to be paid for their services.

We believe the draft regulations must be revised so that the emphasis is on a simple process that provides fair, basic and reasonable benefits to all victims of automobile accidents. Specific optional benefits may be tailored for those with particular needs. It's important that consumers, though, have accident and sickness insurance to protect them in all situations. Disabilities result from many causes other than auto insurance, and auto insurance cannot meet all needs.

The withdrawal provisions and regulatory powers of cabinet under Bill 164 paint a picture of Ontario as an environment in which the regulation of auto insurance is susceptible to coercive measures, limiting rate increases and expanding limits in the belief that companies cannot escape. Such withdrawal provisions are an inconvenience to foreign-based companies, but such an environment is a threat to the survival of a domestic company with significant market share.

In conclusion, Co-operators wants to provide quality service to policyholders on a financially sound basis under a system of insurance that makes the best use of our customers' premiums.

The introduction of Bill 164 was premised on the government's belief that large OMPP profits could easily provide much broader benefits at no additional cost to the consumer, and this premise is false.

Bill 164 and the draft regulations have serious cost implications for both consumers and insurance companies and create a complex system of insurance in Ontario. Such increased cost and complexity will result in widespread consumer dissatisfaction. More time is needed, we think, to see the true cost of OMPP.

We recommend that government focus first on specific, concrete action steps to reduce the frequency and severity of accidents.

Finally, we recommend that government work with the industry in a cooperative way to make changes to the existing insurance system which are necessary, practical and affordable for consumers, and respect the efforts insurers are making to ensure that consumers are served by a responsive and viable industry.

That's our presentation. We'd be pleased to answer questions.

The Chair: Okay, thank you. Mr Tilson, five minutes.

Mr Tilson: It was an interesting observation you made that Bill 164 was introduced even before the government made its presentation to the House or its report to the House, as it was deemed by law to do, as to whether Bill 68, OMPP, was working. Even when they did that it was, I think, simply a two-page letter or a one-and-a-half-page letter. The minister said, "Oh, well, The Road Ahead is our report." Again we ask ourselves why they've done this in the first place.

I'd like to ask you a question. We've repeatedly had people come to us on the subject of rehabilitation. The fear with respect to long-term care is that, through Bill 164, everyone's being treated the same and that, in fact, if you had special needs from your home and your lifestyle as you've been accustomed to, through this legislation you'll never be able to achieve that; the benefit coverage simply won't be there.

The fear has been that if there is a publicly funded program available, for example, for the care of a victim, the insurer would simply refuse to provide a preferred form of private care which would restore the victim to the lifestyle and the way he has been accustomed to living. Have you any thoughts on that fear that's been expressed to us, that the insurance companies will simply take advantage of that loophole in the legislation?

Mr Thornton: I'd like to call on Bill Tait, who manages our claims operation here in Hamilton and who has practical and firsthand experience at working with a rehabilitation system, to respond to that.

Mr Bill Tait: I think it is true that the proposed policy would have the insurance companies look towards the public sector for any benefits or any services that are available out there right now before applying insurance limits.

Mr Tilson: The difficulty is, and that's the point I'm making, that even though the programs you may be able to offer might be able to provide that, because these other programs are available, therefore they can't live the lifestyle they've been accustomed to living.

Mr Tait: I think it's still possible even under this legislation that this can happen, but again, the insurance companies would have more control under Bill 164 in terms of pushing people towards the publicly funded system. That being the case, yes, there probably would be some insurers that would do that. But --

The Chair: Sorry, could you speak into the mike? We're not picking you up on Hansard.

Mr Tilson: I have one other question that like your comments on, and then Mr Harnick has a brief question, and that has to do with the subject of cost.

The Chair: Mr Tilson, you have one minute left.

Mr Tilson: Okay. Well, then, ask Mr Harnick.

Mr Harnick: Very briefly, what's the average premium of cars insured by Co-operators?

Mr Thornton: It's in the area of $800.

Mr Harnick: What would be the average loss cost per car?

Mr Thornton: It currently would be in the order of $640.

Mr Harnick: Would that include all of your administrative costs?

Mr Thornton: No.

Mr Harnick: So that what would be your net return on a premium of $800?

Mr Thornton: On an underwriting basis, in terms of a dollar of premium that we would receive, there's virtually no return from that premium dollar. The return is from investment income, as opposed to what I would call operating income.

Mr Harnick: What you're telling me, just so I'm perfectly clear, is that on an $800 premium, Co-operators breaks even?

Mr Thornton: On an operating basis we would break even and we would get additions to surplus or profit from investment income.

The Chair: I have to go to Mr Owens.

Mr Owens: I'd like to thank Mr Thornton for his presentation. Your company has been involved with our ministry in a number of ways and your former CEO is involved with myself on the co-op review task force, and I appreciate the assistance you've given us.

In terms of the kinds of issues you've directed our attention to in your brief, you talk about, on page 5, the first bullet point, the removal of limits on medical and rehabilitation expenses. At what point, after how many years, do you think it would be appropriate for a company to stop paying benefits to a person who's been injured?

Mr Tait: Perhaps I could answer that. I think one of the proposals that was made by the IBC was that a cap of $1 million be placed on medical rehabilitation and future care expenses. If you're asking about a time frame that benefits should cease with respect to future care, there are some obvious cases where those benefits shouldn't cease.

Mr Owens: If a person is, for instance, 16 and is involved in an accident and is catastrophically injured, in terms of some of the testimony that we've heard during these hearings, the $1-million cap would be reached fairly quickly. My question is, what happens to that person and whose responsibility does it become?

Mr Tait: I think if future care benefits were dealt with on a structured basis where those care benefits were purchased up front on an annuity basis, probably the $1-million cap would look after that 16-year-old claimant.

Mr Owens: In terms of the minister's announcement about a task force, I think on rehabilitation and the $3,000-a-month attendant care cap, we've expressed concerns about cost, but we also understand that standards with respect to care need to be set. Do you think that task force, with the kind of purview that it's going to use -- do you think those issues will help constrain costs?


Mr Tait: I think probably the timing for that task force is excellent. The rehabilitation field is new to most of us, in the last two-and-a-half years with the advent of higher rehabilitation benefits under auto policies. It also doesn't have a lot of restrictions or constraints inside the system. So our hope is that the task force can start to address those issues and guarantee some common care for rehabilitation victims.

Mr Owens: Mr Thornton made a comment at the beginning of the presentation around no-fault, and if I can paraphrase, the acrimony has been reduced and some of the adversarial relationships have been decreased. Can you maybe expand on that a little bit? Some presenters have talked about wanting to return to the system of old, and I characterize that as a wild west type of a system where some people win and some people lose.

Ms Kathy Bardswick: I'd like to respond to that, seeing as my major responsibility includes managing the claims operation, in addition to providing wider-spread service to our customers. I'm going to first respond by sharing some numbers with you in relation to the kinds of activities our people now are generally involved in in relation to the OMPP legislation in comparison to what we used to be involved in.

We have roughly 100 people involved in claims handling, the provision of claims service to our clients in Toronto. Of that 100, we have people, roughly a dozen of them, now involved in what was the traditional tort, an attempt to identify, define and negotiate liability assessments, and the remaining 88 are in the provision of benefits, which is really now the business that we're in, and appropriately so, and possible because we are not heavily involved or required to first attempt to investigate, define "fault" and prepare whatever has to come beyond that, but first provide benefits.

I think that's the appropriate way our resources should be allocated and is conducive to an environment of helping victims get back on their feet and back living at least closely resembling the lives they used to have. I think that allocation of resources alone demonstrates a very different environment for us as insurers.

Mr Owens: Thank you for your presentation.

Mr Mancini: Mr Thornton, I want to thank you and your officials for joining us today and presenting us with your brief. It's very informative and again has demonstrated many of the pitfalls contained in Bill 164.

Sir, would you agree with me that prior to Bill 68 there was great rate instability within the marketplace here in Ontario and that consumers were upset?

Mr Thornton: Yes. I mentioned during the presentation that the Co-operators had lost some $60 million in the years immediately preceding --

Mr Mancini: I appreciate that, but I want to zero in on consumers. Would you agree with me that consumers were upset about the instability?

Mr Thornton: I'd agree.

Mr Mancini: Would you agree with me that the OMPP, Bill 68, in fact was a blended system of no-fault and tort and brought rate stability to the consumers?

Mr Thornton: Yes, I'd agree with that.

Mr Mancini: You said in your brief on page 4, "The minister introduced Bill 164 long before a report on how OMPP was working," which was required by Bill 68. When Bill 68 was introduced, you'll agree with me that it was a major policy change in Ontario, that it was very complex and that in fact it was going to be absolutely necessary to have a report go to the Legislature to ensure that if there were any cracks in the system or people falling through the cracks, the Legislature would get an opportunity to know first hand where the bill needed to be improved, where the legislation needed to be improved. Did you think that was a good idea?

Mr Thornton: Yes, I did. OMPP, as Kathy has said, required a major change in how we approached our business. Clearly, given the amount of change, once it's been in operation for a couple of years, it's appropriate to want to stand back and assess how it's doing.

Mr Mancini: But it was a good idea at the time to have a review of the legislation sent to the Legislature so people who had fallen through the cracks or things that may have developed that hadn't been thought of or whatever could be looked at. I appreciate your comments in that regard.

The government and its New York consulting firm have stated publicly that because of Bill 164, automobile insurance rates will go up a minimum of 4.5%. I've quoted for the record, both here in Hamilton and elsewhere across the province, that the consulting firm of Coopers and Lybrand has indicated that rates will go up substantially more than 4.5%, and that the Wyatt firm has also indicated that rates will go up substantially more than 4.5%. As a matter of fact, some people are indicating rates may go as high as 20%.

Earlier this morning, the parliamentary assistant said there were some wacko people saying that rates were going to go up almost 20%. In your opinion, do you think the Wyatt firm and the Coopers and Lybrand consulting firm are legitimate firms in the industry that can gauge, if not to a tenth of a degree, fairly accurately what might happen and that they are not wacko people?

Mr Thornton: I won't comment on the various actuarial estimates of the increases that have been given. I will say that in our view, given the contents of the proposed legislation, the premiums will have to go up significantly.

Mr Mancini: Are you aware that Coopers and Lybrand estimated that the people right here in the Hamilton region, because of Bill 164, will have to pay $198 more for their premiums? Are you aware of that?

Mr Thornton: Yes, I am.

Mr Mancini: Do you think the changes in Bill 164 are worth the $198 to people who have been laid off and people who are on welfare? We have a million people in Ontario on welfare, the highest unemployment rate we've had in years, people have lost their jobs and plants have closed in record numbers. Do you think now is the time to inject another $500-million cost on the consumers of Ontario?

Mr Thornton: I think my opinion would be interesting on that. I think what would be more significant would be the opinion of our 350,000 automobile clients in Ontario. I know that at this point they would not want to face that kind of increase.

Mr Mancini: You insure a lot of farmers.

The Chair: I'm sorry, Mr Mancini, your time has run out. I'd like to thank you for appearing before this committee, and have a good day.



The Chair: The next group to come forward is the Ontario Trial Lawyers Association from Burlington. I'd like to welcome you to the standing committee on finance and economic affairs. Do you have any colleagues with you that you'd like to join you?

Mr John McLeish: No, Mr Chairman, it's just myself. My name is John McLeish.

The Chair: We have half an hour. We have until 3 o'clock, and in that period of time, if you can leave some time at the end for the members of the committee to ask questions. You may begin.

Mr McLeish: Just so you know who the Ontario Trial Lawyers Association is, it's an association of lawyers throughout Ontario who act exclusively for plaintiffs; no institutional defendants. Much of the work they do is on a pro bono basis for people. A lot of that work is for injured people. If a lawyer is working for an innocent victim of someone's negligence and does not get a successful result, that member of our organization will be happy to waive their fee.

Just so you don't think I'm a lawyer here with some self-interest, I can say this to you: Neither of my parents completed high school. For me, I'm proud to be a lawyer. It's a very big deal for me to be a lawyer and I'm very grateful to be a lawyer.

The Ontario lawyers' main objection to Bill 164, as I'm sure you've heard many times before, is that it totally eliminates the right of innocent accident victims to claim fair and full compensation for economic loss.

No study that was done beforehand, no commission that was commissioned beforehand, in fact, no jurisdiction in North America has a system that eliminates a person's right to sue for economic loss, and I include in that the Michigan system, which I'm sure you've heard about many times. It has a high verbal threshold. Even that permits a person to sue for full economic losses.

On June 22, 1990, the Liberal Bill 68 plan became law. No one screamed louder or was more outraged than the New Democratic Party. I say to you that if some party other than the NDP was proposing this legislation that the NDP is proposing, if the NDP was in opposition, I don't think anyone would be screaming louder than it about the unfairness of the system.

It creates harshness, it creates inequities and it is a blatant violation of the NDP pre-election promise. Before the NDP was elected, I went to a speech that Bob Rae and Peter Kormos were giving at the Sheraton Centre. They promised to restore the full right of accident victims to sue. Bob Rae and Peter Kormos both got a standing ovation for that. There were lawyers, victims' groups and just a number of different people in the group.

As luck would have it, I was walking to the parking lot after that speech and I bumped into Bob Rae and Peter Kormos. We were all going to the same door to the parking lot under the new city hall. I thanked him for his comments. My wife was with me and she said to Bob Rae: "It was a great speech. Did you mean it?" He said, "Absolutely, I did." He shook my hand and my wife's hand, and here we find ourselves today and he's doing just exactly the opposite to what he promised to do.

You've heard, I know, the examples of people who will fall between the cracks if this legislation goes through. Those are children whose earning patterns are not set, women out of the workforce who intend to return to the workforce, young adults with not a set earning pattern, injured workers who go back to work but not at the same salary level, and small business people who take a small draw and keep most of their earnings and retained earnings and so on.

I know that you've tried to legislate on behalf of these people. I know the NDP has had difficulty, and the reason for that, in my respectful submission to you, is that it's just simply an impossible thing to do.

Attendant care remains at $3,000 a month. This is, as I'm sure you'll appreciate, inadequate for paraplegics and quadriplegics and severely head-injured people. Those people at a $3,000-a-month level, without the right to sue and tort, will certainly end up in an institutional facility unless they have support of family and friends.

Let me give you an example. Just before I came down here this afternoon, I was going through my mail. I've got a head-injured client, and she has been receiving from the AXA Insurance company $10,000 a month. AXA Insurance no longer wants to pay it. I don't know why. AXA Insurance has set up a mediation with the Ontario Insurance Commission, and my client barely knows what day it is, let alone can get to a mediation hearing. Her daughter and her brother-in-law have retained me, and we are going up there, hopefully, ultimately to convince someone that the present Bill 68 that is on the books now justifies $10,000 a month and the $3,000 a month is wishful thinking on their part.

