AUTO INSURANCE

MINISTRY OF FINANCE

INSURANCE BUREAU OF CANADA

ST MICHAEL'S HOSPITAL HEAD INJURY TEAM

GET WELL REHABILITATION CENTRE

ONTARIO SOCIETY OF OCCUPATIONAL THERAPISTS

MOTORCYCLE AND MOPED INDUSTRY COUNCIL

WAXMAN, CARPENTER-GUNN

COLUMBIA HEALTH CARE INC

ASSOCIATIVE REHABILITATION INC

ONTARIO PSYCHOLOGICAL ASSOCIATION

MOTORCYCLISTS' COALITION ON INSURANCE

ONTARIO MASSAGE THERAPIST ASSOCIATION

CANADIAN BRAIN INJURY COALITION

CANADIAN ASSOCIATION OF RETIRED PERSONS

CO-OP AUTO GLASS ASSOCIATION

NANCY COLDHAM

JIM METZLER
GLENDA METZLER

GEORGE ROTA

CONTENTS

Monday 19 February 1996

Auto insurance

Ministry of Finance

Rob Sampson, parliamentary assistant for financial institutions

Insurance Bureau of Canada

Stan Griffin, Ontario vice-president

Ronald Miller, actuary, Exactor Insurance Services

George Cooke, chair, IBC Ontario committee

Andrew Rogacki, chair, IBC financial affairs committee

St Michael's Hospital Head Injury Team

Sheila MacDonald, speech pathologist

Kathy Townsend, referral coordinatorr

Sue Balogh, social worker

Get Well Rehabilitation Centre

Fatima Bhyat, clinic director

Ontario Society of Occupational Therapists

Christie Brenchley, executive director

Moira Sonnenberg, vice-president, professional issues

Nancy Gowan, president

Motorcycle and Moped Industry Council

Robert Ramsay, executive director

Waxman, Carpenter-Gunn

Kim Carpenter-Gunn, attorney

Rhona Waxman, attorney

Columbia Health Care Inc

Allan Walton, senior vice-president, COO

Associative Rehabilitation Inc

James Campbell, president

Nancy Gowan, president, Ontario Society of Occupational Therapists

Ontario Psychological Association

Ron Kaplan, co-chairman, OPA task force on automobile insurance

Motorcyclists' Coalition on Insurance

John Cooper, member

Allan Johnson, secretary

Ontario Massage Therapist Association

Elizabeth Leach, executive director

John Sanderson, registered massage therapist

Canadian Brain Injury Coalition

Bernard Gluckstein, legal counsel

Canadian Association of Retired Persons

Lillian Morgenthau, president

Co-Op Auto Glass Association

Nick Pinto, secretary

Roy Gomes, president

Nancy Coldham

Jim and Glenda Metzler

George Rota

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président: Chudleigh, Ted (Halton North / -Nord PC)

Vice-Chair / Vice-Président: Hudak, Tim (Niagara South / -Sud PC)

*Arnott, Ted (Wellington PC)

*Brown, Jim (Scarborough West / -Ouest PC)

*Castrilli, Annamarie (Downsview L)

*Chudleigh, Ted (Halton North / -Nord PC)

*Ford, Douglas B. (Etobicoke-Humber PC)

*Hudak, Tim (Niagara South / -Sud PC)

*Kwinter, Monte (Wilson Heights L)

*Lankin, Frances (Beaches-Woodbine ND)

Martiniuk, Gerry (Cambridge PC)

Phillips, Gerry (Scarborough-Agincourt L)

*Sampson, Rob (Mississauga West / -Ouest PC)

*Silipo, Tony (Dovercourt ND)

*Spina, Joseph (Brampton North / -Nord PC)

*Wettlaufer, Wayne (Kitchener PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Crozier, Bruce (Essex South / -Sud L) for Mr Phillips

Marland, Margaret (Mississauga South / -Sud PC) for Mr Martiniuk

Also taking part / Autres participants et participantes:

Kormos, Peter (Welland-Thorold ND)

Clerk / Greffier: Franco Carrozza

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

The committee met at 0931 in room 151.

AUTO INSURANCE

The Chair (Mr Ted Chudleigh): If I could call the meeting to order, I hope everyone had a pleasant weekend. We have a busy week ahead of us. Are there any items to bring to the committee?

Mrs Margaret Marland (Mississauga South): Yes, Mr Chairman. I raised a matter at the end of the meeting on Thursday which I said we could discuss today because of the time factor at that meeting, and I would like to table that matter until tomorrow after 12 noon, please, if the committee concurs. It was the matter of one of our deputations.

The Chair: Does the committee concur? Thank you. It's tabled until tomorrow at noon.

Mr Wayne Wettlaufer (Kitchener): Mr Chair and members of the committee, I have a letter here from the Office of the Integrity Commissioner and I am supposed to submit it for the record as well as to state for the record my history in the insurance business.

Prior to 1984, I was an executive of an insurance company. From 1984 until July 1, 1995, I was a partner in an insurance brokerage firm. I sold my share in the brokerage July 1, 1995. I no longer have any record; I am not the broker of record for any accounts.

My letter to the Integrity Commissioner outlined my history and the letter that I have received in reply is:

"Dear Mr Wettlaufer:

"I am in receipt of a faxed letter of February 13 with respect to your participation in the provincial government committee studying the proposed changes to the auto insurance industry.

"Your interest in the firm Wettlaufer, Collins and Rankin, insurance brokers, was sold on July 1, 1995, and although you have maintained your insurance licence, you are no longer selling insurance policies.

"As set out in the preamble to the Members' Integrity Act, 1994,

"It is desirable to provide greater certainty in the reconciliation of the private interests and public duties of members of the Legislative Assembly, recognizing the following principles:

"1. The assembly as a whole can represent the people of Ontario most effectively if its members have experience and knowledge in relation to many aspects of life in Ontario and if they can continue to be active in their own communities, whether in business, or the practice of a profession or otherwise....

"You have severed your business ties with the insurance industry; however, it is my opinion your experience and knowledge will be of assistance to this committee and does not place you in a conflict of interest.

"For your information, I am enclosing a copy of Inquiry No. 27, Annual Report 1993-94, in which I made a recommendation to committee members. In your case, I would recommend you state for the record your history in the insurance industry at the commencement of the committee hearings."

Inquiry No. 27 is here. If you wish, I can read it or we can just file it.

The Chair: With the approval of the committee, we can file it.

Mr Bruce Crozier (Essex South): I too, although I don't have a letter from the Integrity Commissioner, should at least state that I was employed in the insurance industry as a registered insurance broker from 1990 through September 1994, at which time I advised the Registered Insurance Brokers of Ontario that I was no longer employed full-time in the insurance industry and withdrew my membership. So I have no interest in any brokerage firm, I no longer sell insurance and I would just state that for the record.

Ms Frances Lankin (Beaches-Woodbine): I just want the committee to know that I have no relationship to the insurance industry whatsoever; never have, probably never will.

Mr Rob Sampson (Mississauga West): Is there a reason why you're specifically telling us that?

The Chair: Do you hold any policies?

Mrs Marland: That's what I was going to say; I have all kinds of insurance.

MINISTRY OF FINANCE

The Chair: Thank you very much. There being no further business to bring before the committee, we will hear from Mr Sampson for, I believe, 30 minutes, which will be followed by 15 minutes of questions from the opposition and 15 minutes of questions from the third party. Mr Sampson, the floor is yours.

Mr Sampson: Good morning, Mr Chairman, members of the committee and ladies and gentlemen watching us today, either here or through the TV network. I must say, before we go ahead, when I was challenged with looking into auto insurance, one of the things I very quickly came to understand is that there are very few people who are not somehow connected with the insurance industry in this province, either as a consumer or somebody involved in the delivery of the program. So I am not surprised to hear the two statements of previous experience in the industry here at the table today.

It's a measure of this government's commitment to getting auto insurance to work for Ontario motorists that this committee has been asked to hold hearings on draft legislation prior to the tabling of finalized legislation in the House. This process is relatively unique, but one that I felt was extremely important for this particular topic. Auto insurance, as we found just a few minutes ago, affects a number of Ontarians. In fact, it affects six million Ontarians and it's critical that we get it right this time when we look at reform of auto insurance.

I'm looking forward to hearing from people across Ontario on the proposals which are the result of work that began with my appointment as a parliamentary assistant to the Minister of Finance, for financial institutions, in July 1995.

What I would like to do today though is to identify the government's objectives in drafting the legislation, review the problems that it's intended to address, and provide an overview of proposals and the thinking behind them. First, let's talk about government objectives.