I mention that to you because I heard someone say earlier that they think the acrimony between the insurance companies and the fight between insurance companies and victims is gone. It's not by any means gone. It's going to take me at least a day to prepare and go up for that mediation hearing. There is no provision whatsoever for provision of legal costs, and there's no way that my client has the wherewithal to pay that.

Just while we're talking about insurance companies and whether or not the acrimony is gone or still there, the same insurance company with the same client right off the bat appointed its own case manager, presumably someone it has used in past cases. My client wishes to use another rehabilitation firm to case-manage. I think she has that right, just as a person can use his or her own doctor. AXA Insurance has resisted that thus far and is simply saying: "No, we've got our people in there. They're going to case-manage your client. Your client does not have a right to choose her own case manager, and if she does, we're simply not paying." That's where that stands right now. I don't see Bill 164 having any impact on a situation like that.

I think you've heard from previous hearings with respect to income disability benefits. Actually, Bill 164, for those making under $40,000, will cause a reduction in benefits. I have put the percentages in the paper on behalf of the trial lawyers. Those making $20,000 a year will receive almost 12% less, $30,000 will receive 16% less in accident benefits and $40,000 almost 20% less. On the other hand, if you're making more than $40,000, you can receive more in accident benefits. The end result of the NDP legislation is that it hurts innocent low-income workers and is a benefit to negligent high-income people. I just ask the committee, is that fair?

You've got a $15,000 deductible proposed in Bill 164. I think that is too high. I'll tell you why I think it's too high. I think about $7,500, if there has to be a deductible, is in the ballpark.

The maximum a person in this province can get for pain and suffering and loss of enjoyment of life is approximately $250,000. That's reserved for brain-damaged quadriplegics.

To have a $15,000 injury, you have to have a serious injury. An example of that kind of injury would be a person with a permanent back injury, a serious back injury. Permanent symptoms can affect their recreational and social activities. They might not be able to engage in them at all or only partially or with pain. That is the person you are taking out of the system. You're probably taking a person even with a greater injury out of the system. No one can afford to litigate for a $20,000 injury, so with a $15,000 deductible, you are taking, I think, far too many serious injuries out of the system, especially, with respect to Bill 68, the recent threshold cases.


I was dead against Bill 68 when it came in. There's a recent decision out of Barrie by Mr Justice Weekes. That system might end up working; it just might. The first case that came out under Bill 68, the Meyer case, said the injury has to be near-catastrophic. This recent case, Dalgliesh v Green, is not that. If it holds up in the Court of Appeal it may have the desired effect of taking out the smaller injuries, the $7,500-level injuries. If you combine that with prejudgement interest at 5%, no collateral benefits, you are still going to have a system where insurance companies are going to be able to make a large profit and people are still going to be able to maintain a tort claim for their economic losses and for pain and suffering, other than the minor injuries.

That system's certainly not perfect, but it's a lot better, I think, than what is being proposed. Bill 164 is discriminatory. It discriminates against people who have injuries in cars, as opposed to somewhere else. I've given the example in the paper of a drunk driver in a boat; he injures someone. That person, the injured victim, can sue the drunk driver of the boat. You put that same drunk in a car and the same victim in a car with the same injuries, there's no right to sue under Bill 164.

Besides taking away the right to sue for economic loss, I think OTLA's second main objection to the legislation is that it is just horrendously complex. I've read it, I've been at seminars and conferences on it and I have a very difficult time understanding it. I think it's like giving someone an Income Tax Act, a piece of foolscap, no tax return form, and saying, "Here you go, Mr or Miss, you fill out your own tax return." To think that a layperson is going to be able to deal with those benefits is wishful thinking. Some of those people may listen to insurance companies, may get correct advice; probably will get not-so-correct advice. If they come to lawyers, they are going to have to pay legal fees, incur disbursements, and a lot of that is going to come right out of their pockets. There is no real provision for them to be indemnified for those fees.

I gave you the example earlier of an insurance company appointing -- in this case, her name is Mrs Sharpe -- their own rehabilitation consultant as a case manager. I don't think that case manager, if they're getting a lot of files from an insurer, is going to be objective. Insurers are interested in one thing and one thing only and that is profit. They have to report to their shareholders and case managers are going to want to get additional files from insurers and, subconsciously or not, are not going to want to deliver reports and give information to insurers that are going to hurt their future prospects of business.

All one has to do is check the statistics of the Ontario Insurance Commission and you will see the number of arbitrations at the insurance commission that favour the insureds and victims. Insurers are still, I think, denying benefits when they shouldn't, putting people to expenses they should not have to be put to.

There is a way, if you are bound and determined to change the system, where you might give some relief to some people, and that is by an option allowing people to purchase on a first-party basis insurance to cover their economic losses. If that is something the committee and the NDP are prepared to consider, I ask two things with respect to that: one, that you make it mandatory on an insurer to offer it and, two, that you allow recovery for those economic losses to be considered and tested just as in the tort system now. I don't think you can do it based on a past record of earnings. Right now, in our courts, with respect to proving a future economic loss, the onus is not on a balance of probabilities; it's something a lot less than that. It's a substantial possibility. If an injured person can show a substantial possibility of a future economic loss, that person can be compensated.

The higher the possibility, the greater the compensation. If there's a 10% chance of a future economic loss, that person can get 10% of whatever that loss might be, $50,000, $100,000. I don't know what it would cost to offer that by the insurers, but if it's anything like the SEF 44, I don't think it would be a lot of money, and especially if it was optional, a person could choose it or not choose it.

Just in summary, what I think you're doing is giving the insurers in this province -- I think we can safely say the automobile casualty insurers in this province are making $1 billion a year -- more control of the system. They take in the premiums, they decide on who gets paid what and payouts for claims without any interference whatsoever from the courts. If what we hear is true -- I heard some of the previous groups say it, and I've been reading the paper -- insurance and insurance rates could go up as much as $200. I thought what the NDP wanted to do was to control costs. Bill 164, if anything, is going to put upward pressure on costs. What is being proposed by Bill 164 is just so unfair.

I ask you this, if it appears that Bill 68 -- it may end up working and rather than go through with something such as Bill 164, which has so much room for unfairness and harshness and it can be mean-spirited to so many people, I ask that you reconsider and if you're not prepared to do so, that you at least allow people the choice of the optional coverage, which I have mentioned.

Those are my submissions on behalf of the Ontario Trial Lawyers Association. Thank you.

The Chair: We have four minutes for each of the caucuses. We'll start off with the government. I see Mr Winninger's got, I think, one of his law books there, so I don't know whether you've come prepared to deal with them there today. Mr Winninger.

Mr Winninger: Thanks very much, Mr Chair. I was a member of OTLA for many years, although I suspect my membership fees are in arrears since the election.

Mr McLeish: I'll have to send you a notice.

Mr Winninger: Thanks very much. Just on the issue of the complexity of the regulation, we decided to bring along the rules of procedure and hold them up today, 750 pages, as you know, in the regulation governing, among other things, how you bring a tort suit. You know, some people have commented that our regulation is excessively long. It's comprehensive, it's fairer than OMPP, and I would submit to you that it has to be of that length to deal with the number of accident victim contingencies and some of the gaps in the OMPP reg. That's just on the complexity issue.

Mr McLeish: Yes, well, the first thing you're going to do is drive people to see a lawyer and there are not many lawyers who understand it as well. Your legislation is going to cause people to incur a lot more legal fees than they do under the present legislation.

Mr Winninger: What we would like to do is reduce it beyond the standard automobile policy into something that's readable and user-friendly, just as they have done in Quebec under their no-fault insurance. Do you mind if I just take a moment though, because a number of the arguments you made, I think, were valid ones, but I need to clarify a few points with you?

First of all, you indicated that Bill 164 does not compensate women who temporarily withdraw from the workforce. In fact they can choose to receive income replacement benefits based on income earned before becoming a care giver. Your brief suggests it's not possible to do so.

If I could just squeeze in the other two and then you could respond. Bill 164 does compensate people who suffer permanent partial disabilities because it provides for multidisciplinary assessment of lost earning capacity. Finally, the brief claims that commissioned salespeople are unfairly dealt with if injured during economic downturns. As you probably know, the scheme allows them to base their benefits on earlier income levels.

I might draw your attention to an article by Jamie Cassels in last year's Canadian Bar Review, indicating that gender bias in personal injury awards to women is quite a serious problem.

Mr McLeish: I've read it.


Mr Winninger: I would just say that the government has to walk a fine line between maintaining affordability of premiums and increasing access to benefits. To say that Bob Rae has done the exact opposite to what he said he would do is wrong. He lowered the threshold from the OMPP; increased access to tort by a factor of three; increased the loss of earnings and rehabilitation; removed the caps; indexed, which is a fairly expensive benefit; and extended the definition of "injury" to mental and psychological injuries.

I, like you, took motor vehicle cases and sometimes, quite frankly, under the tort system, whether the victim was innocent or not, it took an awful lot of time to get a recovery.

The Chair: Mr Winninger, can you get to the question or you'll be getting into Mr Mancini's time.

Mr Winninger: When your accident victims come to your office, innocent or not, at least you can tell them that their loss of earnings will be a lot more fully compensated under the proposed legislation than the $140 a week they'd get under tort.

Mr McLeish: No one's saying the $140 didn't need improvement.

Mr Winninger: But under --

The Chair: Mr Winninger, let him answer.

Mr McLeish: You can increase the $140 to $280 or $300 or 80% or $600. There's not a lawyer in this business who says the $140 didn't need improvement. It had been in place for a long time. We have had, since the day I've been practising law, a blended no-fault and a blended tort system, pre-Bill 68 and Bill 68. There are not too many systems that can't be improved. It did need improvement. There's no one here who's not going to say it didn't.

Mr Winninger: Are you aware that we have --

The Chair: Mr Winninger, I'll go on to Mr Mancini.

Mr Mancini: Mr McLeish, I appreciate the brief you made to the committee and I know it's been frustrating for you. I know what your position was on Bill 68, but I'm also pleased to hear from you that your final comments to the committee were, "Well, don't implement Bill 164 because Bill 68 may end up working."

That's one of the reasons that it was mandatory for a report on Bill 68 to be submitted to the Legislature, to see what changes were necessary to shore up obvious parts of the bill that needed some improvement. I believe you've touched on some of those areas today.

For the record again, because the government members don't seem to be listening, Mr McLeish, you're one of the many litigation lawyers who have appeared before the committee. Not a single one, including yourself, has said that Bill 164 is going to be easier to administer. As a matter of fact, you and every other litigation lawyer who has appeared before the committee has said that these 68 pages of regulations are unintelligible, unreadable and not consumer-friendly.

Could you, for the record, state again what your opinion is on these regulations so that the NDP members, once and for all, can stop trying to confuse the issue about whether or not these regs are going to be consumer-friendly?

Mr McLeish: I've talked to a number of lawyers about it who have nothing to do with personal injury litigation. They're involved in other kinds of law. They say it's the worst drafted piece of legislation they've ever seen at any time, anywhere. It can't be understood.

Mr Mancini: Say it to the government members, say it to those people sitting over there, because they're the ones who keep challenging experts like yourself who've spent working careers trying to deal with this stuff. They're the ones who keep challenging people who've been injured and have not been able to figure out the old OMPP, let alone be able to figure this out. Say it to those people there, please.

Mr McLeish: I think they know it, and time will show that it's the case. It's impossible to understand.

Mr Mancini: Mr McLeish, thank you. We also have been trying to get across to the viewing public and to people who've been making presentations and in particular to the government members that Bill 164 will drive up automobile insurance rates. Let's forget about the industry consultants; let's only deal with the government consultants. Mercer, who was hired by the government members, paid by the government, said that rates are going to go up a minimum of 4.5%. Do you think consumers should have to pay more for Bill 164 than they're paying now, than for the old bill?

Mr McLeish: No, of course not. One of the things the NDP promised too was to lower the rates, or certainly to stop the rate of increase, and it's doing just the opposite with this proposed legislation.

Mr Mancini: The NDP members have consistently told people who've come before this committee that they will get more benefits under 164 than they will under Bill 68, and your presentation to us is about as clear a presentation as I've seen in the last two weeks in regard to that -- I'd like to call it a lie, but I can't -- that untruth.

Mr McLeish: Just say they're not being truthful.

Mr Mancini: That untruth. You know, we've sat in hearings for the past two weeks, and today you've come forward and you've factually demonstrated how people at the lower end of the earning scale, $40,000 and less, will receive less in benefits under Bill 164 as compared to Bill 68, and people making $70,000, $80,000 and $90,000 will get more under Bill 164.

The Chair: Mr Mancini, your time is up.

Mr Mancini: Sir, in your opinion, is there any justifiable reason why low-income earners should be subsidizing the automobile insurance rates of high-income earners?

Mr McLeish: No, of course not.

The Chair: Mr Tilson.

Mr Tilson: Thank you, Mr McLeish. The NDP of course has blamed the legal community for being the cause of the high rates of insurance; that the lawyers, through their stretching cases out, doing whatever they do, have caused rates to go completely out of sight. I'd like you to comment on that.

Mr McLeish: That's ridiculous. The Supreme Court of Canada in 1978 set a cap on what a person could receive for pain and suffering and loss of enjoyment of life. It was $100,000. That was reserved for paraplegics, quadriplegics and the badly brain-injured.

You tell me $100,000 for a 20-year-old person who can't get out of a wheelchair for the rest of his life and will have tubes in and out of him for the rest of his life is too much money. That is ridiculous. The rest of those awards are simply to replace loss of income and to pay for cost of care. Awards in Ontario, quite frankly, were ridiculously low.

Mr Tilson: The government of course has also implied through its comments at these hearings and in the House that there will be less litigation. I'd like you to comment specifically with your thoughts as to what the courts may do with the deductible test, the trilogy test; the actions that may develop with respect to the Ontario Insurance Commission; I suppose dealings with the insurance companies, whether people are under benefits or whether they're not under benefits. Have you and your organization put any thought to where the public will be going as far as that increased legislation is concerned?

Mr McLeish: Let me take your comments one by one here. With respect to the trilogy, they set $100,000 as the cap for general damages. That was on the basis that people were compensated for their economic losses. Now that they're not compensated for their economic losses, there's no justification for a cap of $100,000. Now it's $250,000 for pain and suffering awards, that particular category of damages. Some people have said triple or quadruple, from $250,000 up to I've heard figures of close to $750,000.


With respect to the insurance commission, it was not busy initially. Now people are finding out what they're all about. There are always lots of denials of rights. My office is probably going up to the commission if not once a week, close to once a week. Right now, we look at mediation as a formality and something we have to get through and then get ready for the serious business of arbitration. I predict in a year those people are going to be buried, there are so many denials.