The government's overriding concern in developing its proposals for auto insurance reform has been to make the system work in the best interests of Ontarians. For too many years, auto insurance has been a political football in this province. There have been seemingly endless debates about tort versus no-fault compensation systems, the types, the levels of benefits, claims practices, responsibility for costs and so on.

In the midst of endless debates, the interests of consumers seem to have been lost or forgotten and rates have continued to rise. Auto insurance has been more complex and harder for drivers, accident victims and people in the industry alike to understand.

As tradeoffs were made between the right to sue and accident benefit levels, the fundamental questions seem to have been ignored: How much basic coverage do people need? How much can people afford to pay?

As we begin the process of examining the draft legislation, I ask you to keep in mind that the government's central objective has been to bring fairness and improved price stability to auto insurance.

We think we have been able to draw upon the key components of all submissions received, while at the same time delivering on a product that moves towards basic stable coverage for Ontarians. Where we believe we have missed the target, we will make the changes to get us back on track.

Last February, the Premier outlined five points that have guided our efforts to reform auto insurance. We are committed to:

(1) Repealing Bill 164.

(2) Setting weekly accident benefits at a reasonable level.

(3) Allowing consumers to purchase top-up coverage so that they can customize their auto insurance.

(4) Restoring the right to sue for significant economic loss above the benefits available to all insureds.

(5) Modifying payments for rehabilitation and medical expenses to differentiate between serious and less serious injuries.

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The government's proposals incorporate the Premier's five points and address other issues, such as the need to avoid shifting new costs into the public purse while at the same time we are trying to reduce government spending.

Since taking office eight months ago, we have developed a proven track record of moving quickly to deliver on our promises. Auto insurance is no exception. In fact, it's a prime example of our commitment to deliver. The draft legislation which you have in front of you was released a year to the day after Premier Harris set out his five points for reform.

What are the problems with the current system? The new system we are proposing will be Ontario's fourth auto insurance product in six years. The product that we put in place this time must be lasting.

Let me explain why reforms are needed now. Let's talk about costs. The current auto insurance product is simply not affordable. In 1995, rates increased by double digits, after rising by roughly the same rate in 1994. Consumers cannot afford another round of such increases.

Why have auto insurance rates risen so dramatically over the past few years while inflation has been running at about 2%? The major factor has been increasing accident benefit costs and, within this context, rising medical and rehabilitation costs. Between 1990 and 1994 medical and rehabilitation costs alone rose an average of 30% each year.

Under Bill 164, almost everyone who is injured in an auto accident is entitled to generous benefits instead of being compensated for their actual losses. This concept of entitlement discourages people from returning to work and encourages fraud and abuse.

The high benefit levels also mean that there is no opportunity for people to tailor their coverage to reflect their individual circumstances. Everyone ends up paying high premiums for coverage that only a few need.

Previous rounds of auto insurance reform raised the level of no-fault benefits in the belief that this would help accident victims. The reality is that the current benefit levels are encouraging overpayment and improper treatment of accident victims. This does not speed up recovery and in some cases may actually be harmful to the people being treated.

For example, over 90% of the treatment programs submitted for independent review by a medical and rehabilitation assessment centre have been rejected. In a large number of these cases, the claimants were getting more than one type of treatment for the same type of injuries.

All of the parties in auto insurance are responsible for the situation that I am describing, including insurers who in many cases have not put in place proper claims management practices.

In Bill 164 there are simply too few mechanisms to ensure that the benefits paid out are reasonable and necessary.

Let's talk about the limitations on the right to sue. The current system is flawed because it unfairly restricts the right to sue. It takes from the innocent accident victim to pay the at-fault driver.

With no access to tort for economic loss under Bill 164, there is little opportunity to deter negligence or to tailor compensation to reflect real, in many cases, individual losses.

Relying on a no-fault schedule to compensate for economic loss makes it difficult to recognize the special circumstances of innocent accident victims. In particular, self-employed people and young students who have not realized their full earning potential are not well served under a no-fault system.

Let's talk about the regulatory burden. One clear indication that auto insurance is not working well is the regulatory framework that has grown up around it. The procedures to resolve disputes about accident benefits and review auto insurance rates are simply too cumbersome. The regulatory framework adds to the cost of the system, and these extra costs are in turn passed to consumers in the form of higher insurance rates. Streamlining is needed.

I want to now talk about our reform proposals, which represent a welcome alternative to the current system.

The starting point is the repeal of Bill 164. We are proposing a new system that strikes a balance between access to the courts for the not-at-fault victim and base benefits available to all accident victims. This system combines the strengths of each in a package that will give motorists fair, balanced protection and long-term rate stability.

In the area of the right to sue, the draft legislation establishes the right to sue for significant economic loss in excess of all other benefits available to not-at-fault victims. Not-at-fault accident victims will have the right to sue for excess income loss suffered beginning seven days after an accident.

We have clearly stated that our policy intent is to allow recovery for significant economic loss as opposed to some limited definition of pecuniary loss. Recovery will be set at 85% of the net income level. This will take into account the work-related expenses accident victims no longer have when they are recovering under the plan.

For the not-at-fault victim, there will also be a right to sue for 100% of the expenses incurred for medical, rehabilitation and attendant care, housekeeping, and home maintenance expenses in excess of the no-fault limit.

Both forms of tort recovery, by the way, will be reduced by collateral sources and, as I said, the no-fault benefits to limit double compensation.

Approximately 60%-70% of accident victims are not at fault. Income losses and expenses for care are individual and difficult to assess using a fixed schedule. It makes sense that innocent accident victims have access to the courts to address their losses, especially where injuries are serious and the basic package of accident benefits may not particularly meet their needs. It makes sense that, as much as possible, we return the obligation to pay to the at-fault driver.

Along with the restored right to sue for economic loss, seriously injured accident victims will be able to sue for something called pain and suffering. The legislated test for pain and suffering will not change. A $15,000 deductible will apply. The deductible and the legislated test are intended to reserve limited court time for those with the most serious injuries. Such a system will also ensure that maximum financial resources are available for those most severely injured.

One frequent criticism of the tort system is that it is slow to resolve disputes. Our proposals include several innovative mechanisms aimed at encouraging claimants and insurers to settle tort claims as soon as possible before filing with the courts. Claimants are required to give early notice and a duty is imposed on insurers to quickly settle claims. This balanced system of obligations requires the parties to participate in mediation if one of them requests it.

The new accident benefits schedule: Our proposal also includes a new accident benefits schedule that is intended to provide a base level of protection for all consumers and, within that limit, to compensate people for their actual financial losses. Also, there will be new measures to reduce fraud.

Income replacement benefits: All income earners who are injured and unable to work will be eligible to receive up to 85% of their net income, to a maximum of $400 a week. We have maintained the caregiver maximum limit at Bill 164's amount of $250 a week. The benefit will compensate primary caregivers that are injured in an auto accident for caregiving expenses that they incur as a result of an accident. Everyone will have the option of buying additional coverage to meet their individual needs.

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A major innovation in the accident benefits schedule is the new procedure for claiming medical and rehabilitation benefits. This procedure is intended to ensure that accident victims receive only those goods and services that they need to truly recover. Claimants will be required to give their insurer a treatment plan prepared by the claimant's health practitioner. This treatment plan will outline the claimant's injuries and the proposed treatment. When no treatment plan is submitted before incurring a medical and rehabilitation expense, there will be no obligation for insurers to pay the claim.

The new accident benefits schedule delivers on the government's commitment to establish payments for medical and rehabilitation benefits so as to differentiate between serious and less serious injuries. People suffering catastrophic injuries will be able to receive up to $1 million in no-fault medical and rehabilitation benefits, plus up to $1 million in attendant care benefits. For people who do not have catastrophic injuries, our proposal would provide a no-fault medical and rehabilitation benefit up to $75,000 in excess of the OHIP coverage. A separate attendant care benefit for up to two years' coverage and $72,000 would also be available.

The benefit limits and the definition of catastrophic injury were designed after examining the costs of treating auto accident injuries. The goal is to ensure that accident victims get access to reasonable and necessary services to speed up their recovery.

Upward pressure on premiums should also be reduced. Insurers will have more control over the use of medical and rehabilitation benefits, and this will eliminate opportunities for fraud and fraudulent and inflated claims. Again, consumers will have the option of buying extra coverage to supplement the basic medical and rehabilitation package.

Designated assessment centres have also been looked at as part of our review. The accident benefits schedule we are proposing retains the use of independent assessment centres to provide neutral, third-party medical opinions if disputes arise about entitlement to benefits.

We have decided to keep the centres because we believe that their original purpose best serves the accident victim. However, we are also of the opinion that changes to who the centres are, what they do and a number of related items are needed to ensure that accident victims are properly attended to. We want to make the centres more effective to make sure that accident victims are able to quickly access the necessary no-fault benefits.