Dealing with insurers is something you asked me about. You've still got a person who's dealing with a multinational corporation and it is not a fair contest. They still take a hard line. They can still hire the experts. It's still a war and it's a very unfair one.

Finally, with respect to the deductible, take a situation where a person's got a serious back injury, say a $50,000 injury, and it involves surgery. At that level, that's a serious injury. That person might be 50% at fault. Cut the $50,000 in half, that's $25,000, take off your deductible of $15,000 and that person's left with $10,000. The person will probably not be able to afford litigating an injury like that. There are going to be lots of people under this legislation who just shy away from pursuing a claim they otherwise should pursue.

The Chair: I'd like to thank you for coming before this committee. You've brought a few more new points forward.

Mr McLeish: Thank you for your time.


The Chair: The next group is the Dominion of Canada General Insurance Co. Would you come forward, please, with your colleagues. I'd like to welcome you to the standing committee on finance and economic affairs. I believe you've been sitting back there since this morning, so we won't eat any time up. You may begin by announcing who you are, whom you represent and your position.

Mr George L. Cooke: I am George Cooke, the president and chief executive officer of the Dominion of Canada. With me is Bruce Pearson. Bruce is an independent insurance broker from Hamilton who represents the Dominion, along with other insurance companies. Insurance brokers deal with policyholders on the front line and we believe you should hear their concerns directly.

The Chair: Sir, do you want to speak into the mike. Some voices pick up better than others.

Mr George L. Cooke: I'm trying to. Does that help you?

The Chair: That's better. Every word that you're saying is being recorded. It won't be used against you, though.

Mr George L. Cooke: That's all right.

It was only days ago that I appeared before you on behalf of the Insurance Bureau of Canada. I'm sure that with the very intense schedule you've been following, it feels like many weeks ago. Mr Harnick already alluded to that point as I came in.

The Dominion of Canada is 100% Canadian-owned, the sixth largest property and casualty insurer in the country, and it's served the needs of Canadians since 1887 when Sir John A Macdonald was our first president. Background material about the Dominion is included in the package which has been given to you.

I should tell you that our view is consistent with the remarks made by Mr Griffin, Ms Murphy and myself for IBC last week, but let me summarize quickly the Dominion's concerns with Bill 164:

1. The draft regulation is unworkable and it's too complex.

2. The tort deductible is unfair and unaffordable.

3. The cost of the system created by Bill 164 cannot be accurately estimated without much more information as to how the system will work, but all preliminary estimates, and I stress all, indicate that Bill 164 will cost more than the Ontario motorist protection plan.

4. Substantive, inexpensive road safety initiatives, like graduated licensing, which most people support, have been largely ignored.

We openly acknowledge that OMPP can be and should be improved. But like the government's approach to preventive health care, improvement must start with reducing accidents, saving lives and minimizing injury, and in turn removing unnecessary cost from the system. In our view, it is both foolish and insufficient to address only compensating or overcompensating injury while at the same time ignoring preventive measures. I am sure that during the last 10 minutes, somewhere in Ontario there has been an automobile accident which could have been prevented or injuries which would have been less severe if appropriate road safety measures were practised in this province.

Graduated licensing is only one, but a very important one, of the road safety measures we support. It is ironic that the government has not acted on graduated licensing. I strongly suspect that if an argument were put to the government that there was a very inexpensive and easy way to reduce death from cancer by 25% for people under 25 years of age, we would see immediate action and a sincere willingness to address the circumstance. Why is it the government cannot respond in a similar way to graduated licensing initiatives? It is simply unacceptable to allow bureaucratic inertia and political pondering to prevent graduated licensing from being introduced.

Road safety measures are noticeably missing from Bill 164 and it is our view that Bill 164 should not proceed without them.

The fundamental structure of Bill 164 accomplishes five things: First, it sets out withdrawal provisions; second, it deals with rate classification; third, it gives regulation-making authority for accident benefit compensation to cabinet; fourth, it eliminates the right to sue for economic loss; and fifth, it expands the right to sue for non-economic loss.

We can accept the amended position of the government on market withdrawal and rate classification. We can also accept cabinet's authority to make accident benefit regulations. But from your point of view, the fact that the draft regulation is complex and unworkable is not necessarily something with which you must deal now. You may, in our view, proceed to grant that authority to cabinet as long as you believe that the government can and will make the regulation workable.

I urge you, as committee members, to send a strong signal to the government that the regulations must be simplified. It is, in our view, too trite for one to be convinced of complexity by a comparison of 17 pages of regulations under OMPP to 68 pages under Bill 164. Neither is it acceptable to discard this comparison because more individuals receive compensation under one product than the other. We owe it to the people of Ontario to keep it simple and to make it work.

In my remarks to you during the IBC presentation, I pointed out that the proposed $15,000 tort deductible is unfair and unaffordable. The one part of Bill 164 that causes the Dominion concern and should cause you great concern now is the expanded right to sue for non-economic loss; that is, pain and suffering and loss of amenities of life.

In its analysis, the government has assumed that only 6% of claimants could sue under OMPP. It is quite possible that the 6% could increase to 12% depending on eventual court interpretation. The $15,000 tort deductible effectively gives the right to sue for non-economic loss to at least 18% if the government is correct, and that's a big if, but if the government is incorrect, that number could be as large as 35%. The result is cost escalation that is unnecessary and a product that is unaffordable.

I think we can agree that any product, whether it be that proposed in Bill 164, OMPP or any other, involves tradeoffs among the level of compensation -- that is, fairness, equity and adequacy; the timeliness of compensation -- that is, how quickly payments are received; and affordability -- that is, cost. The balancing of compensation, timeliness and affordability is fundamental to the public interest. At the end of the day, people must be able to afford the result.


Let us look for a moment at what is happening with Bill 164. Whoever crafted the proposed product structure, which I'll refer to as The Road Ahead, or TRA, must have been guided by the need to balance the cost of increased tort access with affordability. I think the logic must have gone something like this: Take the alleged cost reduction from placing all economic loss on a no-fault basis and use it, in part, to pay for the increased payments for non-economic loss and legal fees arising from increased tort access. But it does not work.

With the changed TRA structure, the real winners are the lawyers and the at-fault claimants who will recover more than under OMPP through higher benefits. The losers are the most seriously injured not-at-fault claimants who will not recover their full economic or non-economic loss, and the consumer who will pay more.

Under OMPP, the most seriously injured retain the right to sue. As such, their compensation can be tailored to their circumstances. Under TRA, all economic loss compensation is through no-fault. To attempt to compensate the most seriously injured not-at-fault insureds on a basis comparable to OMPP, at-fault insureds get more. Other claimants do too and some are overcompensated.

This attempt at full compensation for economic loss is necessary in the TRA design to try to protect the court-imposed cap on general damages of some $240,000 that I discussed with you when I appeared for IBC. I should say that $240,000 cap I'm referring to is the same $100,000 cap that the previous presenter was referring to. We're just measuring it at different points in time. It demonstrates what inflation can do to a figure over time.

Given the cap on general damages, the tort deductible reduces the award for the most seriously injured not-at-fault victims by $15,000 relative to OMPP. It also allows more people to retain the right to sue, which increases legal, adjusting and investigation costs, increases the potential to artificially inflate claims and increases uncertainty.

The analysis undertaken by Mercer for the government and introduced by the minister demonstrates that under a pure tort environment, some 65% to 70% of claims costs pass through the system to the claimant. Under a pure no-fault system, some 91% of claims costs pass through the system to the claimant. As you determine public policy, you must decide whether the perceived or actual fairness introduced through a tort remedy is worth the added cost to the system, the increased cost to consumers and the corresponding reduction in the award to the claimant.

As members of this committee, your problem, I respectfully put, is the following: You cannot defer the decision on access to tort. It is a matter that must be dealt with through legislation. To contrast, concerns about the complexity and affordability of the accident benefit regulation can be dealt with after the bill is passed.

Under the current OMPP, the right to sue is determined through a description of injuries; that is, that people with permanent and serious physical injuries and the families of those killed in car accidents have access to the courts.

If you were to decide to leave this restriction in place, all the concerns about the tort deductible disappear. Alternatively, you might change the restriction. The problem is how to craft new wording that is both fair and affordable, given that judicial interpretation is not known.

Either of these approaches involves changing the fundamental structure of the TRA product. However, neither deviates from the fundamental mandate as set out by the minister. A fair and affordable product, providing timely compensation, may be crafted in more than one way.

I understand that prior to these hearings, FAIR, a public interest group, had proposed to you a first-party tort buyup for economic loss. We have some concern about that proposal and I'd like to share that with you now for a moment, if I may.

Basically what this proposal is trying to do, I think, is address the very points that I've just talked to. Unfortunately, I don't think it's terribly workable. The problem goes something like this: Given that it's a first-party scheme and what it's intending to do would be to provide compensation for those high-income earners who would be most seriously injured, in order for somebody to be able to sell it, assuming we could administer it, he would have to know information about the individual purchasing insurance that's not allowed to be requested under the act. They'd have to know their occupation, they'd have to know their income. Given that you don't know those factors, from the point of view of the person selling insurance, he wouldn't know which customer to offer it to and which one not to offer it to.

The alternative, as I understand it, that FAIR puts to you is, "Well then, offer it to everybody." But what happens when you do that is, the price for everyone goes up, and what you effectively have happening is the unemployed steelworker from Hamilton subsidizing the trial lawyer from Toronto, which is not a circumstance that we think would be preferable.

We are very encouraged by the consultative process that has taken place to date. TRA removes the current $500,000 caps on medical rehabilitation and care benefits. Stringent yet fair cost control is required to replace these caps. In his announcement of January 18, 1993, creating the rehabilitation task force, the minister has clearly recognized the need to address cost and affordability while providing timely, acceptable levels of compensation. Consultation can work.

We're also encouraged that you are truly listening to the concerns that we are expressing to this committee. We want to pursue constructive insurance reform. We are not opposed to change; we accept change, but we accept change that is necessary, fair, practical and affordable.

Mr Chairman, at this point, I would like to ask Bruce Pearson to offer some comments to you and then I would come back and conclude.

Mr Bruce Pearson: Mr Chairman and members of the committee, I am an owner of Pearson Insurance Brokers. We operate four offices in the Hamilton area and have some 20,000 clients. We've been pleased to be associated as an office with Dominion of Canada for over 58 years. George Cooke has invited me here today to share some of my concerns with you regarding Bill 164.

As a broker, I speak with people who buy auto insurance every day, and I believe that I understand what people want. Our employees in our four offices spend about a third of their total working time explaining how car insurance works to anyone who comes into our offices with a question. We are explaining the rating system, claims procedures, policy coverage, differences between companies, just to mention a few. We take time to explain the ins and outs of auto insurance to any who may ask.

The consumer today is very concerned about the cost of insurance. Many in this area, greater Hamilton-Wentworth, are between jobs, out of work or indeed on fixed incomes. They cannot afford to pay high premiums, but they are demanding high-quality service for every penny they spend. People want an insurance product that's easy to understand, pays benefits quickly and repairs vehicles effectively. What we find people are not in favour of and do not want is an inordinate or an awful lot of paperwork, delays and the time and expense of court costs.


Judging from my conversations, most people are satisfied with the current no-fault system. People are pleased that premiums have been stable or reduced. Claims are settled more quickly than under the prior tort environment and income benefits are delivered in less than two weeks. From the consumer's point of view, OMPP is working. Remember that in 1990, when OMPP was introduced, consumers were facing a potential rate increase of 35% on average under tort.

Most brokers feel that Bill 164 is too complicated to understand. I ask that you put yourselves in our shoes. It is possible to provide a service to people, but only if they can understand what that service includes. Few brokers, myself included, understand Bill 164 sufficiently to explain it clearly. It may be crystal clear to the civil servants who created it, but it is not, nor will it be, clear to the ordinary people who drive cars.

I happen to have the good fortune of being the education chairman within the industry and I'm confused with many parts of Bill 164. I ask again, how can the average person be expected to understand what their entitlement is under this plan?

Bill 164 is not user-friendly and as a consequence is not acceptable. Brokers are concerned that Bill 164 will lead to unnecessary price increases for consumers. How much is yet to be determined, but informed actuarial studies do indeed indicate higher prices. We do not need more lawyers and more overcompensation. People simply cannot afford and will not accept amendments.

I thank you and I turn the microphone back to George.

Mr George L. Cooke: The economic decline over the past few years has taught many of us that we cannot always have everything we want and certainly not all at once. In the same vein, one of the major differences between government and opposition is the recognition that no one can provide all things to all people all of the time. We face very real and legitimate tradeoffs.

One of the most important messages to be taken from the study undertaken for the government by Mercer is that OMPP is currently underpriced. The Mercer study suggests that prices need to increase on average by some 8.4% beginning July 1, 1993. The Wyatt report prepared for IBC suggests that this number is between 13% and 26%. Bill 164 has nothing to do with these rate requirements. Any cost consequence of Bill 164 is in addition to this requirement for the adequate pricing of OMPP.

Why is there now a need to increase price under OMPP?

1. The price of auto insurance has generally not been increased since June 1990.

2. The price of auto insurance was reduced in late 1991 and early 1992 by many companies. The Dominion reduced price by some 4.8%.

3. The premium tax of 3% was reintroduced by the government in the 1991 budget. This tax was not passed on to consumers.

4. The current depopulation of the Facility Association, which we support, will provide auto insurance to some 2.5% of Ontario drivers, with savings of up to half of what they have been paying. Insurance companies will forgo this extra revenue.

5. The cost of claims increased at rates generally greater than CPI inflation and closer to health care cost escalation due to the bodily injury component of compensation.

Need I say more? Well, the recession has decreased accident frequency, but as the economy turns around this saving will be lost.

You must understand that prices are set to recover in the future costs expected to be incurred in the future. Pricing is not retrospective or retroactive. Unlike electricity pricing, for example, price changes in auto insurance are not immediate. The 12-month policy issued yesterday does not attract an increase for 12 months and then it takes another 12 months to fully earn that premium. That is a total of 24 months after the price is changed.

The Dominion has taken very strong action in recent months to ensure that it remains truly efficient in the delivery of auto insurance. We have consolidated operations, stressed performance, frozen salaries, introduced new technology, all of which is to provide better, less costly service. We believe these actions are a prerequisite to an application for increased price. We would not ask consumers to pay for inefficiency but we will ask consumers to pay for increased costs of compensation.

To conclude: The fundamental structure of OMPP will lead to greater price stability over time than that in TRA. We recommend that you adjust the tort access under an OMPP-like structure, as you feel appropriate, to achieve the balance of compensation and affordability that you desire. The proposed draft no-fault accident benefit regulation should in due course be amended to make it understandable and consistent with the new restriction on tort access.