A new committee will be set up to select and monitor the assessment centres. The committee will be made up of consumers, insurers and health practitioners knowledgeable about the system and able to safeguard the integrity of the independent assessment process. One of the committee's main tasks will be to streamline the independent assessment framework and to work with health practitioners and the industry to ensure that the treatment plans that are used are reasonable and effective.

Our proposals include measures to streamline the process for resolving disputes between insurance companies and claimants concerning accident benefits.

The Ontario Insurance Commission's dispute resolution process will be changed to encourage early settlements. A neutral evaluation process will be introduced to offer the parties an opinion on the likely result of a court proceeding or the commission arbitration of their dispute. Also, the commission arbitrators will have the option of awarding costs to insurers as well as the injured party.

In addition, insurers and those insured are being given the opportunity of jointly referring a dispute to private arbitration, outside the commission process. The greater number of options for resolving disputes will allow people to choose a forum that meets their particular needs.

As I said earlier, one of the problems with the current system is that high no-fault benefits have led to more fraudulent claims, and the cost of fraud is borne by Ontarians, all Ontarians who abide by the law.

To combat fraud, three new offences will be created under the Insurance Act. Under the proposal, it will be an offence for claimants, health practitioners, auto body shops and others to knowingly make a false or misleading statement to advance an insurance claim.

The new accident benefits schedule will also reduce fraud by allowing insurers to request sworn statements and proof of identity from claimants, and allowing insurers to suspend accident benefit payments if there is wilful and material misrepresentation.

We have far too many uninsured drivers in Ontario and this means those who pay their premiums are absorbing the costs. Part of the problem is the penalty for driving without insurance, so we are proposing to double fines. But we also need to deal with how we can identify the uninsured driver more readily, and I will be working with the Ministry of Transportation and industry representatives to move quickly to a more real time exchange of data between the insurance industry and the ministry about who has valid insurance coverage.

One of our main priorities as a government is to eliminate the province's deficit so that the taxes of hardworking Ontarians can pay for the services they want and need, and not simply to service the $100 billion in debt that's built up over the last number of years. In certain situations, where specific segments of society benefit from programs designed to meet their needs, we believe they should assist in meeting those associated costs.

The government's auto insurance proposals would allow the government to once again recover from insurers some of the costs that the public health care system incurs in caring for accident victims. The Ministry of Health estimates that it spends over $100 million on hospital and ambulance services alone for auto accident victims. Auto insurers collect approximately $5 billion a year in premiums, and I believe they should pay a portion of what the public sector spends on caring for those they insure.

The draft legislation includes many proposals that will alter the nature of the auto insurance product available to the public. There are also new provisions to simplify the rate review process. The changes are intended to reduce the costly regulatory burden that is ultimately passed on to consumers in the form of higher premiums.

Insurers will be able to make a simplified rate filing if they meet certain criteria. Companies whose rate filings do not meet the criteria will be subject to a more stringent approval process, and some insurers will face the reality of having to justify their price increases in public hearings.

In the next several weeks, the government wants to hear from the public and the insurance industry, and all the stakeholders in the auto insurance industry, on a number of non-product issues.

One of these is the possibility of broadening the use of rating variables such as collateral benefits and income. We are also interested in views as to whether it would be feasible to introduce rating variables for retirees as part of our final legislative plan. We need to understand clearly the dynamics of the system before we make changes in those areas because they would have an impact on everyone's premiums. If the concepts make sense, we will act.

In addition, the government would like to hear suggestions for reform of the Facility Association and the risk point system. We'll be looking closely at these issues and I'm hopeful that we'll be able to recommend some changes in this area. The bottom line, though, is that any reforms must benefit consumers.

It is our belief that the government's proposals for product reform will help address some of the problems that consumers have been having in buying auto insurance. By making the product more attractive, we believe that we will see a willingness on the part of the industry to aggressively market auto insurance in this province, something we haven't seen for a couple of years.

The government is serious about reforming auto insurance to make it work in the interests of Ontario motorists. Our goal is to ensure that the auto insurance system reflects the principles of fair, basic protection, and long-term rate stability. The draft legislation strikes a balance, extending the right to sue for economic losses while at the same time providing a basic package of no-fault benefits and the opportunity to customize benefit levels.

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The government realizes that legislative changes alone will not be enough to deal with the long-standing problems of auto insurance. The system has a large compensation pool and all stakeholders will have to contribute if solutions are to be found. Insurers will have to take direct steps to improve their claim management practices. Consumers, the legal profession and service providers will have to act responsibly in claiming the compensation auto insurance provides. In short, everyone will have to work at controlling auto insurance costs.

We've promised to introduce auto insurance legislation in the House in the spring session. I'm hopeful that this committee's work in the next two weeks of public hearings will set the stage for introducing a bill that meets the needs of consumers across the province.

The Chair: Thank you, Mr Sampson. Before moving to questions, I've been asked to announce that room 228 has been set up as an overflow room for the public. There is television coverage in that room, and it is in the west side of the building on the second floor.

Mr Peter Kormos (Welland-Thorold): Please, Chair, on a point of order: I should indicate to you that I'm not a member of this committee but I am, pursuant to the standing orders, exercising my right to be present today. I will be monitoring the committee through the course of this week and next, and I appreciate your accommodation of me.

The Chair: Thank you very much.

Mr Kormos: You're welcome.

The Chair: We move to questions now from the opposition.

Mr Crozier: Prior to any questions, I would also like to make a short statement. Ladies and gentlemen, in comments made recently regarding the draft legislation, Mr Sampson said: "My instructions were very clear: Deliver on our commitment for a fairer and more efficient auto insurance system that brings improved stability to rates, something that most consumers in Ontario have not seen for some time."

I'd like to point out that under the Ontario motorist protection plan introduced in 1990 auto insurance costs did decrease significantly. In fact costs decreased in the years 1990 and 1991. They increased somewhat in 1992 and 1993 but were still substantially below the years 1987 through 1989. It was only after the introduction of Bill 164 in 1994 that auto insurance rates began to skyrocket. Auto insurance premiums rose by 10.6% in 1994 and by 11.3% as of September 1995.

We've heard mention of rate stability. We too are interested in achieving rate stability. However, we are advised that this draft bill will result in a continued steady increase in rates, albeit they may be in the higher single-digit range rather than double-digit. We will be most interested in the legislation's intention to assess insurers for some health care costs arising from accident victims. Although the government has not fully defined its intention in this area, we understand it could add 2% to the cost of auto insurance today. As a matter of fact, this cost has been termed a tax by the Canadian Bar Association -- Ontario.

In any event, we will be listening to the discussion as to whether this will be a recovery of actual costs or a fee based on premium. The government has suggested that the committee merely prepare a summary of representations made and that this summary be sent to the Minister of Finance. It is our position that the committee should review all submissions with the objective of presenting and recommending to the Minister of Finance changes in the draft legislation.

Mr Sampson has mentioned the Facility Association and I'm pleased to hear that, because we have to review the access to standard insurance. This has been under some debate recently and, although this is not part of the act, I hope that we will have some discussion in this area and that areas like gaps in coverage would certainly be of concern.

In conclusion, our foremost concern, that of the Liberal caucus, for any new auto insurance legislation is balance. Any changes to the automobile insurance system must not only address the concerns of the industry, but more important, must ensure that consumers have affordable coverage, independent brokers have a level playing field and victims of automobile accidents have sufficient and fair recourse.

This bill appears to be a step in the right direction since the disastrous Bill 164 sent premiums soaring. We welcome the fact that the government is releasing a draft bill with public hearings. Let's hope that the government will listen to the recommendations that come from these hearings. We look forward to participating in this all-party committee and are hopeful that this time the government and the opposition can work together to give Ontarians a system that is both affordable and fair.

I think my colleague has some questions.

Mr Monte Kwinter (Wilson Heights): I am delighted to be participating in this exercise. I have a long and memorable career dealing with auto insurance as a minister in the late 1980s, and I think we all agree that we are anxious to get some resolution so that we can provide an environment for fair and equitable insurance.

I have some concerns and I'd like to ask Mr Sampson about a couple of them. One, in your statement you talk about the current auto insurance product simply not being affordable. It seems to me, from hearing your proposal, that you're not going to make it any more affordable, you're just going to prevent it from getting less and less affordable. How do you reconcile that with the fact that you're saying it is simply not affordable?

If you take a look at the bodily injury and accident benefits combined, after an initial dip in 1996, that is going to go up rather dramatically. So in fact we are not going to see more affordable insurance, we're just going to see a different component and a different structure in the insurance.