The recommendations of the rehabilitation task force will be essential to fair and affordable compensation. They will demonstrate new-found cooperation between industry, government and the rehabilitation sector. Road safety measures, such as graduated licensing, should be introduced to become reality no later than the introduction of changes to the insurance product, not promises but real measures.

These recommendations are consistent with the minister's goals yet they reflect the constructive comments put before this committee and resolve many concerns people have expressed. The result, simply put, is this: Public participation leads to better public policy.

Thank you for the opportunity to express these views.

The Chair: We have about one minute for three caucuses. Make it very short. Mr Cordiano.

Mr Joseph Cordiano (Lawrence): I would just say this. Would you agree with me that the government should in fact scrap their proposed legislation altogether as it is completely unworkable and there is no room for making any changes that would improve it in the sense that it would lead to the kinds of conclusions you've come to in your report?

Mr George L. Cooke: Not entirely. I think we have tried to suggest ways in which constructive insurance reform can be carried out, and we've suggested amendments to the bill that we feel, if followed, would lead to that end.

The Chair: Mr Harnick, quick.

Mr Harnick: Mr Cooke, as the president of one of Canada's largest insurers and representing, to a very large degree, the industry as well as your own company, can you tell us definitively that the best thing we should be doing right now is taking the OMPP and adjusting the threshold to meet the deficiencies we've seen so far and then proceeding from there?

Mr George L. Cooke: Mr Harnick, I can only state on behalf of the Dominion of Canada, and I would suggest, that as long as those of you who are making public policy are aware of the tradeoff between the level of compensation and affordability, it is quite appropriate to adjust the threshold, such as the OMPP threshold, accordingly. We believe very strongly that the fundamental structure of the product in OMPP is far more sound and will produce a far more predictable and stable environment in the future than that in TRA.

Mr Owens: Mr Cooke, I want to thank you for your blunt, as usual, presentation. Mr Anderson from the IBC recently indicated that the government was hearing -- and you stated that again this afternoon -- the concerns of the industry, and you yourself indicated that people should not pay a whole lot of attention to some of the figures in the press with respect to potential premium increases.

My question to you: Can you talk about the kind of consultation process we've been engaged in, something that was characterized by an individual today as perhaps something less than honest? Can you talk to us about the kinds of participation you've had, the input that you and others have been able to give with respect to this legislation?


Mr George L. Cooke: Surely. In that sense, I can speak both on behalf of myself as Dominion and I think also as part of the steering group of industry representatives. We found the government quite prepared to engage in constructive consultation with us. There's been a positive exchange of ideas and concerns over the last 12 to 14 months. There's evidence of the constructive resolve in the creation of the rehab task force. I think it's just one point to note that we're very encouraged and we believe that we can work with government and would like to do so.

The Chair: Thank you for appearing before this committee.


The Chair: The next group is called Future Health. Would they come forward, please. I saw everybody standing up. I was waiting for four people to come forward there.

Ms Ellen A. Helden: Just me.

The Chair: Well, I think you're the best person who came forward anyhow. I'd like to welcome you to the standing committee on finance and economic affairs. We have one half-hour, and in that one half-hour, if you can leave some time at the end for members to ask questions. If you don't mind, introduce yourself for the purposes of Hansard, and you may begin.

Ms Helden: I want to thank you for giving me the opportunity to be here today. Twenty-four hours ago I wouldn't have thanked you. I actually had cancelled my talk. However, about five minutes later a friend came in and said, "I hear you're doing a talk." I said, "I was, but I'm not any more." "Why?" "Well, I feel afraid. I feel intimidated."

The Chair: Okay. If you wouldn't mind not holding on to the mike. What happens with Hansard over there, sometimes it gets a bad contact.

Ms Helden: Okay. Can people hear me?

The Chair: You don't have to feel intimidated here.

Ms Helden: I know. Well, let me get on a roll here first.

The Chair: Okay. The last lady who came in here, she said she was shy. I had to cut her off, so --

Ms Helden: Okay.

The Chair: Okay. Go ahead.

Ms Helden: So I can't hold on to this. All right. Anyway, I was thinking about my audience and I thought, you know, the government's here, medical people will be here, lawyers, doctors. They are very powerful people, powerful institutions. You know what? I truly, honestly felt intimidated, and I said, "You know, what role do I have to play here?" So I cancelled.

I was talked into coming back. I guess I had a feeling that I could not make a difference. I am just me, okay? I do rehabilitation with clients who've been in car accidents, but I had the feeling that I would be intimidated. However, if you don't deal with your problem, the problem becomes yours or the problem gets passed on to another person. So here I am.

My name is Ellen Helden, and I work at Future Health. Future Health is a rehabilitation company that treats and assesses clients who have been in car accidents. Our job is to get people back to pre-accident level of functioning, as close as possible, and to harmony and health. We have had experience in this area for over 10 years.

The way I'd like to lay my talk out today is to talk, number one, about the problems in rehabilitation by giving you some examples of my clients' problems. Secondly, I want to make a point about lack of education, knowledge and research and, thirdly, that there are solutions to the problems.

Let's talk about the first part, rehabilitation, and what we really do for a living at Future Health. Our referral sources are insurance companies, lawyers, self-referrals or doctors. Like I say, I have done this for over 10 years. Interestingly, the policy has changed, some of the laws have changed over that time, but what stays the same constantly are the problems. Problems in our office, in the trenches day to day, are no different today than they were 10 years ago. I'd like to give three quick examples. These are just three telephone calls from clients two days ago.

My first telephone call was from a client; her accident was five years ago. She was referred by a specialist to Future Health to see if we could activate her out of the cycle of chronic pain and get her back to pre-accident level of functioning into some kind of a functioning lifestyle.

The first thing we had to do was try to get approval for the case, so we contacted the no-fault carrier. It was a fight from the beginning to the end. The lawyer had to become involved. We finally got access to treatment. This was under the old policy. The no-fault benefits ran out. The client was back to about 50%, 60% of what she used to be and there were no longer funds available under the first party.

The other side was asked to come forth with some money to continue treatment to finish. This is now five, six months later. All the efforts that were put into that by the client, the physicians, the rehabilitation workers had all gone by then again. It is such a delicate balance to get out of a sick role and to go to wellness. All people on the team have to be on board. The client was actually suicidal, didn't know what to do: "Can't the lawyers hurry up? How come people don't understand me?"

The second call in that day was a client under OMPP. The problems were no different. She was asked to go for an independent medical, referred by the insurance company. The client went into the office and she did not want to take her clothes off because in her culture you do not disrobe in front of a man. The benefits were denied as a result of that report. It was stated that the client refused to be examined, so the client did not have access to benefits.

The other case -- it was about three years ago that the accident had occurred. The client had tried to go back to work after the first year -- not successful; thoracic outlet syndrome, real problems. Presently, he's in the process of losing his home.

These are the problems we deal with every day. We try to identify the problems and find solutions. What you hear here is that there are problems in the system. No matter how good your law is or how bad, if people don't work in the spirit of the law, it doesn't matter what's set out. You could have "a bad law" and if everyone worked together in the spirit of the law you would get good results. No matter how good the law is, if people can't trust each other, it will still not be good.


I want to leave you right now with this point: Access to accident benefits continues to be a problem; delivery of accident benefits and health care is a problem.

Why is there a problem with access and delivery? Are there bad people here? In your booklets there are two handouts and I want you to go and look at those handouts. One says "Old System"; one says "New System."

In the old way or even the way we're doing work now, if you do not work as an interdisciplinary team -- that is, insurance company, doctor, specialist, community service rehab worker, significant others and lawyer -- if they don't all work for the client, you get into the system where the client is alone, everyone is alone and no one's talking. It doesn't matter how many good or bad people are on it; when people don't work together, you cannot resolve this problem. So the law in that case has very little to do with it. It is really refocusing on the problem -- access and delivery and how do we do it.

Oftentimes this is what my experience has been. From an insurance company view, they need to know what they're responsible for. Oftentimes they've only known the adversarial way to get information, because that's historically what this was. Now they get different opinions from doctors, rehabilitation, clients not getting better. How long do we have to keep paying on these files? No one knows. There's very little education input there.

From the plaintiff lawyers' point of view, in the past they were on the client's side, but no one was allowed in and it took so long.

Doctors: plaintiff and defence doctors -- since when are we plaintiff or defence doctors? Clients feel it all the time. They say: "Do they know what they're doing? I don't know what's wrong with me. They've not told me. I don't know why every doctor has a different opinion. They don't believe me. They don't tell me anything."

Then there's always the fear of court cases and lawsuits.

Rehabilitation: Big question, what is rehabilitation? Done for the lawyer, for the insurance company, for the doctor, for the client?

What is treatment? If it doesn't work, we often blame the client, because the client didn't mitigate the damage.

Alienation, mistrust: A system like that, when we're not talking and working together in a problem-solving way, results in alienation. There's no accurate problem identification. The client's often alone with his or her reality. There's a lot of anger, lots of miscommunication, much unhappiness and many, many costs. The adversarial system is extremely costly.

I'd like to propose that we all work towards a new system, an interdisciplinary approach, where there is no longer mistrust of each other. Why the mistrust? As I say, historically, it has been adversarial, although I guess Judge Osborne started to see early on in the 1960s that there was a need for no-fault. Accidents sometimes are our fault and sometimes aren't, and he saw the need for this whole trauma assessment and trauma medicine and taking the fault out of it. So no-fault is not new; it started a long time ago, but continuously, I think, access and delivery have been a problem.

I think lack of education and knowledge is the problem. It's not that insurance companies are bad, lawyers are bad, doctors are bad. I've worked with some wonderful adjusters who do wonderful case resolution, with great physicians, with lawyers who have the interests of the client in mind, and with doctors who genuinely want to help people get better. But we haven't bridged enough. We don't know the process of change here. The laws change frequently. Responsibilities have changed so fast that we all have to change so quickly, and I think that's one of the major problems. It's not good versus bad, us versus them; it's really a lack of knowledge and education and how to do it differently, how to do it better.

There are solutions. One thing I'm excited about is that we're entering into this with an opportunity to make something good. However, I think we need an organized approach to the problem, an approach that can be trusted by everyone involved. It should be beyond reproach.

Last summer, Economical Mutual Insurance invited a group of physicians to start looking at how they could make better delivery with respect to accident benefits and health care. Out of that, groups of people have met, with the result that at McMaster University Medical Centre there is a proposal for a trauma assessment project which would be directed under Dr Adrian Upton. It is all in your folders.

Why is this necessary? This project would take into consideration three points: One, it would meet the need for immediate evaluation of problems, identification of organic and non-organic problems -- are they reducible? -- and rehabilitation planning, early diagnosis, early treatment, so that the clients, first of all, get good care, and secondly, so that the insurance company can start measuring its losses or its costs and setting the reserves early. This is being done now, but it is not done in a systematic, controlled way. That would become available to everyone.

The second part is education. Physicians, adjusters, rehabilitation, lawyers and clients all have to be educated. Trauma medicine is in its infant stages. There is a great need for education. There is the opportunity at McMaster to do this.

The third part is research. Why research? Well, what works in getting people better? We all have ideas. We all have techniques. Some of them work here; some don't. We need to look at this much more closely.

The department of biostatistics and epidemiology at McMaster has looked at the proposal and is very excited about this project. They are a world-renowned system. They have set standards and have been involved in quality-of-life statistics etc for the World Health Organization. That's available to people there.

We should take this seriously. Workmen's compensation is an example of what we don't want to happen. We don't really know what works. The insurance companies right now don't know how to set the reserves. So I would like you to look over those proposals carefully.

Why this approach? Clients need to feel they can trust the system. Insurance companies need to feel they can trust the system. Rehabilitation, physicians, people need to feel they can trust it, and right now there is not a systematic approach as to how to deal with these problems.


The Chair: Ready for questions: Mr Tilson, three minutes.

Mr Tilson: Thank you very much for coming to us this afternoon. I look forward to looking at your paper because there was a lot that you put in there that you haven't said. I look forward to reading it, and I must say I have no further questions.

Mrs Mathyssen: I'm glad you did decide to come. As you can see, we are really quite remarkably unintimidating, so I commend you for coming. I think it's important. You've brought something to the committee. There has been quite a lot of wrangling about what's going on in terms of this bill, and you've reminded us that we may sometimes lose sight of the immediate needs of the injured victim, the injured client.

You talked a great deal about rehabilitation and how we could do it better. Can you comment on the impact of early intervention, early rehabilitation, for both the injured person and the insurance company?

Ms Helden: Yes. The earlier you start looking at the problem, the more quickly you can put in resources that prevent further problems. There are a lot of good studies which show you that the longer a client is in the sick role or does not get rehabilitation, the more entrenched the problems will become.

Mrs Mathyssen: Does it become a mindset, a state of mind, as much as anything else?

Ms Helden: Do you mean from the client's point of view?

Mrs Mathyssen: Yes.

Ms Helden: See, the client has physical problems initially, after an accident. Nobody likes being sick. They like to get better. However, my experience -- that was my point. What happens is that you have your problem with pain or whatever, and then this system starts to become a problem. The clients have to prove that they have a problem. If you continually have to prove that you have a problem, how can you get out of the sick role? You can't, because you have to prove you're sick. So the longer that goes on, the more entrenched the perception of pain becomes and the more other problems come along with that, such as loss of job, loss of family, conflict in all areas -- physically, emotionally, in the recreational life, the financial, social and family life. So the longer you wait, the more new problems you create.

Mr Phillips: I appreciate the witness coming as well and bringing, I think, some firsthand experience tending to deal with people who I think understand it but maybe are one step removed from it.

I wonder if you have any advice for the committee just in terms of the bill we're dealing with here. This is the third phase, if you will. There was what we call the pre-OMPP bill, the OMPP and then this bill, which is called 164. Do you have any advice for the committee in terms of people you may be seeing and how they've found the two systems and whether you've had a chance to look at the current proposed bill. Do you have any advice for us?

Ms Helden: Yes, I have. First of all, I want to be able to trust our democratic institutions for making good laws. I am not an expert on the law. However, there are very good benefits in this policy and the only thing I want to stress is that access to benefits should be honoured. I don't know how you can make sure that happens; that is still a problem. Clients still have to prove, often, that they have a problem. Even with those who are under no-fault, there's still a lot of litigation going on, that you should be entitled to it. A client shouldn't have to prove. That's your right.

The other point I think you need to look at is the delivery for rehabilitation services. I think it's a big problem for the industry. I see adjusters struggling every day with trying to make decisions. The pressure on them must be tremendous, "Don't spend money but get the client better." We don't even know what that means. So I guess the point I want to make to you is, make sure you look at a systematic approach that is trusted by everyone, that will set standards for rehab, for physicians, for lawyers and for industry in terms of its delivery.

Mr Phillips: I appreciate that. Thank you very much.