Mr Sampson: The question of affordability talks to a couple of points. I think the cost escalation information you're speaking to is something that the industry will be presenting shortly when it presents its actuarial results, and we have not completed our review of those actuarial results. I'm not convinced that in doing the actuarial assessment -- and you've got to understand what actuaries do when they assess one of these products. They take a look at previous patterns and they try to see how those previous patterns may or may not be repeated going forward.

I'm not convinced that the actuarial assessment has really given full credit to the designated assessment centre committee and the new role we see for what we'll be calling DACs, I guess, from now on -- because the words "designated assessment centre" are hard to spit out three or four times -- the new role we see for the DAC committee going forward and helping to control costs. That's one of the difficult things the actuaries may have been struggling with as they took a look at price projections going forward.

But on the affordability side, the comment there is really as it relates to whether or not it's fair for certain groups of individuals to be paying for the gold-plated benefits that are available under 164. The problem with a full no-fault system is that everybody pays, to all intents and purposes, the kind of average cost -- it doesn't exactly work out that way, but the average cost of the gold-plated no-fault plan. We had seniors coming to us and saying, "Why am I paying for potentially up to $1,000 net a week when that's nowhere near the income loss if I have one as a result of an accident?" So the affordability question really is driving at "Let's try to create a base plan that covers the average Ontarian."

For those who are earning more or those who have different circumstances other than the average Ontarian, then go out, like you do for any other plan -- RRSPs, life insurance, home insurance, basically every other financial plan -- and customize it to suit yourself, to suit your financial needs.

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Mr Kwinter: When you talk about the medical and rehabilitation benefits, you say that a claimant will be required to give their insurer a treatment plan prepared by the claimant's health practitioner, and if there's no plan submitted, they will not be obligated to honour the claim. The concern I have is, what happens if they give a plan? Are you saying that the insurer can second-guess the doctor and say, "I don't like your plan and we're going to tell you what you do for your patient," or is it just if there's no plan, there's no obligation?

Mr Sampson: It didn't make sense to us that claimants were receiving medical treatment without having a road map as to where that treatment was taking the claimant. It didn't make sense to us that one would start with a treatment program without knowing what the expected outcome of the treatment plan was, for the benefit of the claimant and for the benefit of the insurer.

Mr Kwinter: I have no problem with that. I'm asking you, though, is it the intent that as long as the insurer knows what the road plan is there's no problem, whereas if they don't have the road plan they're not obligated? My concern is, what happens if the insurer doesn't like the road plan? Are they in a position to say, "Sorry, we are not going to approve that particular plan"?

Mr Sampson: Under the proposal, the filing of the treatment plan will allow the claimant access to the 15 medical rehabilitation sections of the act, basically 15 visits or six weeks, whichever comes first. That's triggered based upon the filing of the plan. Thereafter, if there's some dispute as to whether the plan is effective or not, ie, the insurance company is having some difficulty with whether the plan is going to treat the injury, then the designated assessment centre will be used to resolve disputes between the insured and the insurer. But we believed that it was far more fundamental to have these plans established.

By the way, the DAC committee, I think, since it's going to involve a committee of insurers, insured and health practitioners, will be more actively involved in determining what appropriate treatment is for various types of injury. That's something we have not had in this province. It has happened in other provinces, but in this province we don't have the research that tells us what the expected outcome and what the appropriate treatment plan is for various soft-tissue injuries, and I think the sooner we get there the better it will be for both parties, the insured and the insurer.

Mr Kwinter: I'd like to talk to you about the Facility Association. You allude to the fact that you're looking for suggestions, but you have come up with none. My concern is that a lot of the attention on the Facility Association is addressed at those drivers who are referred to the Facility because of their accident record, because of their history.

My concern is that a lot of drivers get referred to the Facility Association for no cause of their own but because of the particular broker they're dealing with and that insurers will not take business from those particular brokers and, as a result, some people get shifted into the Facility for no cause. They don't know about it. They just assume that, for whatever reason, that's where they're going. Can you assure me that in your deliberations and in your looking at the Facility, you'll look at that aspect and not just the drivers that are referred to it?

Mr Sampson: First of all, I think it's clear, for those listening and watching today who don't know what the Facility Association is, that's essentially the industry's mechanism to deal with the higher-risk driver, so to speak, and how that higher-risk driver gets access to insurance. What we have now is a compulsory auto insurance product. Everyone must have auto insurance.

We did not look at specific reforms to Facility and we have not tabled them because we felt it was important to solve the fundamental product misdesign before you decided how that impacted and how one was going to deal with the residual market. You've got to solve the product first, put the cart before the horse, if I may, and so that's what we've done.

We've tabled what we think is a redesigned package that helps us deal with some of the fundamental flaws in 164, and then that will allow us to deal with the related issues, many related issues, one of which is how one properly assesses and deals with the higher-risk driver. It's important, I think, for people to know that the rules that place one in Facility are not those of the government but those of the industry, which has tried to come to grips with how one identifies that -- how can I say -- grey market between the good driver and the bad driver.

It's clear to me that we will have to make some changes to that grey market area. We will have to make sure that the person who, for instance, went away for two years to Germany for a job and then came back isn't improperly put into that risk pool that represents the high-risk driver pool, but his or her driving record for the 30 years prior to their trip to Germany is reflected in their premium level. That's what I'm hoping to hear from the committee process and the deputants that come forward. Now that we've got, we think, the product properly redesigned, how do we deal with, as I said, all the other issues related to auto insurance, one of them being the appropriate classification of the high risk and the pricing of the high risk.

Ms Lankin: I'm going to move straight into questions because I have a number of them that I would like to pursue with Mr Sampson. I know that my colleague Mr Silipo has a couple and Mr Kormos may as well. So I'll try and move through them fairly quickly and I'll dispense with an opening statement.

I'm interested, Mr Sampson, you've said you've spent most of your time thus far on work developing the new product and that some of these other issues will be dealt with as we proceed over the next couple of weeks. In the development of that new product, we know that for the average driver who becomes injured through an accident there is a dramatic reduction in the benefits that will be available, and yet it's interesting, in all of the public statements that you've made so far, you haven't talked about any decrease in premium rates to drivers. I'm wondering, when you're cutting the benefits so much, can you tell me why there won't actually be a decrease in premiums?

Mr Sampson: As you know, one of the dilemmas of this industry is it's a balance between what one has via the access to the court system to solve the costs associated with claims, and what one gets as a result of a base level of benefits payable to all insureds regardless of fault.

You're right, we did take down the maximum levels available to all insureds, regardless of fault, to reflect the establishment of a base plan. But in addition to that, we also significantly added access to the court system for the not-at-fault driver to claim for economic loss and medical and rehabilitation expenses over the base amount.

So while we took from one area, and it certainly reduced the underwriting costs associated with that area, we gave effectively all, if not a significant portion of that, to the tort system. Currently, under 164, one cannot sue with the exception of the category of pain and suffering, period, full stop. Right now, under this particular plan, there are three avenues, including pain and suffering.

Ms Lankin: So basically your answer is that the value of the package is the same, that's why there's not going to be a decrease in rates?

Mr Sampson: I think you're going to hear some comments later, throughout the day, that we have made changes to the underwriting costs, so to speak, or the loss costs associated with this base product, and those are different than the current 164.

Ms Lankin: I've got a lot of questions, Mr Sampson. Can you try and get to the point on the answer to that? Is it basically because the cost is the same, you've just shifted things around inside, that's why there will be no reduction in the premium rates?

Mr Sampson: The loss costs under this program are less than 164.

Ms Lankin: Okay. So why won't there be a reduction in the premium rates, then?

Mr Sampson: There may be. It's not up to me to set rate levels and premium levels, otherwise we would have done what I think Mr Kormos would have liked us to do, which was get into public auto. We're not in the business of setting insurance rates. It's the industry who will set the insurance rates.

Ms Lankin: But you have said that in the work you have done, you expect there will be price stability.

Mr Sampson: Right.

Ms Lankin: So in fact, you are designing a package to affect the rates one way or another. Let me move on. Maybe I'll save those questions for some of the people coming forward today.

You expect there will be now, as a result of this product design, price stability.

Mr Sampson: Yes.

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Ms Lankin: What's your definition of "stability?"

Mr Sampson: I'd like to see effectively no increases, but the fact of the matter is, in the scheme of things in auto insurance, the fact that you're dealing with very significant medical expenses, that doesn't usually happen. What happens is, new treatment levels come, new types of treatment, new equipment --

Ms Lankin: What do you expect your new product design will produce in terms of price stability? Will it be a 1% to 2% increase a year; is that price stability?

Mr Sampson: Yes, we struggled with what the measuring stick would be, and you'll see a reference to a measuring stick in the legislation that tries to gear off the CPI. I'm not exactly sure that the consumer price index accurately reflects the increased costs in medical expenses. There doesn't seem to be a strong correlation between the two because of what I said earlier: There are changes in treatment plans and types of equipment used for various treatments that add costs but improve the treatment levels in the system, and so we have to be prepared to accept those increases as given, almost.

Ms Lankin: And yet you've said that was one of the major problem areas in terms of driving costs up in the system --

Mr Sampson: Yes, but not at 30%.

Ms Lankin: -- and that's an area that the DACs and other sorts of things are going to be controlling, and you say we should expect results from that. You did say in your presentation that some of these other areas you haven't had a chance to look into yet; you need to understand clearly the dynamics of the system before you make changes because they would have an impact on everyone's premiums, and I'm assuming, in designing this new product, you understood fully what the impact would be on premiums. For example, before you released this draft legislation and this design product, did you look at actuarial studies of what it would do to the premium rates?

Mr Sampson: We took the position that once this product was redesigned, it wasn't the government that was going to be selling it, it was the industry. So we were more concerned about where the industry felt this particular product design was taking them with respect to loss costs and other associated costs of delivery. So we didn't do a full actuarial study prior to releasing this particular document. We had a sense, based upon other actuarial work that was done for prior plans, as to where some of these components would take us.

Ms Lankin: And that was basically price stability, the zero to 1% --

Mr Sampson: Yes, but as I said earlier, our view is it's the industry that's delivering the product; I want to hear from the industry where they think the costs are and where the --

Ms Lankin: I understand the industry has in fact done some actuarial studies of this product and that information has been shared with you over the course of the last week. Could you tell us, what does the industry project with respect to rates over the next few years?

Mr Sampson: As I said in my opening comments, we did see something late last week. We've not had a chance to fully analyse what they have analysed from our presentation. Their preliminary indication is that there'll be rate increases in the single digits; I think 7% to 8% was the number I heard from them. To me, that doesn't reflect their understanding of where we believe the control levers we've given in the medical and rehabilitation side are. I'm not exactly convinced --

Ms Lankin: So the industry's analysis says rates are going to continue to go up, perhaps not at 10% or 11% a year but at 7% or 8% a year. What I want to know, Mr Sampson, is, if the industry, when all of the analysis is done and all the checks and balances and you've worked through it, if they're right and that's what they say it's going to do to rates, does that meet your definition of price stability? Will this bill have succeeded at that point?

Mr Sampson: No, I think we've got some more work to do if that's their final answer as to where the costs are going. As I also stated in my opening comments, we've brought this forward in draft legislation because we're not expecting we'll get it perfect right off the bat. So if the industry is saying, "You might have got half of the answer but not all of it," let's hear what the comments are -- from the industry and the other people who are presenting to us, not just the industry -- as to where those additional levers should be.

Ms Lankin: Do you know whether or not the industry's actuarial studies include such things as the new 2% tax that you're reintroducing, the OHIP subrogation that will be passed on to consumers? Does their actuarial study include that, do you know?

Mr Sampson: I don't know that answer. I don't know whether they have included it or not, since we had not finished our analysis of where they got their costings from --

Ms Lankin: My understanding is that it doesn't. Do you know whether their actuarial study includes any transition costs of moving from one system to another and the dual administrations that are there? There are certainly transition costs involved in that.

Mr Sampson: Yes, I don't know whether those costs or benefits have been put in the system, as there are clearly some benefits associated with transitioning from 164, because 164 is an extremely costly product. But again, we've --

Ms Lankin: Well, presumably, the --

Mr Sampson: If I can just finish my answer, we've not outlined what the transition items are, because we didn't know until we brought this package forward -- in fact, we don't know until we're finished this process -- what we're transitioning to. So it seems to me to be somewhat premature to start to analyse what the transition would be until one knows where one's going.

Ms Lankin: I think there's a reasonable basis to that comment. What I would suggest is we pursue with representatives from the industry and others who are commenting on this over the next couple of weeks whether or not this bill that you've brought forward actually accomplishes what you want to accomplish. It seems to me from the information we've reviewed so far that prices will continue to rise at a level that is nowhere near what you've defined as price stability.

The majority of what will drive that cost will be a combination of a reintroduction of tort and the problems that exist within the medical rehab system, which I would argue simply putting a cap on of $75,000 doesn't fix the problem. The problem is inside the administration of the system, the gatekeeper, the access to the services, the planning of treatment. I think the treatment plan is a useful first step, but you're not getting at the actual problem that needs to be gotten at. The $75,000 cap unfortunately just means that those people who have injuries that are beyond that, and who require medical rehab treatment beyond that, are going to be out of luck with respect to those injuries they are in treatment for.

We are going to spend considerable amounts of money in court trying to get a legal definition of what is a catastrophic injury, as people try to push beyond to get the kind of treatment they need.

Mr Sampson: Well, I --

Ms Lankin: At this point, I'm making a bit of a statement, so I'll get you to wait.

Mr Sampson: That sounds familiar.

Ms Lankin: I think what we'll need to examine is whether or not your bill, as you bring it forward, actually fixes the problems that were still remaining to be fixed after Bill 164. We will fully admit that there was a task force set up, and work needed to be done within the medical rehab area, but it should be done, we believe, in a way that provides a level of benefits that is fair to people. What you've done here, with the caps you've put on benefits, is reintroduced unfairness to the accident victim and provided a cushion, in a sense, for the insurance industry to move from what the rates are that they are paying now, or the premiums that they are charging now, to an ever-increasing premium. It won't produce the stability that you're looking for.

I want to turn it over to Mr Silipo now who has some questions as well.

Mr Tony Silipo (Dovercourt): Mr Sampson, I too want to focus in on this question of costs to the consumer, because it seems to me when you say that the overriding concern of your government is to develop proposals that make the system work in the interests of Ontario motorists, presumably you would agree with us, that means ensuring that, first of all, we have rates that are reasonable and, at the same time, we have a system that protects people in the event of an accident.

When I look at what you've done in this proposed legislation, you have reduced the amount of benefits -- if you compare that to what the average Ontarian in terms of average income would need to be able to supplement their income if they were involved in an accident. That means that in order for people to get the level of coverage they would feel comfortable with, they would have to automatically increase beyond the basic limit of the $400 a week, which presumably means it's going to cost them more.

I don't understand how I would explain to a typical resident in my area, in my riding, why this particular product that you've got here on the table through this bill, coupled with the rates that will come -- I appreciate that you're saying this is draft legislation, but I also think it's incumbent upon you to be clear about what you think this is going to do to rates. I'll be interested very much in what the insurance companies have to say on that, because I think from the consumer's perspective, it's really to be seen from those two perspectives as to whether what we've got here is a better product than the existing one. I can't tell, as a result of this, the average resident of my riding that they're going to be paying less. In fact, I'm probably going to have to tell them that they're going to be paying more and getting less coverage than they're getting now.

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Mr Sampson: You've got to realize that as you go up the income categories to the individual who might be earning $1,000 net, associated with generally most of those positions -- not all, but most of them -- is a significant program of collateral benefits, benefits that would be available from other sources of coverage as a result of their employment, and yet we were asking all Ontarians to pay for those high caps.

It didn't make any sense, so it was necessary for us to bring the benefit levels -- the caps, anyway -- down for two reasons: firstly, to reflect what an average Ontarian might need in the absence of any other collateral sources, any other benefit sources, and then allow that individual the ability to customize. If somebody has a significant collateral benefit program, there would be no need for them to add to the income level. Why would they? They'd be double paying -- like they're doing now.

We'll hear the industry's presentation with respect to its actuarial assessment. As I said in my presentation, I'm not clear, based upon our very preliminary review of their analysis, that they have properly costed the toolbox, if I can, that we've provided the industry and the stakeholders to properly deal with what have been rather dramatic increases in medical and rehabilitation expenses in the last couple of years.

Mr Kormos: If I may, Chair, very quickly -- thank you, Mr Sampson -- so you've not only reduced the cap but you've reduced the weekly payment to 85% of net from 90% of net, and you've again -- and granted there's been a whole lot of good precedent about the legerdemain that's involved in talking about tort, because you know that the big-ticket item for a victim is not the pain and suffering, nor is that the big-ticket item for an insurer, it's the income loss.

The fact is that all you've done by restricting recovery of excess economic loss to 85% of net is transformed what was a no-fault benefit into something that's going to be pursued only on behalf of innocent accident victims. The fact is there is no real tort recovery here for economic loss because there's no consideration of anticipated future loss, and you know that's the big-ticket item. That's the big loss to the youngster, for instance, who has great potential and the capacity to have earned a decent living, to be denied that by virtue of not having access to tort.

Mr Sampson: Well, that's not exactly correct, actually.