The Chair: I'd like to thank you, Ms Helden, for your brief today. It added a little bit more on what we've heard here in Ontario; a little bit different.

This committee will recess for a five-minute break. Be back at 4 o'clock.

The committee recessed at 1557 and resumed at 1604.


The Chair: Our next group coming forward is the United Steelworkers of America, Local 1005. I'd like to welcome you to the committee. We have until 4:30 and in that period of time if you can wind up leaving some time at the end for questions from the committee members. You may begin, and identify yourselves for the purposes of Hansard.

Mr Bob Sutton: Yes, it's short anyway, Ron. I'm Bob Sutton, chairman of the political action committee at Local 1005 and the recording secretary. To my left here is Gary Howe, the secretary of the political action committee and secretary of our health and safety committee.

Local 1005 is the union that represents workers at Stelco Hilton Works in Hamilton. I'll mention that there are 6,000 active members right now and about 9,000 retired members, and we had 13,500 members 10 years ago. We've seen our share of layoffs and we presently have about 931 people on layoff. This local has always taken an active position in any political debate.

What's happened here is that about a year ago at one of our membership meetings a motion came from the floor that whenever this road show on car insurance was going to be formulated, the political action committee was to write a brief and present. There are three particular areas that were debated at that membership meeting that we're going to address in our brief.

The first one was the government-run car insurance. It's been a long-standing position of the local as well as the New Democratic Party in this province that government-run car insurance was the only way to go. We would like to have seen that kind of legislation come out a year ago September, but unfortunately it didn't occur.

Either it should have been that way, or the other possibility, if it wasn't the provincial government taking over the industry, we would even have liked to see it set up its own parallel corporation. If nothing else, our members think that if there was a parallel, publicly run car insurance that people could use as an option, it would tend to keep the rest of the industry a little more honest, because there are a lot of our members who don't have much faith in the car insurance industry. A lot of people, like myself -- if it was a government-run company, I'd gladly pay $100 a year more just to know where my money was going.

The second area, and this is an area of major concern and probably the one that got the motion to the floor, was on the area of collateral benefits. As I understand it, it was Bill 68, the Ontario motorist protection plan, that established the principle of reducing an injured worker's no-fault benefit by the amount that was received from disability insurance or his company's sick plan. In our opinion, it may reduce the premiums for car insurance, but what it does is shift the burden of that premium away from the car insurance to a worker and/or his employees' group insurance plan.

The way it happens in a company like ours is we negotiate a group insurance plan, and that cost basically comes down to so many cents per hour, a dollar something per hour, whatever it is, and at the end of the three-year period, when our contract expires, if we've used up the level of insurance that we've negotiated, we go into a deficit situation and have to renegotiate that in the next collective agreement. Any money, like the car insurance or an injured person collecting from it, takes money out of that fund that we have to renegotiate for.

The other thing we have, and I think most collective agreements are somewhat similar, is a $70,000 lifetime maximum presently on our group insurance. So if somebody's off work for a year, that eats into that $70,000 and it means that somewhere down the road he may lose other benefits. Of course, with every collective agreement it's our intention to increase that $70,000 to $80,000 or $90,000, but it's not an easy thing to do, especially when times are tough.

An employer like Stelco has been hit quite hard. We've lost a lot of people on layoffs. Right now the steel war's going on with the United States. There are 135 companies that used to be our customers that after the trade deal was signed packed up and moved south of the border. Those are customers, 500,000 tons of steel, that we're trying to chase and we're being harassed at the border. The company's feeling that, and when it comes time for us to negotiate our group insurance, that's going to be an irritant.

The other issue that was raised, which was somewhat minor but it was an issue with the members, was the right to sue. I guess under this plan that we've got now, this is probably the one good improvement that we do agree with. Being able to sue for pain and suffering is a much better way than we had it before, because we kind of feel that with a pure tort system you're looking at years of delay, and I'd use the word that it's a bit of a lottery whether you're going to get any payment under a legal position or not, under suing.

The no-fault benefit pays everybody right off the bat, and I kind of agree with that and the fact that there are some doors open for lawsuits after. I think that's probably about as good a compromise as we're going to get on this issue.

As I said, our members had these three specific concerns. We were sent here by the membership to address these concerns, which are publicly run auto insurance, collateral benefits and the right to sue. That's why the political action committee is here today.


The Chair: Okay, fine, we'll go to Mr Winninger.

Mr Winninger: Thank you for your presentation. I might break down your points into three: the first was public ownership of auto insurance, the second was collateral benefits and the third was the issue of the right to sue for pain and suffering.

We feel Bill 164 introduces a number of improvements to the Ontario motorist protection plan in that it increases the weekly payment for loss of earnings upwards to $1,000 a week; it takes off the lifetime cap for rehabilitation, which used to be $500,000; it indexes benefits to the consumer price index, so they're not frozen in time; and it certainly extends the definition of "injury" to mental and psychological injuries. These are benefits that have a cost attached to them in terms of the premiums you and I pay for auto insurance.

If in fact people who do have a sickness and accident plan through their place of employment were to say, "Because I can access those benefits through my place of work, I shouldn't be having that factored into my auto insurance premium," the insurance industry would probably say, "Well, look, there's only so much money in the system, and if we take you off premiums for that component of your auto insurance, then all other drivers will have to pay more." That's the spinoff effect of ignoring collateral benefits.

As far as public auto insurance is concerned, perhaps we all would have liked to have that, but I think you know what the reasons were for declining to assume ownership: 13,500 jobs lost at a time when the recession was in its trough, and an estimated cost of $1.4 billion to take it over when we were running a deficit in excess of $10 billion. These were the economic circumstances we, as a government, found ourselves in. You may or may not accept those reasons for not taking it over, but I think it's helpful to restate those reasons for the record.

One of the improvements, as you acknowledged, to Bill 68, the existing legislation, is that instead of having what we call a verbal threshold for tort, for pain and suffering, that is, a serious and permanent injury -- and the court has suggested it's catastrophic; in another case, the Dalgliesh case, it takes a lesser test -- the fact of the matter is that with that $15,000 deductible you have a more certain measure, a numerical threshold. If you feel your case is worth more than that, you weigh the benefits and the costs of going to court.

I wanted to ask you if you were aware that by increasing the weekly benefit up to $1,000, based on 90% of net income, we're actually taking in 97% of all full-time worker loss of earnings compared to only 73% under the existing legislation.

Mr Sutton: No, I wasn't aware of that until now, but I was aware of the fact that none of our members are making $1,000 net income weekly, so that wasn't as big a problem to us as it could be for other groups.

Mr Winninger: I do know workers at our Ford plant near London, in Talbotville, with overtime, are making that kind of money. Does that include or exclude overtime?

Mr Sutton: My personal position is that I've always been opposed to workers working overtime, especially during tough economic times. My view is a 40-hour week.

Mr Mancini: I appreciate the concerns you've expressed, Mr Sutton. I'm not sure I can be helpful on the concern about the collateral benefits. I understand the present legislation treats the collateral benefits in the same manner that Bill 68 just treated the collateral benefits. I think you're aware of that.

Mr Sutton: Yes. I did say that, I believe.

Mr Mancini: I just want to verify a couple of points. You mentioned to me that you have 9,000 retirees in your local.

Mr Sutton: Yes. Actually, it's not just our local. It's the Steelworkers from the Stelco chain. There are about 9,000 people who are retired.

Mr Mancini: Are you familiar with the United Senior Citizens of Ontario?

Mr Sutton: I know of them, yes.

Mr Mancini: They represent 300,000 senior citizens. Are you familiar with the presentation they made before this committee?

Mr Sutton: No.

Mr Mancini: They stated the following: "To reiterate, it's our strong belief that Bill 164 and The Road Ahead will result in rate increases of 45% or even higher to our members" -- that's the seniors. "Once again, we're strongly stating our objections to this bill and are very concerned that the objections will fall on deaf ears."

Furthermore, they state in their brief, "Do not implement Bill 164."

Bill 164 will eliminate the age factor in the rating of automobile insurance and senior citizens will be forced to pay a significantly higher premium because of that.

Mr Chair, could you let me know when I have two minutes left, please?

The Chair: Yes, I will.

Mr Mancini: Maybe you wouldn't be familiar with this, because it happened in London, Ontario, the other day. Mr Nigel Gilby, a litigation lawyer, made a presentation to this committee and admitted to the committee that he had supported the NDP in the last election because of its promise of (a) government-owned automobile insurance, (b) lower rates and (c) the full right to sue for both economic and non-economic loss. Of course, all those promises have been broken.

He made the following presentation to this committee. He compared the existing legislation and the new legislation being proposed by my friends across the floor here and he said the following:

If a married male aged 30 with a gross income of $25,000 was, God forbid, in an accident and became a fatality, under the Ontario motorist protection plan, the existing plan, that person's family would collect $435,000 in economic loss benefits. Under the government's plan, that person would collect $93,000. Therefore, his family would have to pay a $300,000 penalty because of this legislation.

He further went on to tell us that if the same thing happened to a married male aged 40 with a gross income of $50,000, if there was a fatality in an automobile accident, under the Ontario motorist protection plan that person's family would get $623,000, and under the government's legislation, Bill 164, they would get $149,000. That's a penalty of $480,000 to that person's family.

Furthermore, today, we heard from Mr John McLeish, who also admitted that he voted for and supported the NDP because of its promises on automobile insurance. He said the following to the committee today:

"While the NDP says it is increasing accident benefits, this is not true with respect to the income replacement benefits for those earning $40,000 per year or less." I would assume that you'd be concerned about those people. "Under the NDP scheme, a disabled worker making $20,000" -- a year -- "will receive 11.8% less than under the Liberal plan, a worker making $30,000 per year will receive 15.9% less, and a worker earning $40,000 per year will receive 18.4% less" under the NDP legislation than they would have received under the existing Liberal legislation.


He went on to say, Mr Sutton, that:

"An innocent accident victim earning $70,000 per year" -- I don't think many of your members earn that much money -- "will receive 30.7% more under the NDP plan than under the Liberal plan, while a victim earning $80,000 per year will receive 46% more under the NDP plan and a victim earning $90,000 per year will receive 61.2% more under the NDP plan."

Do you think workers earning $40,000 a year and less should be subsidizing people through their automobile insurance rates who are earning $70,000, $80,000 and $90,000 a year?

Mr Sutton: I think what you're saying there is, you're talking about the change from $600 to $1,000 on weekly benefits.

Mr Mancini: Yes, that's correct.

Mr Sutton: Quite frankly, I think that's more fair, and I'll tell you why. Right now, you get 90% of your net wage.

Mr Mancini: No, you get 80% of your gross right now.

Mr Sutton: No, 80% of gross under the old plan, 90% of net under the new plan, and the 90% of net is also indexed, so somebody who's off for X number of years is going to be looking an awful lot better if we've had the inflation we've had in the 1980s. But the other point my friend over here said is that it goes from 73% of people would be protected up to 97%. I can see that, and there's no doubt that we're all going to pay more premiums for that, because the only way you can reduce premiums is to reduce benefits, isn't it?

Mr Mancini: Sir, people earning $40,000 a year and less will be paying and subsidizing those people earning $70,000, $80,000 and $90,000 a year and more. That's the point.

The Chair: Two minutes.

Mr Mancini: Mr Phillips?

Mr Phillips: I appreciate the steel organization being here today. I realize it's been your group that's been among the most hard hit, I think, in the recession as you look at the various plant closures and what not.

My question is, and really this is the debate here, is the incremental cost of this bill worth the benefits? That's where I'd like the advice of your local. We've had a variety of estimates of increased costs, from 5% to 20%. Your organization has looked in detail at it. If your members were faced with a 10% premium increase, and I've tried to pick a number that I think is fair, which could be I gather a $70 to $80 annual increase in premiums, does your local support proceeding with the bill because it believes that a $70 to $80 increase in premium is worth the increased benefits you might receive?

Mr Sutton: I'm not sure we agree that the increase is going to be there for that reason. Most of our members see the car insurance going up, and as long as it's privately run, we're not going to see anything different, in my opinion. However, I think when we look at a couple of the benefits in here, we're pleased with that, but the collateral benefits are a problem to us. There's no question of that.

Mr Phillips: But would your members say, "Listen, we're quite prepared for an $80 increase for those benefits"?

Mr Sutton: As I said, I'm not sure that there is that $80 increase for these benefits.

Mr Phillips: If there was, would they support it?

Mr Sutton: I'd have to go back to the membership floor and debate that one, I guess.

Mr Harnick: Sir, I just want to go over one aspect of this bill with you first. The economic loss provisions in this bill say that if you suffer an economic loss -- in other words, if you suffer a loss of your income after you've received whatever benefits this plan is going to give you, and you still have a loss from what you should have made if you were able to continue in your job, continue to get your promotions and work your way up, even though you have a differential between what they gave you and what you would have earned had you not had the accident, this bill takes away your right to claim for that differential, even if you're an innocent victim. Do you agree with that?

Mr Sutton: When you're referring to purely the economic loss?

Mr Harnick: Yes.

Mr Sutton: The way I read it, I don't think I'd be looking at much of an economic loss. Let me tell you why.

Mr Harnick: Well, I'm not talking about you personally, but just generally. If someone does suffer an economic loss, what I want to know from you is, shouldn't they be able to collect it if they're innocent?

Mr Sutton: From our members' point of view, we don't see that our members are going to have any substantial economic loss. If they're receiving 90% of their net income -- it's indexed -- and the fact that they're not going to work, not paying for gasoline to drive to work, not paying for lunches and other employment costs, where is their economic loss?

Mr Harnick: What if they're --

Mr Sutton: Somebody that's maybe making $200,000 or $300,000 may have an economic loss.

Mr Harnick: Let me explain it to you. Let me explain where their economic loss is: If the person was just starting out, not necessarily as a steelworker but maybe as a teacher, he or she might be starting out on the lowest grid of the pay scale, and if the person is then injured and never able to work, they won't get to be the middle-income- or higher-income-earning teacher, the vice-principal or the principal, and they might have been on track for that, so they may suffer a future loss of income.

Let me give you another example: Let's talk about the student. Let's talk about your son or daughter who's at school now and might be getting straight As, and you know your son or daughter is going to grow up maybe to be the president of the steel company --

Mr Sutton: Heaven forbid.

Mr Harnick: Well, let me change it -- maybe to be a doctor, a lawyer --

Mr Sutton: Head of the union.

Mr Harnick: Head of the union, maybe take Leo Gerard's job -- but that student is injured in an accident, will never work again or never be able to work and never able to achieve what their intelligence indicated they would have been able to achieve. This bill will effectively pay them $391 a week, indexed, for their working life. We know they could have been much more than somewhere around the $20,000 mark. Don't you agree that a person in that situation should have the opportunity, after a premium's been paid, to claim for what their life might have been if they were innocent?