Mr Kormos: Why do you talk about access to tort when really there isn't any meaningful access to tort?

Mr Sampson: Because there is a meaningful access to tort. If you look at the legislation, the legislation indicates that there'll be a definition with respect to economic loss to be determined in regulations. That regulation has not been set yet, but it's our policy intent not to limit the economic recoveries that one would normally get via the court system. In fact, my understanding is that the model we were particularly interested in following with respect to recovery levels draws upon the traditional awards that a court might award, as opposed to being any limited number.

Mr Kormos: Is the government committing now --

The Chair: Your time has expired, Mr Kormos.

Mr Kormos: -- to ensuring that they'll be recovered for anticipated economic loss?

The Chair: Our time has expired for question period.

Mr Kormos: He had time to answer, Chair.

Ms Lankin: It's easy to answer yes or no.

Mr Kormos: Come on, Bob.

Mr Sampson: From me, a yes-or-no answer?

Mrs Marland: Mr Chairman, I'm wondering if we can do something gracious to help the public. We've got a situation where this is a very important matter. We obviously have a great deal of interest, and I see at least 10 people standing, so I'm wondering if during the morning we could arrange through the clerk to have some more chairs brought in, if necessary move the deputation desk up a little, to allow for another row.

The Chair: I understand that we have opened room 228. Additional chairs are not permitted under the fire regulations and the maximum capacity of the room is those seatings. We haven't mentioned about the people standing, and I can't see that far without my glasses.

Mrs Marland: Well, we used to have an extra row when the desk was further forward, before this side became so long.

INSURANCE BUREAU OF CANADA

The Chair: If we could move to the Insurance Bureau of Canada. I understand that we have an hour together, gentlemen. You have a presentation to make and then perhaps we can move to questions, which will be divided between the three parties. Could you identify yourself for Hansard, please, and proceed at your convenience.

Mr Stan Griffin: Good morning, Mr Chair and members of the committee. It's a pleasure to be here. Let me first apologize for a bit of huskiness this morning. I've been fighting off a cold for the last couple of days.

My name is Stan Griffin and I am vice-president, Ontario, at the Insurance Bureau of Canada. With me today are George Cooke, on my left, who is chair of Insurance Bureau of Canada's Ontario committee and president and CEO of the Dominion of Canada General Insurance Co. To my right is Andrew Rogacki, who is chair of IBC's financial affairs committee and president of Progressive Casualty Insurance Co. Both Mr Cooke and Mr Rogacki serve as directors of the Insurance Bureau of Canada. Also with us this morning is Ronald R. Miller, of Exactor Insurance Services Inc, an actuarial consulting firm.

I would point out at this stage that you should have three documents: a copy of our overview written submission that I will be going through; a set of supplements to the verbal description that I will be referring to later on; and finally, a bound copy of a number of detailed recommendations and comments, including the full actuarial report.

Insurance Bureau of Canada is the major industry trade association representing private property and casualty insurance companies operating in Canada. Our membership includes more than 125 companies and groups that underwrite more than 80% of the total private insurance business in Canada. You will find a fuller, detailed description of Insurance Bureau of Canada in appendix B of the appendices. You will also find copies of our biographies in appendix A.

Insurance Bureau of Canada congratulates the government for recognizing when in opposition and early in its term that the auto insurance system in place in Ontario since 1994 is broken and for bringing forward a proposal to start the reform process. We think this new product will go a long way towards stabilizing the price of auto insurance. It is a good first step, and with amendments it can be made even better. This is a very key point. The true test of the government's ability and resolve to address the problems of auto insurance will come not today, as many expect. Rather, it is our opinion it will come weeks from now, when it takes the advice offered over the next two weeks and uses it to finalize legislation. Let me just say I was heartened to hear Mr Sampson in his opening remarks say, "Where we have missed the target, we will make change to get us back on track."

Turning to the present system, the system of auto insurance introduced by the previous government under Bill 164 has proven to be too costly and complicated for consumers. Over the past two years, premiums have increased on average by 11% and 12%. Insurance Bureau of Canada's consumer information centre takes more than 3,000 calls per month from people across the province, and the most frequent request made by those people phoning in is for an explanation of the benefits available to them under the auto insurance policy. People do not understand how the current system works, and generally they feel they are paying far too much for it.

At the same time, Bill 164 has allowed fraud to increase and introduced overcompensation and waste throughout the system. The availability of the richest set of benefits in North America for injuries sustained in an auto accident regardless of fault has encouraged this. In particular, the inefficient use of insurance premium dollars to fund appropriate medical and rehabilitation treatments has been a problem. While the overall cost of insurance claims was increasing in the order of 8%, the cost of claims under the medical and rehabilitation coverages was increasing by more than 25%.

Perhaps the basic flaw in the Bill 164 system is that it moved away from the insurance principle of indemnification towards a system of entitlement. The insurance principle of indemnity is to return the claimant to the same position they were in before the accident, to the extent that money can, no better and no worse. Under Bill 164, compensation has very little to do with the actual loss. If the claimant fits any one of the complex myriad categories at the time of the accident, the allotted benefits, or entitlements, flow automatically regardless of the actual loss or need.

Recognizing the shortfalls of Bill 164 early, the insurance industry worked to design a new auto insurance system to replace it at the appropriate time. A technical working group was formed early in 1994 comprised of senior industry technicians from a wide range of companies. This working group set out to design an insurance system that would provide price stability over the long term, be affordable and understandable to consumers, easier to administer for insurers and brokers, reduce fraud, overcompensation and waste, and recognize an individual's loss in determining compensation, that is, return the concept of indemnity to the insurance system.

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The system eventually became known as OMEGA, a very awkward acronym that stood for the Ontario Motorists insurance plan for Economic loss, General damages and Additional optional benefits. OMEGA attempted to balance three important elements: first, reasonable benefits available to all accident victims regardless of fault; second, access to the courts for innocent accident victims to recover any shortfall in their economic loss provided through those benefits; and third, compensation for pain and suffering for the seriously injured. Costs under the OMEGA proposal are greatly reduced in comparison with Bill 164, largely because of the claims controls in place to discourage fraud, overcompensation and waste.

In general, the government's proposal for replacing Bill 164 has design objectives similar to OMEGA.

Mr Sampson has outlined the government's draft proposals this morning. We observe differences from OMEGA in detail. We have taken care in reviewing the draft legislation and regulations and have comments to offer now and in the future as the government's proposal evolves further. We would like to take a few moments now to review the actuarial costing of the government's proposal.

It must be recognized at the outset that there is a great deal of uncertainty when forecasting any new, and completely new, auto insurance system. Reasonable people can and are likely to disagree on some costing issues. In this particular case, there is also some confusion as to whether the proposed legislation and regulation reflect the government's stated intent and how it will actually work.

Having said that, the industry asked Ron Miller of Exactor Insurance Services Inc to prepare a costing. He has built and maintains an extensive actuarial model relating to Ontario automobile insurance which provides him with the ability to perform the most sophisticated analysis available. Ron Miller has been preparing such costing estimates for several years and his forecasts have a considerable track record of unfolding accurately.

The two main points of interest to the industry and consumers are the immediate cost impact of such changes and, second, the long-term rate of change.

With regard to immediate costs, the government's proposal is significantly less costly than Bill 164. The expected adequate average required premium is estimated to decrease by 18%. This estimate takes into account the total average premium package, including not only the compulsory accident benefits and liability coverages but also the optional collision and other vehicle coverages. Those policies not including these optional physical damage coverages would see a greater decrease.

Let's turn to the longer-term rate of change, which actuaries refer to and call trend. This is a forecast of how required premium is likely to change in the future. We note a trend of 7% to 8% for the government's proposal and 11% to 15% for Bill 164.

If you turn to the supplements to my remarks, the first chart shows the average cost of the government's proposal on July 1, 1996, estimated at $1,140.36. This number should be compared to a Bill 164 cost, in the right-hand column, of $1,390.76. You can readily see the trend of each over the next five years: the government's plan at $1,631.26 and Bill 164 at $2,566.23 by the policy year 2001.

These forecasts are driven by projections of the costs that are paid by auto insurance premiums. For the most part, these include car repairs, lost income, medical expense and damage awards through the courts. It is important to realize that virtually none of these costs are related to the consumer price index. We have attached graphs displaying the components of the CPI and of auto insurance claims.

If you flip to the next chart, you will see the breakdown of the major components reflected in the consumer price index for Ontario, well over 50% being composed of shelter and food, another 10% for household operations, 6.5% for clothing. Auto insurance itself is reflected in the CPI as a mere 3.4%. The point is that there are few items in the CPI in which we actually replace as a result of an auto accident.

If you flip to the second page, we have shown here the long-term rate of change in the consumer price index, being the line that's kind of steady through the centre, and the rate of change of Ontario auto premiums, which is the one that looks like the Grand Canyon or the New York City skyline. I should point out that on the scale, the annual percentage change reads 0.1%; those should be 10%, 20%, 30% and 40%. Again, there is little if any connection between the two.

The next two graphs show the actual breakdown of the total claim costs as paid for by auto insurance. If you look at the first chart, the accident benefits portion, which is that portion that pays for lost income, medical payments, those kinds of things, represents almost 50% of the total claims payout. About another third, I would guess, by the time you combine collision, comprehensive and a portion of the third-party liability for property damage, is going off to pay for damage to vehicles.

The next chart breaks down further the components of the accident benefits portion of the claims. The overwhelming evidence here is that, of the total accident benefits claims, medical and rehabilitation costs represent 59% of those total claims.

The final two graphs you have in this package show the actual history of the discounted loss costs from 1984 to 1994, and the projections for Bill 164 and the government's proposal to the year 2001. The full actuarial costing is included in appendix F of the bound appendices.

The government's release of its proposed legislation 10 days ago included a draft bill to replace Bill 164, and a draft accident benefits schedule setting out the benefits available regardless of fault. While we applaud this effort as a vast improvement over the current system, we believe there are opportunities for improvement which are consistent with Mr Sampson's objective for reform that would help reduce costs and further stabilize the product.

With control features similar to OMEGA, outlined in detail in our appendices, required premium at July 1, 1996, can be reduced by up to $100 in the government's proposal and the trend by approximately one trend point.

Turning to the actual draft bill and the accident benefit schedule, with regard to the bill, we have identified 11 areas where we suggest certainty and stability in the system would be enhanced by additional regulations. These are set out in appendix C. IBC is ready to assist the government in developing these regulations. Appendix C also sets out a section-by-section review of the draft bill, with issues and recommendations for improvement.

Turning to the draft accident benefit schedule, while the draft accident benefit schedule is greatly improved, the breadth of the schedule continues to anticipate every claimant's personal situation. Our experience has demonstrated that this is impossible. What is required is flexible yet informed judgement of individual circumstances rather than the reliance on rigid categories and classifications. A comprehensive list of issues relating to the accident benefit schedule, along with recommended solutions, is contained in appendix D.

While the government has taken the lead in proposing a new insurance product, we would like to offer commentary on a number of other related issues which will either impact upon or should be incorporated into the introduction of the new system.

First, rating variables in group insurance. Insurers must be allowed to collect underwriting information relating to collateral or other benefits, income and occupation. Presently, only group auto insurance plans are allowed to take into consideration these underwriting variables in assessing risk.

Without access to this information, those writing individual risks will continue to face undue discrimination. IBC advocates a level playing field in this matter. The application of these rating factors should be available in the underwriting of all auto insurance policies.

Second, streamline the Ontario Insurance Commission. Regulation of the insurance industry in Ontario is carried out by the Ontario Insurance Commission and paid for by the insurance industry. The costs of operating the OIC are funded by insurers operating in the province and ultimately are reflected in the costs of premiums for consumers. In its first year of operation, 1990-91, the OIC operating budget was $13.7 million. The 1993-94 budget was more than $19.4 million, an increase of 42%. In that year, costs to the insurers were $15.4 million.

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We believe that many functions of the OIC could be eliminated, transferred to the federal government or outsourced to the private sector. This would reduce regulatory costs to insurers and administrative costs to the government. These costs are ultimately passed on to the motorists.

We recommend, among other things, the following: first, that solvency monitoring be transferred to the federal government; second, that the motor vehicle accident claims fund be privatized; and third, that the OIC's alternative dispute resolution or ADR services should not be granted its current monopoly. Other examples are contained in appendix E(2).

Third, conflict of interest. Put simply, our industry wants to make sure that our consumers' dollars are well spent. This is a particular concern when it comes to funding effective medical treatment and rehabilitation of our claimants. According to a recent study conducted by the Institute for Work and Health here in Ontario, auto insurers are second only to the Minister of Health in what we pay for rehabilitation services. The report estimates that auto insurers paid more than $300 million for rehabilitation in 1993 and almost $187 million in the first six months of 1994.

The industry is concerned that these dollars are not being spent efficiently and effectively to achieve the goal of returning injured victims to their pre-accident status quickly. It is our industry's perception that there are many unnecessary medical treatments being provided and that the system is full of conflicts of interest involving health care providers, the legal community and others.

We see the need for a system of accreditation of rehabilitation providers based on outcomes, greater use of treatment guidelines, tighter controls on self-referral and conflict of interest, and the ability of insurers to direct medical and rehabilitation care to those who show proven results.

The Facility Association. Bill 164 has resulted in a shrinking market for high-risk drivers in this province. A proposal to reform the Facility Association, the "Take all comers" rule and the insurance risk point system commonly referred to as the four-point rule has been developed and will be forwarded to the government. IBC supports this proposal and we urge you to consider it.

Appendix E outlines other non-product-related issues we would like to bring to this committee's attention that will either have an impact on the system or should be addressed at the same time as the introduction of a new auto insurance product.

Appendix G highlights a problem encountered in tort and accident benefits interface and suggests a possible solution.

In conclusion, IBC believes the government's proposal provides a framework for an auto insurance system that will provide the appropriate benefits to those involved in motor vehicle accidents in Ontario. We believe that the government has achieved a workable balance of access to tort and access to no-fault accident benefits, and we congratulate you for this effort.

However, we feel there are a number of areas where there are opportunities to secure even greater long-term premium stability for consumers, and we urge the committee to review the detailed recommendations contained in our report.

We also recognize that this proposed change in the system will be the fourth auto insurance system in this province within the last six years. This change will of necessity involve a number of transition issues, including education of the public, brokers, agents and insurers. IBC is ready and willing to assist and actively participate in that process to ensure that this transition occurs as smoothly and as soon as possible.

Thank you for your attention. My colleagues and I would be happy to answer questions from the committee.

Mr Crozier: Thank you for your presentation. I hope that in the days and nights to come we will have an opportunity to read through this. Just to highlight some of what you have presented to us this morning and so we all better understand what the objective is when it comes to rates, in the chart provided by Exactor -- and I'll refer to that -- we're beginning in the rating year starting July 1, 1996, and going through to the year 2001. I haven't worked out the compounding of this, but what you're telling us is that with this plan as it's been presented to you by the government, rates will increase, over the term of this government, by somewhere in the neighbourhood of 35% to 40%. Is that correct?

Mr Griffin: I'm going to refer that to the actuary, but I believe that is correct.

Mr Ronald Miller: Yes. Over the five-year time frame, the rating year starting at mid-year this year going forward five years, the cumulative increase would be 35% to 40%, based on those numbers.

Mr Crozier: As I said earlier today, rate stability seemed to be one of the objectives of the government's plan. Can you tell us if you've calculated whether the recommendations you are making in addition to the draft legislation will have any noticeable effect on that increase of 35% to 40%?

Mr Griffin: I should preface that with the fact that we have had very little time to review fully the recommendations here and put them through the costing, but I believe Mr Miller is in a position to give a tempered response to your question.

Mr Miller: That work is in progress. The industry plan is projected to show lower increases, but not greatly. I think it was mentioned in Mr Griffin's comments, perhaps up to a point lower on an annual basis, but there would still be a substantive increase over five years.

Mr Crozier: As a matter of fact, it was in the comments: "With regard to immediate costs, the government's proposal is significantly less costly than Bill 164. The expected adequate average required premium is estimated to decrease by 18%." Then you go on to say, "We note a trend of 7% to 8% for the government's proposal." Can you relate those two figures for us so that we all understand it better?

Mr Griffin: Mr Cooke is going to take a stab at it.

Mr George Cooke: In order to put the 18% in context, one has to understand that it's comparing a fully adequate actuarial costing of the government's proposal against a fully adequate costing of Bill 164. That's what consumers should be paying for Bill 164 today as compared to what consumers in fact are paying. That's where the 18% comes.

What we're suggesting in our presentation is that against those numbers, the government's proposal as stated will trend somewhere in the order of 7% to 8% per year. Bill 164 would trend somewhere between 11% to 15% per year, and you can see those trend numbers on the chart in front of you.

We've suggested modifications in our detailed appendices. You've got to appreciate that in the course of a week it's almost a Herculean task to get one of these things costed, let alone three, and Mr Miller's managed to do two of them. We've suggested that with further changes, particularly focused in the area of controls, we can reduce that starting point, that $1,140.38, by up to $100 and likely reduce the trend by about a point off that 7% to 8% range, all of which has to be put in the context of an average street premium today -- that's the average price paid by the consumer, realizing there is no such thing as an average consumer -- which is about $1,115. It's shown at the bottom of that chart.