Mr Sutton: That's providing they go through the court system and can prove fault in the accident.

Mr Harnick: Well, they're going to get their accident benefits anyway -- but they're innocent.

Mr Sutton: What you're referring to is strictly through the court system and I think --

Mr Harnick: No, it's not strictly through the court system.

Mr Sutton: Sure it is.

Mr Harnick: No, no. They get their accident benefits.

Mr Sutton: They're getting their accident benefits, but what you're referring to is the future potential --

Mr Harnick: I'm saying, shouldn't they be able to claim their additional --

Mr Sutton: You're referring to litigation and that.

Mr Harnick: That's right.

Mr Sutton: Quite frankly, I view it as -- they might as well go buy lottery tickets --

Mr Harnick: But you see, they're innocent.

Mr Sutton: -- because the odds of them winning in court are just about the same, aren't they?

Mr Harnick: No, you're wrong about that. They're innocent; they're the innocent person; they're going to get something; they're going to get what they can prove. Now they've got their accident benefits that pay them $20,000 a year. They might have been a doctor, making $100,000 a year. To me, that means they're losing about $80,000 a year. Do you walk away from that?

Mr Sutton: They might have won the lottery too.

Mr Harnick: But do you just walk away without trying -- if they're innocent. Why would it be a lottery if they're innocent? The accident is without their fault.

Mr Sutton: You're looking at one example of what may happen. They may get struck by lightning; they may be in an accident that's their fault; it may be partially their fault. What about all of these other people?

Mr Harnick: So on behalf of your union and your children, you're content to say that even if they're innocent, they get $391. Even if they're innocent and can go to court and get more money, depending on what it is they're able to prove, you're quite content to accept the $391 on behalf of your children and other union people's children and just leave them at the poverty line?

Mr Sutton: Well, one of the other things you're saying is, are we also in favour of paying more benefits, more premiums, in order to receive these more benefits? I think we'd much rather pay for private accident insurance and not have to worry about going through the court system. I'd rather invest my money there and my members' money there. I'm going to get more bang for my dollar going through life insurance.


Mr Tilson: Just to remind you, sir, your members want the right to sue. That's what you say in your brief.

Mr Sutton: Yes, we did, and we discussed it --

Mr Tilson: That isn't what you're saying now.

Mr Sutton: No. What we discussed at the membership floor was, under the system, it was very hard to enter into any kind of lawsuit, and if you want to get into the pain and suffering, we have some serious considerations on the $15,000.

Mr Tilson: Your members want the right to sue. So does everybody else in this province.

The Chair: Okay. Time has run out. I allowed you another few seconds there.

Mr Mancini: You're very generous.

The Chair: I know I am.

I'd like to thank you for coming before the committee today.


The Chair: The next group is PAIN, People Against the Insurance Nightmare. Would you come forward, please. I'd like to welcome you to the standing committee on finance and economic affairs. We have a half-hour. We're on until 5 o'clock, and after your presentation, if you can leave some time in that half-hour for questions from the members of the committee here. If you don't mind, identify yourselves for the purposes of Hansard and the committee. You may begin.

Mr Pat Mazurek: I'm Pat Mazurek. This is Doug Welland. I'm a member of a local NDP executive and I'm a lawyer. I've done work in the insurance area of law from both sides of the fence, as a lawyer representing both insurance companies and claimants. Mr Welland is a professor in the department of economics, the faculty of social science at McMaster University here in town. He has a particular expertise in the area of the insurance industry and, in particular, in the quantification or assessment of losses to injured victims.

We're here on behalf of PAIN, a group which many of you are probably familiar with. We've been involved in fighting for the rights of innocent accident victims, as well as fighting for some sensible and humane social policy in this area since back when the Liberal government first introduced its proposals to bring in the dramatically changed system that was created by Bill 68.

We appreciate the opportunity of addressing you here in Hamilton today and ask that you please listen carefully to what we have to say. We think our perspective on the matter is something different from what you've heard from most of the groups that have made presentations to you.

It's our basic position that this bill is very bad law. We think actually that the bill is probably a perfect example of everything that's wrong with a lot of the policymaking and legislating that's going on in our society these days. There are essentially three levels at which we take fundamental objection to the bill in its fundamental structure.

First, on an ethical level, it's our proposition that it's morally wrong. Some of the reasons for that have probably come out in some of the submissions from some of the other people, including some of the victim groups that have appeared before you.

On a level of social or economic policy, it's our position that this particular bill, and in fact Bill 68 that went before it as well, is utterly illogical, bordering on the nonsensical. Professor Welland will be elaborating on that.

Finally, on a political level, it's our position that the bill is essentially invalid because it's utterly contrary to the democratic mandate that put you members in your chairs today. We won't touch on that at great length, because we don't have enough time. I think you all know what we mean. We'll return to it at the end.

In our brief time before this committee, it's going to be our effort to try to shine a little light through what is clearly a thick fog of what we would have to call bullshit that's being generated or spewed forth by the paid propaganda machines that are contributing to the debate on this issue. On the one hand, we have the government propaganda machine, which is paid for by our tax dollars and which is issuing forth all kinds of obfuscation and confusion on the issue. On the other hand, we have the insurance industry's propaganda machine.

This one is also being paid for with public dollars. In this case, it's your premium dollars buying these beautiful ads and things like that in the Globe and Mail, the cost of which of course goes into the cost of the insurance that we all buy. I guess it's kind of interesting to observe that we all have the great good fortune of paying for the privilege of being smothered in this obfuscation and public relations.

In any event, we have no incentive to create such a fog. We're not paid to be here, unlike many of the other people presenting to you. We want to get right to the straight goods without any waste of time or money. We think the straight goods are a lot clearer than you would think after you hear all of the propaganda.

We'll begin with our first heading. I've given you a rough outline of our paper here. Our first heading simply focuses on the title.


The Acting Chair (Mrs Irene Mathyssen): Would you please be quiet. We have presenters on the floor. It is their time. If you do not come to order then you will have to leave.


The Acting Chair: I said order, and when I say order, we come to order.

Would you like to leave?


The Acting Chair: The Chairman is here. You have a Chairman sitting in the chair.


The Acting Chair: I regard that as a sexist insult. I am perfectly capable to be in the chair.

The Chair: Give me the chair back. I've got a job as the Chair here. I've got a job to make sure that people are getting interpretation in French. I see them in the booth. They're doing it. I just walked back there. If I can't put somebody in the chair for 30 seconds to walk back -- I can hear what's going on when I'm walking back there, when I'm in the tent for a short while. People in the audience are not going to tell me what I'm going to do up here. If you want to tell the Premier, fine.


The Chair: I'm sorry, sir. Have him removed from the audience. We'll recess for five minutes.

The committee recessed at 1637 and resumed at 1642.

The Chair: We'll resume the hearings.

Mme Soth: Je voudrais signaler à tout le monde qu'il y a de l'interprétation en français. Vous pouvez prendre un récepteur ici. Nous sommes dans la cabine, et si vous avez des problèmes techniques, adressez-vous au technicien qui est là.

The Chair: Would you carry on, please.

Mr Mazurek: We've completed introductory remarks. I left off when we were focusing on the first title.

I focus on the name of this act. It's called An Act to amend the Insurance Act. It's our basic proposition that this is a complete misnomer. The kinds of changes that were passed in Bill 68 and that are being further enhanced here should not be buried in something like the Insurance Act. You're familiar with that act. It's a big thing like the tax act. It's a good place to bury little things, because only the industry tends to read an act like that. It's supposed to be an act to regulate that industry and the so-called products it puts out.

This bill is not primarily focused on that. This bill is primarily law reform, as was Bill 68. Specifically, the essence of this bill is to take away basic civil rights and, oddly enough, take them away from the most disadvantaged people in our society.

Just to illustrate, I don't think this committee would think it proper, if the topic under discussion was removing the rights of victims of toxic pollution for example, to hold the perpetrators responsible even if they could show a direct connection and direct innocent loss. If their rights were being savaged by corporate barons who felt their insurance rates for such matters were no longer affordable, whatever that means, I wouldn't think this committee would think it appropriate that those rights should be savaged in order to address these perceived problems of that particular industry. In fact this particular government, we find, in that particular area is championing something like the environmental bill of rights. It's going quite the other way. Yet when we turn our attention to this department, we find an entirely different approach.

If a government like this one apparently is, and like the one before it apparently was, seems predisposed or motivated to pass such onerous and unfair legislation, the last thing we would expect is to find it buried in something like the Insurance Act. You wouldn't expect that regulation of toxic pollution and the removal of rights of victims of that to be buried deep within this, would you? I wouldn't.

I think it's more than just a matter of name, because it betrays the entire fundamental illegitimacy of the whole project that's being undertaken. Probably, if we used clear, meaningful language and described this bill for what its essence is, the name should be -- I am not grandstanding; I'm being literal here -- An Act to eliminate the Civil Rights of the Disadvantaged. That is what is at the core and that, and only that is what makes all the other little details and benefits you've been troubling yourselves with possible, because it's those people who are paying, as we wish to demonstrate now.

The reason we say this is fundamentally misguided is that this whole bill does not address the real problem. There is indeed a real problem in our society relating to motor vehicle accidents. Its the astounding number and severity of motor vehicle accidents and the tremendous amount of damage that's being caused in those accidents, as well as that problem being magnified by the pitiful systems we have in place for dealing with the people who are injured in such fashion or for that matter any other fashion. That should be the focus of this committee's inquiry: how to address the real problem.

Auto insurance rates don't fall out of the sky. What is the proper cost of auto insurance? What does "affordable" mean? How do you answer that question? You've got to look at the damage caused. Professor Welland will elaborate on this. Right now, I simply wish to observe that this bill is not even concerning itself with that. This bill is looking at the symptoms of the problem and it's purporting to address the symptoms, but it's not even curing the symptoms. Rather, what it chooses to do is ignore the symptoms, to somehow legislate them out of existence.

What you should know, of course, and hopefully what some of the presenters have made clear, is that no matter how many PR people you have working for you, you can't write legislation that is going to eliminate the real loss people have suffered.

There is a way you can eliminate their loss, ladies and gentlemen, and it should weigh on your consciences, because there's a good way. It's to address the real problem: cut the accidents, cut the damage. There are a number of ways it can be done. But that's not what you're embarking upon here. You're embarking upon the opposite. You're going to ignore it, somehow make it out of existence. To top it off, you're going to systematically remove any sort of advocacy for those people so that when they're being ignored, they're muted and it's very difficult for them to make themselves heard and to make their suffering and the shortchanging known to others.

The effect of all this is to not encourage preventive action, but on the contrary -- this is the irony of the whole thing -- to make a real problem worse. You certainly aren't making it better. You probably aren't even neutral. You're almost certainly, according to the statistics, going to make it worse, and there's a common-sense reason for that, of course.

Let's look at what is posited as the alleged problem. You've heard what we say is the real problem. The alleged problem is that auto insurance rates are going up too high. We've made a little picture for you and you all have a smaller version in your brief. It's sort of a Ross Perot type of thing, to make it clear, because people don't seem to be clear on it. The title as you see is "Where Your Insurance Premium Goes."

If you take a little look at the pie, you see we've got it in three major thirds. One we call the "Industry Cut" and it's somewhere in the vicinity of 35% to 40%. I don't know enough to come up with these numbers by myself so I took them out of the government's own material. That's where these numbers come from. Brokers' commissions are approximately 15%. That's not just of the injury money; that's everything that's paid. That's a conservative estimate as well. I've got a figure of 17.3% in the material, but we rounded it out. Similarly with profit, we've been modest -- 10%. It's certainly been more in the last year and probably will continue to be more under the new system being proposed. In any event, let's call it 10%.

Then we have to think about overhead. Overhead is those nice gleaming buildings, these beautiful ads, the jingles you hear on the radio. You've got to pay for that stuff too, and that comes to about 10% on the figures that have been made available by the government. So you've got somewhere in the area of 35% to 40% there.


The figures in your promotional material also show the property damage of the remainder that goes out in claims. A majority of that share, something over 50% and probably closer to 60%, goes out in property damage, which comes to a total of about 35% or 40% of the grand total.

The personal injury part that we're concerning ourselves with in such detail here is actually only about 20% to 30% of the entire disposition of your premium dollars. But the only focus of Bill 164 is that little part. Nobody's doing anything, I mean anything, about the rest. The brokers' commissions are fully half of the total amount going out for all kinds of injuries to everybody, but there's not a breath about it; profits similarly.

Now it's being posited, as one of the alleged solutions, that by eliminating fault and moral responsibility and everything else, we're somehow going to get away from these so-called wasted costs of determining actual fault and actual economic loss. That's a bit of a joke in and of itself, because when it comes to setting premiums, of course the government assures us that fault will count, but we don't have a system for figuring out who's at fault, so that's an interesting one you can think on. In any event, the reality is probably that some time will be spent on fault even under the new system.

But on the government's own Mercer presentation, at best the amount of savings in cost -- because remember, of this little piece, the vast majority does go out in benefits to victims, and a certain amount is what economists like to call transaction costs. A certain amount of those transaction costs are going to occur in any event, and that's accepted in the material too, and it's common sense. You still have to adjudicate claims and pay out the money and keep track of people.

Even if we accept as true that they're going to save the kind of money they suggest, look at your pie; the alleged savings, and I stress alleged, is 2% or 3% of the grand total of the auto insurance premium, maximum on the best assumptions. That's the territory we're in. Of course, common sense lets us know that the so-called reduction or limiting of auto insurance premiums is not going to be done simply by going to work on that 2% or 3%. The reality is known, and you've had it presented it to you in different ways. The government knows it. Your friends over at this table will tell you that it's absolutely understood that the total amount that'll go into the pockets of innocent accident victims was reduced by Bill 68. Their part of the pie shrank, and it's going to be further reduced now; it certainly isn't going to be increased. They're the ones paying for all these benefits. All of the cost is being borne by a reduction in that pie.

Let's look at that pie. As the cost of saving this 2% or 3%, of course, we've eliminated fault, which means now all the benefits are going to the guilty drivers as well. The money from that isn't coming out of the sky and it's not coming out of that piece of the pie, and it's not coming out that piece of the pie. There's only so much pie. Guess where it's coming out? Of course, it's coming out of the fund that's already there for accident victims. If the guilty people are getting more, guess who's getting less?

You can do as much PR as you want, but there are only so many pieces of the pie, and that's where the money's coming from. They know it, and hopefully they'd let you know it. You should be very clear that in approaching this bill, the object is to restrict the money that goes to innocent accident victims. They're the ones who are going to pay for the subsidy, and only them.

I referred to morality. You'll see in our next heading we talk about wealth transfers, which is essentially what we're talking about here. This isn't product reform; this is basic stuff. We're transferring wealth and what we're doing, of course, is subsidizing automobile owners, the most advantaged segment of our society. Yes, widely held: Many people have them, but the rich people have more and they're going to benefit more and there's fully a third of our province or more of our citizens who don't. They're not going to benefit. They're not getting reduced premiums. They don't pay premiums. They don't have the privilege of having a car to pay premiums on.

Who are they? They're the disadvantaged, the poor, the elderly, the people who are already disabled, for goodness' sake. They're the people who aren't driving around, or maybe the ones who are a little more socially responsible and ride a bicycle, take the subway or something, to stay out of the car. Whatever it is, they're not benefiting. It's the disadvantaged who are not going to get any of the alleged benefit of reduced premiums. But they're equally going to pay with everybody else, because they're just as likely to get mowed down or whatever.

The cyclist, who is merrily riding to work, can get blown out by the car just as well as anybody else, probably better. He's more likely to be badly hurt, which means more likely to pay the serious costs, because the basic wealth transfer -- and I want to be really unequivocal about this: I absolutely challenge, our group does, any member of this committee, any member of the government, any of the bureaucrats, to refute that these are the directions of the wealth transfers.

You can quibble about how much, and indeed it depends on what rates you put in the regs, and they're subject to change over time, as we all know, but the basic directions are clearly in the way indicated in our brief. Innocent victims will be the ones paying, the only ones paying, to subsidize motor vehicle owners. The innocent victims, incidentally, will also be the only ones paying to subsidize or at least give benefits to the guilty drivers, beyond what we gave them before.

If society feels so bad about these people, then they should use some tax dollars to give them breaks, because philosophically and morally, they have no basis whatsoever to distinguish between somebody who piles himself into a pole in a car or someone who falls off a ladder at home. There's no reason to stop it at accidents. Why should the guy who gets hurt in an accident get more from society than somebody who's congenitally that way? Jeez, he's better off. He at least had a few years of regular living. Now he knows how it feels. This guy's been that way since birth. There's no moral basis to distinguish. The only basis to distinguish is fault. Innocent people have a right, theoretically and morally, to get something complete from the perpetrators of the harm; others do not.

I observe in passing, and you'll see it's noted as number 3, that in effect what's going on here, going back to our little picture, is all citizens are subsidizing the insurance industry, and the insurance brokers in particular, by reason of the fact that all of these so-called cost-saving measures are being borne by the injured people with no effort whatsoever to make these shares reduce whatsoever.

Of course, it makes a mockery of the fact that the real intent is to save rates. If it were, you'd look at the pie, and let's not spend weeks of hearings on a couple of percentage points down here. Look at these big pieces up here. Let's do something about it. Now, the government's abandoned the profit idea. They could have gotten rid of those going with government-owned, and they probably could have brought the brokerage fees to zero or very close, going that way as well. They likely could have reduced overhead, but none of that happened. Instead, we've got the whole thing being borne on the backs of the injured people.

Of course, you'll see the final transfer of wealth, and this is the beautiful paradox of it all -- or to my mind, the pathetic paradox -- that it's basically a transfer from the have-nots to the haves of society, all courtesy of the NDP; Jeez, I always thought they wanted the arrow to go the other way.

The Chair: You've got one minute left to conclude.

Mr Mazurek: Okay. Now I'm going to switch my -- well, we were shorted a bit. I'm going to let Mr Welland speak in a moment about the fact that all of this also has a profound and negative effect on public policy, because it encourages uneconomic action by not addressing the real --


Mr Tilson: On a point of order, Mr Chairman: I have been watching the clock very carefully, and the time that they lost was during this little exercise that went on here. Their speech was interrupted. I believe they've got at least 10 minutes more.


Mr Winninger: Point of order.

The Chair: I'm sorry. I'm not going to rule on that one, because it is the group --

Mr Tilson: I've been watching a watch. It's 5 o'clock.

The Chair: I've got 5 o'clock.

Mr Tilson: They started at 4:30. They've lost 10 minutes because of your shenanigans.

The Chair: They did not lose 10 minutes. It was five minutes. We went out there --


The Chair: I'm sorry. There's no comments from the audience. If you're going to stay here and comment, I would appreciate that you leave.

Mr Kormos: It's called the New Democratic Party.


Mr Winninger: Then why did you interrupt your speaker?


The Chair: I'm sorry, sir. Okay. I'm sorry that we've run out of time and we're carrying on with the next group.



The Chair: It's 5 o'clock.


Mr Kormos: How do you call yourself a democrat?


The Chair: I'm sorry. The time has run out. It's 5 o'clock. The next group's on at 5.

Mr Kormos: No, no.

Dr Doug Welland: I've got about 10 minutes here, Mr Chairman.

The Chair: No. I'm sorry. Your group's done.

Dr Welland: We will not leave.


The Chair: I'm sorry. I'm ruling as Chair and I would like that gentleman removed from the room. If he's going to leave --

Mr Kormos: These people have a right to make a presentation.

Mr Harnick: Point of order, Mr Chairman. May I have my microphone turned on, please? Point of order.

Mr Winninger: I have a point of order.

The Chair: I go over here to this point of order. Mr Winninger.

Mr Winninger: I would simply like to say that if a member of PAIN who's here today in the audience chooses to interrupt his representative speaking at the mike, then it can't later be complained about if they don't get their full time.


Mr Harnick: That's not a point of order.

Mr Winninger: They can choose to use their time the way they please.

The Chair: The Chair has made a ruling here.

Mr Harnick: That's not a point of order, and I would like to make a point of order.

Mr Tilson: Mr Chairman, I'd like to challenge his point of order.

Mr Harnick: I would like to make a point of order.

Mr Tilson: I, as a member of this committee, am challenging your point of order.

Mr Harnick: Excuse me. Point of order, Chairman, and I'd like my microphone turned on. You might be able to dictate to everybody else, but you're not going to dictate to me.

The Chair: I recognize Mr Hornick -- Harnick.

Mr Harnick: You'll get it right. A few more weeks and you'll get it right.

The Chair: I'm used to you sitting beside Mr Kormos there. He knows a lot of Hornicks.

Mr Harnick: I don't know what that means, but the fact of the matter is, Mr Chairman, that we have a subcommittee that made rules, and the rules were that groups get half an hour. This group has had 18 minutes. You adjourned it --

The Chair: You haven't got --

Mr Harnick: Let me finish and have the courtesy of keeping your mouth shut until I am finished.

The Chair: Okay, you're out of order.

Mr Kormos: Oh, come on.

Mr Harnick: I don't care whether -- you're out of order too.

The Chair: You don't call me --

Mr Kormos: Everybody's out of order but you and Bob?

The Chair: Will you apologize for what you said to the Chair?

Mr Harnick: You apologize for interrupting me. You know, you get the courtesy that you deserve.

The Chair: Turn the mike off.

Mr Harnick: No, don't turn my mike off.

The Chair: Yes.

Mr Harnick: We have rules here.

The Chair: The rules are --

Mr Harnick: We have a subcommittee that made certain decisions, and you might be the Chairman, but that doesn't permit you to overrule the subcommittee. Who do you think you are?


The Chair: Mr Huget.

Mr Bob Huget (Sarnia): Point of order, Mr Chairman: I would move for unanimous consent to extend the hearing times by five minutes.


Mr Owens: Agreed.

The Chair: Okay, five minutes.

Mr Mazurek: In light of developments, I was just going to give my concluding remarks, but I won't. Please read them. They're on the last page. All I say is, address the real problem. Don't run and hide. Don't be cowardly. Go after the big boys; don't pick on the little guys. Professor Welland is going to elaborate on the point that you're really making a basic problem worse.

Dr Welland: My starting point is the price of auto insurance, which is really the reason that we're here today.

In an unregulated competitive market, prices convey a great deal of information. In the case of automobile insurance, back in the days when prices were unregulated, rising prices informed us of increasing numbers of maimed and broken bodies and alerted people to the fact that a change in behaviour was needed and that vehicles and roads must be made safer. Prices were --


The Chair: I'm sorry, sir. You're out of order back there. You're using your own time up.

Dr Welland: Prices were simply responding to increases in private costs that automobiles were imposing upon society. Prices rose exactly as they should. The consumer, not surprisingly, began to clamour, and at this point, the government, either not understanding or choosing to ignore the real issue, which is that of highway safety, began to pander to the naïvete of the consumer by regulating prices.

Regulation of prices is a poor stopgap because it doesn't deal with the underlying problem and eventually it sets up a new clamour. From whom? From the industry. They're faced with rising costs and shrinking profits and they can't adjust their prices to reflect cost increases.

Now the government has two highly visible groups clamouring for relief and in the meantime the carnage goes on. The pressures build. Government decides it has to respond in a way that holds the line on prices, notwithstanding the fact that the upward pressure on prices is merely a reflection of what's going on on the highways: Accidents are increasing; average claim costs are rising. The market is working exactly as it should.

At this point, in response to the hue and cry, the government steps into a market that is working well and begins to meddle. Let me remind you, as Mr Mazurek has stated, that rising prices are a symptom, a signal. They're not the disease. Bill 164 is an attempt to treat the symptom, just as Bill 68 was before it. The line has to be held on prices and the shell game begins.

We can't touch the profits of the industry. They have to be protected. We can't touch the profits of the brokers. They have to be protected too. Well, let's hide some over here in OHIP, let's hide a bit more over here in disability insurance by making it primary, let's reduce compensation to innocent accident victims of the future, and if we want to reward the guilty, let's make the innocent pay for them too.

What a brilliant solution. It's the political version of the perfect crime. These people can't complain because nobody knows who they are yet. A sigh of relief. We've solved the problem. We've held the line on prices, but at what cost?

Innocent accident victims have lost the right to sue because of the verbal threshold. They can no longer obtain full compensation for economic and non-economic losses. The victim is being victimized, first by the negligence of some other driver and now by government policy. What a wonderful world we live in.

The price of auto insurance no longer reflects the true private cost of the carnage going on on the highway, which continues on unabated, and everybody forgets about it. Who cares about that anyway? We've held the line on prices. After all, after Bill 68, the most seriously injured, innocent accident victims, survivors of those killed in fatal accidents, still have unfettered access to tort for full redress of their economic losses.

Then a new government comes to power, campaigning on the promise to redress the many problems created by Bill 68, promising to restore the right to sue for full economic and non-economic losses. I heard that promise from the mouth of the Premier himself at the kickoff to Mr Christopherson's campaign.

The Chair: How much have you got left?

Dr Welland: I've got about two more minutes, Mr Chairman, if you please.

The Chair: Okay. You can have two minutes.

Dr Welland: What does this government do? Instead of carrying on with its promise to restore the rights of the innocent accident victim, it carries the problem of unfairness to innocent accident victims much further. The Liberal bill left open the door to full compensation through the tort system for economic and non-economic losses, recognizing that major and catastrophic injuries were deserving of special treatment.

Ladies and gentlemen, it's precisely these people who are at the top of your hit list in Bill 164. You've heard this from John Sewell; you've heard this from a number of other people, I'm sure. They have informed you that students, younger workers, the survivors of innocent individuals killed in automobile accidents and victims requiring extensive amounts of long-term care are being asked in this legislation to bear a much greater risk, a disproportionate share of the risk against the negligence of other people. They're being asked to self-insure their human wealth, their earnings power, and the compensation in the accident benefits schedule is completely inadequate in many cases to compensate people for what they have truly lost. I could give you examples, but because is limited I'm going to skip over it.


I'm going to make one other comment. First of all, I understand that Mr Nigel Gilby has handed out my technical analysis of this bill. I should point out that this is about a year old. I wrote it for the Advocates' Society meeting on January 10, I believe, of last year. There are many comments in here that are still valid as technical comments, criticizing the no-fault provisions of the bill. There are still many gaps in the legislation, and even though these comments are not written with a view to the new regulation, which I just got a copy of, there are still many points here that are valid.

I want to make one other point, and that is that a more subtle but important side effect of this legislation is the fact the market signal about the true level of accident cost is going to get hopelessly lost as a result of this legislation. The carnage will go on and it'll increase because of some of the goofy incentive effects of this legislation.

But the really sinister effect of Bill 164, just like Bill 68 before it, is that now the true costs that the automobile imposes on society get shuffled off in various directions, they're buried deeply, and the government then has failed in its responsibility to deal with the problem that created the crisis in the first place. It has treated the symptom and not the disease, and the real loser is the innocent accident victim, who's being victimized all over again.

It's interesting to note that in the spin document, the 64-page document that Mr Charlton tabled in the Legislature early this year, it stated, "Bill 164's proposals provide a comprehensive system of economic compensation, eliminating the need to sue." I put it to you that the framers of this legislation don't believe this claim; otherwise, why would you be restricting the right to tort?

The Chair: I'd like to thank you for your submission.


The Chair: The next group to come forward is the Simcoe Erie Group. I'd like to welcome you to the standing committee on finance and economic affairs. You will have one half-hour for your presentation. I had some patience because I didn't want to see you go to Toronto to make the presentation there if we dismissed. Identify yourself for the purposes of Hansard, and you may begin.

Mr Malcolm Heins: My name is Malcolm Heins. I'm president of Simcoe Erie Group, a group of property casualty insurers based in Burlington. On my left is Mr Ralph D'Angelo, a lawyer in our company who has a fair bit of experience with both the OMPP legislation and the proposed draft legislation in Bill 164.

I don't want to rehash a lot of what has gone before this committee. I've been reasonably familiar with the presentations that have taken place in a summary way, and our presentation was designed to pick up on a couple of points that we didn't think were necessarily covered in some of the other presentations. I don't intend to go word-for-word through this presentation. If you have it in front of you, you're able to read it. I'll hit the points, so I'll be moving around a little bit.

The Chair: The researcher has a copy here and we'll go through it, and it would be even better if you brought up some other points there too.

Mr Heins: Terrific. No one, as we see it, really disagrees that the amendments within Bill 164 enhance the accident benefits and the right to sue for non-pecuniary damages such as pain and suffering over and above what is presently available under the OMPP. Most of the debate in the submissions which it appears have come before this committee have concerned the impact these changes were going to have upon the price of automobile insurance in Ontario. Most of the submissions, we are sure, have pointed to the increase in premium costs which will have to be borne by the Ontario consumer in comparison to the price of the current OMPP product.

In our view, the realities are that the costs associated with OMPP are already escalating. That point was made by Mr Cooke in his presentation by the Dominion of Canada General Insurance Co. We see it today in our administration of the OMPP product. We also would advise this committee that the OMPP product, as an accident-sickness program, is an immature insurance product. It is barely two and a half years old. That's very young in the life of that kind of an insurance product, and as a result the full implications of what we're dealing with are frankly unknown. We are learning day by day.

As a result, it is our view that to embark on yet another revision of the insurance product for automobile insurance is frankly premature and really borders on the irresponsible at this point in time.

The other point we need to make, and this is perhaps one of the subtleties that I think is being missed, is that given the OMPP product and indeed the product envisaged by Bill 164, what we are seeing is a shift in the cost of health care from, in many respects, the public sector to the private sector. We already are seeing patients being discharged from hospitals into the care of private-type institutions which are being funded by the automobile insurers. Now, there's nothing necessarily wrong with that, but it is starting to transfer a cost to the driving public. I can't give you statistics on that, its anecdotal, but we see it happening increasingly on a day-to-day basis in our OMPP unit which administers all our automobile insurance claims in this province.

You have a subtle shift, if you like, on health care costs going from the public sector, in terms of what we classically think of as OHIP, into an automobile insurance product, the implications of which need to be thought about.

When we look at 164, I think you've heard ad nauseam about how complex it is. I can say, as a former lawyer -- and I know Mr D'Angelo agrees with me; you've heard it from a myriad of lawyers -- it is one of the most difficult pieces of legislation I've ever had the privilege, if I can call it that, to read. I started reading it one Sunday morning with a cup of coffee, thinking I'd breeze through it, and gave up in disgust and thought, "I'd better leave this so I can sit down at my desk and really work at it."

The expenses under 164 are no doubt going to increase. The minister's own words, when he introduced this document in the Legislature in January of this year, were that 164 will provide the most generous benefits in Canada. We agree it will. If that's the case, the costs are going to go up and the public is going to have to bear the price.

Costs going to go up not only because of the benefits contained in here, but as a result of the administrative costs associated with administering this act. Given its inherently complex nature, the claims administration costs alone are going to increase for the insurance industry. Claims handlers are going to have to interpret and apply a complex scheme of accident benefits compensation. They will be expected to calculate the net income of a claimant after performing applicable income tax calculations, and they'll have to do that a number of times over the life of a claim. They're also going to be expected to adjust the amount of weekly benefits payable to a claimant several times during the currency of the claim file. They'll also be expected to be experts in medical and vocational rehabilitation in order to effectively administer the accident benefits scheme.

I can only echo the points made by the person who was here, I think, three sessions ago on the rehabilitation side: We're starting to point ourselves into needing a mechanism to adequately deal with the victims of automobile accidents. I know we have set up a committee to look into it. I think as a company and a member of the industry we laud that, but it is a difficult task. It is not something you can write a series of regulations around to deal with. I think we're starting to see the problems already, even in the OMPP system to a certain extent, with respect to the problems of administering rehabilitation.

Indeed, when we look at Bill 164 the way it's drafted, it is our view that we are going to see a proliferation of rehabilitation-type institutions, and this is going to be nothing more than a problem for the claimant and the industry. The claimant will be shuffled needlessly from one institution to another, not deriving any real benefit. At the same time, of course, this is an expensive process, and all we're doing is eventually causing premiums to go up. We're going to have to satisfy victims of accidents, and we're going to be creating a problem within the system.


Bill 164 also creates a problem in that it doesn't deal adequately with disputes between medical practitioners. On the one hand, we could have a chiropractor saying somebody requires further treatment, and on the other hand, we could have a doctor saying the person is ready and able to return to work. I don't care, frankly, what doctor and what chiropractor we're talking about in this situation, whether they're an insurance appointee or a plaintiff's attorney's appointee, but the reality is there's no mechanism in the legislation to deal with a problem of that nature. It can be -- and we've already seen it begin, to a lesser extent, under OMPP -- a serious problem not only for the victim but for the whole system.

The question of fault: Listening to a few of the presentations this afternoon, when we start talking about fault, even going into the classic tort system that existed previously, in our view, fault plays a relatively minor role even in the tort system where there have been personal injuries. The reality is that the vast majority of victims of accidents are compensated in some way. Having said that, in our view you still need to penalize those who abuse the privilege, and I call it that pointedly, of driving on the roadways.

Looking at the OMPP legislation as it exists, I think a reasonable balance was struck. It's not perfect; nothing is perfect. Certainly, drunk drivers are penalized under this legislation in terms of not being able to receive weekly benefits or property damage recovery. There is a mechanism for the seriously disabled person to recover. I think a lot of the presentations, if you look at them, seem to point towards what you do about the catastrophic injury. Nobody minds that the catastrophically injured claimant has a right to be fully compensated. The tradeoff is that those who are less seriously injured give up something to make the system affordable. I think that is a delicate balance, one which Bill 164 fails miserably to deal with. Granted, it could be improved somewhat, but the OMPP legislation deals much more effectively with it.

At the same time, whether you're at fault in the accident or not, under the OMPP legislation you still get your basic economic recoveries; you're not destitute. If you're at fault for a reason that is truly punishable, it's picked up adequately within the OMPP legislation.

Looking at the complexity of Bill 164, I was really struck in the end that the reason it is so complex is that it tries to be all things to all people. It is dealing with what is inherently a subjective analysis in the case of serious injury and trying to legislate it. This is virtually an impossible task, and I think reading the regulations proves it. What you've got to do in those serious cases, from which a lot of the complexity derives, is simply let them go into the tort system, through the threshold test as it exists. It's not perfect, but at least it works and assists the seriously injured claimant.

Certainly, our view, and from what I can see the view of the vast majority of people who come before this committee, is that the present system we have in place is proving more than adequate. It's basically working, as far as we can determine. Granted, there are probably glaring individual examples of abuses by insurance companies, by plaintiffs and by plaintiff-type attorneys with respect to the current system, but I think on the whole, in the great balance of things, it is a working, viable system.

For the minister to expect automobile insurance to provide expanded and enhanced coverage at essentially the same cost, as he envisages under this act, is simply unrealistic. We can't do it. The only way we'll be able to do it is if we are legislated out of what we believe is our right to make a profit.

What do we recommend be done? Our view is that the 164 scheme, particularly the regulations that are provided for under that legislation, simply be scrapped. It's the wrong time, it's badly drafted, it's going to cause an insurance crisis -- mark my words -- one to two years down the road, and we're going to be right back at it again and nobody's going to thank the industry, nobody's going to thank the Legislature, nobody's going to thank the legal profession for putting this bad piece of legislation into force.

There are some individual problems with the OMPP system. They can be addressed fairly quickly. Particularly, self-employed individuals, badly missed in the OMPP legislation, should have the right to simply buy a defined coverage limit for their business and their loss of income. That can be quickly input.

There are some other problems that I know people want addressed. Why not simply set up a task force, as has been done already with respect to the rehabilitation problem, and deal with them piecemeal within the context of legislation that is only now starting to become truly understandable to the industry in all its respects, rather than throw the baby out with the bath water?

Those are my comments.

Mr Tilson: Thank you very much for coming and giving us your presentation. I agree that if this legislation is passed there will be a crisis down the line. I think it's as clear as can be, a major crisis. I do also agree that with the minister's comments of generous benefits, someone's got to pay for them.

I have one question for you, and I hope I'm not insulting, but I think you're probably one of the smaller firms. Is that correct?

Mr Heins: We're the 15th largest in Canada. We are one of the smaller automobile writers in the province, but we are a fairly large company.

Mr Tilson: That's what I was directing my comments towards, because I don't think you spent too much time on the withdrawal provisions. I don't know whether you have any thoughts on that.

Mr Heins: It's a little difficult for us to withdraw, isn't it? Our head office is literally 15 miles from here. Where do we withdraw to? Zurich? London? We're here.

Mr Tilson: But you might decide to get out of the business.

Mr Heins: Oh, yes.

Mr Tilson: In other words, the minister has said: "Rates aren't going up. I don't care what you people say. I don't care if you're saying they're going up 20%. They're not going up, because you've made all kinds of money in the last number of years. You made $1 billion in the first year of OMPP and you're ripping the system off. We're not going to let you raise the rates." You, on the other hand, say: "I'm sorry, Mr Minister, this is what you've done to us. We simply can't operate."

Mr Heins: As a Canadian-based carrier, if the rates were to be frozen, we would literally have no choice but to likely withdraw from the line of coverage, simply because we have nowhere to retreat to. The property and casualty industry is dominated by foreign-owned carriers; roughly two thirds of the industry is foreign-owned. For them, it's an easier process, if you like. Maybe it's difficult enough, but at least they have a territory that they can back into, and by and large, often a friendlier territory. We have nowhere to go, so we must simply terminate the line of business, lay off people and that's the end. Otherwise, we go bankrupt.

The Chair: Go ahead, Mr Harnick.

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

The Chair: You have two and a half minutes left.

Mr Harnick: Mr Heins, I know your background and I know your experience in dealing with innocent injured accident victims. Do you agree with me that to pay a student who will never work again the equivalent of $391 a week for life is, to say the least, cheap?

Mr Heins: Certainly, if that student has the ability to go on and contribute as a viable member of the workforce, obviously it's unfair.

Mr Harnick: It's morally wrong, isn't it, for an innocent person to be capped at what essentially is lower than the poverty line?

Mr Heins: It would be if otherwise he had other rights, yes.

Mr Harnick: In terms of fatalities: You have handled fatalities for innocent accident victims yourself. Can you conceive of a 35-year-old breadwinner making $40,000 or $45,000 a year who is killed in an accident leaving a spouse and two children and having his family, if he's been an innocent victim, given $117,000 to look after them for life? Can you conceive of that?

Mr Heins: In that context, no.


Mr Harnick: It's wrong, isn't it? It's morally wrong for someone who's innocent to be told, "All you get to live on is $117,000, because that's all your spouse was worth and that's all he was producing." Do you agree with that?

Mr Heins: If that is not representative of what that person would have otherwise got, it's obviously not a fair result.

Mr Harnick: I understand under OMPP, or the previous system to that, that claim would be worth somewhere in the nature of $600,000 to $700,000.

Mr Heins: I'll answer your question in another way. The problem, as we saw it under the previous tort system, was not the catastrophic injury. The problem was the proliferation of smaller injuries that basically beat the system to death. When I started practising, I used to resolve soft tissue injuries for $3,000 to $5,000. I was signing cheques in 1987 for as much as $200,000 for the same type of injury. That's what killed the system.

Mr Harnick: But don't you agree that if someone has suffered a serious injury, he's entitled to be compensated?

Mr Heins: That is why the threshold system, in our view as an industry and as a company, works. It allows the catastrophically injured claimant to be fairly compensated, or even the seriously injured claimant.

The Chair: Sorry; time's run out. Mr Cooper.

Mr Mike Cooper (Kitchener-Wilmot): Thank you very much for your presentation. Several brief questions: Do you believe that auto insurance was ever set up to be a life insurance plan?

Mr Heins: To be a life --

Mr Cooper: A life insurance plan, as Mr Harnick was alluding to about life insurance benefits.

Mr Heins: Well, it's a compensatory system. It's not a fault system, as we see it; it's a compensatory system. At the moment and, really, even under the tort system, it was moving into really a disability system. If you want to call that life insurance, I'll go along with you, but it's basically an accident disability plan.

Mr Cooper: Thank you. I believe you were here during PAIN's presentation and they were showing the pie charts.

Mr Heins: Yes, I couldn't see it, but I was --

Mr Cooper: It was basically a third on the profits of brokers' fees and operating fees, and on page 3 you've got there about the costs going up, all the things that are going to be affected by Bill 164. Is there any way you can reduce that section?

Mr Heins: The acquisition costs in the profit section? Which section are you talking about?

Mr Cooper: The brokers' fees, profit, operating fees; about a third of the pie.

Mr Heins: The number that was mentioned was 35%. I find that high. Certainly, it's high for our own company with respect to automobile insurance. The number really runs, in my view, between about 22% and 30%.

Mr Cooper: So you believe that as benefits are increased, premiums have to increase.

Mr Heins: Yes.

Mr Cooper: One last question about the comprehensive scheme. Basically, what you're saying there is, "The government is attempting to establish a scheme which attempts to deal with every possible economic consequence which may be suffered by an injured person as a result of an accident." Basically, what we're doing is to bring more people into this and you're saying we should leave them out because of the high cost?

Mr Heins: No, I'm not. What I'm saying is the weakness of 164 and why it is so complex is that you're trying to put into writing a whole combination of variables, and when you finish doing it, it's a jumble. What I am saying is, don't even try to do it. Go back to the threshold, which is much easier to understand, not only by the industry but by the public, and deal with those people that way. That's the weakness in the legislation. It's foolish to take the route that's being taken.

Mr Cooper: Thank you. I'll defer to Mr Owens now.

Mr Owens: I'd like to thank you, Mr Heins, for your presentation. I'd just like to correct a comment which was made on page 4 with respect to no provision for dealing with a conflicting opinion scenario. In fact, there is provision within the regulation for a third opinion to be rendered before the case, if necessary, moves into mediation and arbitration.

Mr Heins: While I am a lawyer by background, I'm not an expert. My expert tells me not in all contexts.

Mr Owens: In terms of your comments on page 5 with respect to drunk drivers etc, I think you touch on a point that people have alluded to throughout these proceedings, that no-fault does not necessarily mean no responsibility. I think Pat Mazurek referenced it earlier this afternoon in terms of the numbers of accidents that are continuing to happen.

As a person who as recently as December of last year got my driver's licence for the first time in my life, and as a graduate of the Young Drivers program, I'm completely amazed at the kind of lunacy that takes place on the road, and unfortunately we can't legislate common sense; we can't legislate courtesy; we can't legislate intelligence quotient.

What we are prepared to legislate, however, is the road safety agency and it's our view and the view of your group and other groups across the province that the road safety agency is to play and should play a major role in the reduction of accidents. You're right, we should not only be looking at the end of the system; we should be looking with a view to keeping people out of the system.

Mr Heins: I have to agree with your comments. If you get in your car at 2 o'clock in the morning and are on the QEW between Hamilton and Toronto, what you see happening on that highway is unbelievable.

Mr Owens: Yonge Street at 4:30 in the afternoon.

The Chair: Okay, gentlemen, I'd like to thank you for coming before this committee and I'd like to -- yes, Ms Mathyssen.

Mrs Mathyssen: I would like to put something on the record before we adjourn. I simply wanted to draw your attention to my request. It's very brief.

The Chair: Okay, go ahead.

Mrs Mathyssen: Basically, this has been a very emotional and difficult committee process, but all the presenters except one group came here and had the courtesy to remain within the time constraints. I believe it is an affront to people like Mr Palk, Ms Helden, Ms Newell and all those people who came here and behaved in a courteous fashion. Their message was just as important as the PAIN group, and yet PAIN got more time because they were bullies and used bullying tactics. That, I think, deserves comment, and the fact that they were encouraged is also equally reprehensible. I want that to be very clearly on the record.

The Chair: Okay, thank you. This committee's adjourned until February 9 at Queen's Park at 10 am.

The committee adjourned at 1737.