All of this is very confusing for someone to understand, but that's where the numbers are.

Mr Crozier: Mr Cooke, that's what I'm trying to do, to make it less confusing so that the public will not have any built-up anticipation of greatly reduced insurance costs. Albeit we're just beginning -- and I appreciate it; it's a great task for you folks to have worked on it to this point. That's why it's interesting to me that the government would come out at the very outset and talk about rate stability when they themselves hadn't crunched any of the numbers.

I don't want any expectation unnecessarily built up by the public as to what this might do, although by the end of the process I hope we work towards that goal.

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Mr Cooke: I think it's important to realize that caught up in any number of what we've called product-related changes are any number of factors that can come to bear on trend. The tighter you can make the controls without disadvantaging the truly injured accident victim, the more you're going to get a handle on trend. The trick is not in adjusting the benefit level; the trick is in adjusting the controls and the system so that those people who are truly injured get the right amount of treatment and only the right amount of treatment, and those who aren't truly injured don't get treatment they don't need or treatment that isn't doing them any good. That's the trick.

Mr Griffin: I'd also suggest not to lose sight of the fact that if you look at the extreme right-hand table there, if we do nothing, the trend under Bill 164 is double-digit and we end up with 65% or 70% over the next five years.

Mr Crozier: Absolutely.

Mr Kwinter: I'd like to pursue this whole idea of cost because that is really what is driving this whole agenda. Most people have no idea what insurance should cost. All they know is, "Five years ago I paid X and now I'm paying maybe two or three times X." I know that when I was the minister and had to defend what was happening in the insurance industry, that was the most common complaint I had, this idea that, "I've never had an accident and suddenly my premiums have gone up dramatically." I applaud your recommendation that there should be some education so that people understand how insurance works.

Having said that, I'm having some difficulty with your proposal. If the intent is that insurance is becoming unaffordable, and I think most people over the last 10 years have been complaining about the affordability of insurance, then your proposal does not meet that test. We have a situation where I get the impression that anything is better than 164 and it doesn't matter whether it's affordable, it's not as bad as 164. I don't think that is the criterion we should use.

We have the opportunity to correct what is wrong with 164 and hopefully, with our deliberations, we will do that. When you consider that the rate of inflation is running at about 2% or less -- but certainly, if we use 2% over the next few years, it's a pretty reasonable presumption. It may not be; it may go up a little higher, but it's also going to be less as it is right now.

You're taking a look at a situation where by your own admission premiums are going to increase under the new plan by at least 35% -- that's on your assumption -- which by no stretch of the imagination, I don't care how you sell it, is going to be perceived as rate stability. Plus, and this is a huge plus, when you compare what you are proposing to Bill 164, it would be different if you said, "There are inefficiencies in 164; there are abuses; we're going to tighten up everything; we're going to provide the insurers with the same kind of coverages they've had before, but we're going to reduce their increases from," as you've said, "18% down to 7% or 8%." But you're not doing that. You're dramatically cutting back on the coverage.

You would think that with the efficiencies you're putting in, with the controls you're putting in, with the cutback in what you are covering, if anything, you would see decreases each year as the economies of scale and the efficiencies click in, but you're not doing that.

I can tell you that I remember when OMPP came out. Our target was 5% and it was absolutely politically unacceptable to have premium rates going above 5%. Now you're just saying that as a matter of course they're going to go up 7%, 8% every year and that's great, because the alternative, 164, is far worse. I agree and I think there's no question that we have to deal with changing what is happening there. But somehow I feel you still haven't done it; you haven't come up with the solution.

Mr Cooke: Give us a chance to try to respond to what I think of your question, if we put a question mark on the end of it. One has to realize, first of all, that this is an average consumer. Good drivers under this plan will have the opportunity to see price decreases. Similarly, with the element of choice, consumers will be able to purchase much more closely the coverages they actually need, and with the introduction of additional rating variables, prices can be set in such a way that consumers are paying for coverages they're otherwise going to be able to take advantage of. So with those particular points, there's a substantial number of people who actually could see positive rate change, reduction under this kind of a plan.

There are some others today, because of subsidies in the system, who will see some increases. Those are either people who are getting a free ride on the back of the many or people who are bad drivers. I don't think that the public, generally speaking, have a problem with that kind of an outcome.

We've tried to demonstrate here that inflation and the cost of auto insurance have absolutely nothing in common. As much as I would love to see price increases at the rate of inflation, or for that matter even less, it's not realistic when you look at the component of the makeup of what we pay out in claims relative to the makeup of the CPI which those charts indicate. They've got nothing to do with each other. It's apples and oranges.

The last point I would make is that I don't think there's any substantial reduction in coverage here available for an innocent accident victim. In fact, in many instances, many innocent accident victims, because of the tort access, will have additional coverage available to them. It was not the case in Bill 164. What we've cut out is complexity and the cost associated with it, the potential for fraud and the cost associated with it, and the fraud and the cost associated with it.

Ms Lankin: I'm interested in Mr Kwinter's problems with your plan, because as I understand Mr Cooke's OMEGA plan, he actually shopped it around, and the Liberal Party adopted it before the last election and signed on, and the Tory party adopted it before the last election and signed on. I'd sort of thought that everybody was there together in that pot so I'm surprised that there is now some hesitancy on their part.

Mr Griffin, your colleague just made some comments about who's going to benefit; for example, good drivers will benefit. Can you tell me your definition of a "good driver," and how many of them are there out there? Who's actually going to get a decrease? What percentage of the insured driving public is going to see a decrease in their premiums?

Mr Griffin: I think we all like to think we're good drivers in this province. The reality is that we're not. I can't tell you what an individual company's definition of a "high-risk driver" or a "bad driver" is. You might hear from the two companies represented here, but that will certainly vary, company to company.

Ms Lankin: If you've got a couple of speeding tickets but you've never had an accident might mean you're a good driver because you can drive quickly and be safe.

Mr Griffin: Companies look at the combination of those kinds of things differently in terms of setting their risk assessment.

Ms Lankin: One of the problems I have is understanding what's behind some of the language that we hear thrown around, and with a lot of respect I think from the industry sometimes it's pretty rhetorical -- you can say that about us as politicians, but I'm now going to say that about you as politicians on behalf of your industry -- that the many are paying for the bad habits of the few, and that lots of good drivers out there are going to get a decrease. In fact I'd like to see some proof of that I guess is what I'm saying, and we'll ask those questions as individual companies come forward later on.

Dealing with your own information here, at appendix B, it indicates that, "In Ontario, $7.9 billion was collected in premium revenue and $6.3 billion paid out in claims," that's in the insurance industry overall. "Auto insurance represented 62% of all premiums collected with $4.9" -- I presume that should be billion, not million --

Mr Griffin: Yes.

Ms Lankin: -- "$4.9 billion generated" in terms of the premiums collected "and $4 billion paid out." So there's certainly a profit margin there overall on auto insurance in Ontario.

Now I look at the Exactor chart you provided us with and I see that you say the average rate under Bill 164 is about $1,400, and under the government plan it will be between $1,100 and $1,200.

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Can you tell me why you're not predicting then that the average premium rate is going to come down in Ontario, that the consumer actually is going to see a reduced premium rate, given how much there is a reduction in the benefits that they would receive if in fact they're injured in an accident?

Mr Griffin: Can I just correct maybe your first observation and have one of my colleagues respond to your second. With regard to the numbers in appendix B, the $4.9 billion in premiums and $4 billion in claims does not necessarily indicate a profit. As a matter of fact, over the last 10 years in this province there has, I believe, only been five or six years in which the industry has generated a profit on auto insurance. There are other things coming into play obviously, including operating expenses on behalf of the industry.

With regard to your second question on the costing, I believe Mr Cooke had a comment there.

Mr Cooke: I think the answer to your question is indicated by looking at the street premium, the average street premium at the bottom of the page of $1,115, and to the extent that this average means anything -- I've already pointed out there is no such thing as an average consumer in this instance -- it's the comparison between that and the $1,140, as opposed to that between the $1,140 and the $1,390. Companies today are selling this product substantially below cost, in the order of 18%.

If for whatever reason, going forward, companies are inclined to continue to sell below cost, then of course people will see price reductions. I think Mr Miller should likely speak to what he's assumed here, but what he's tried to do, as I understand it, is tell you what these products should cost and also tell you what people are paying for them today.

Ms Lankin: Before Mr Miller responds, because I have another question and you might want to wrap them both up, let me just say in comment that the way I understand it then is that the average price out there should be actuarially about $400, and the average price in reality that's being paid is about $1,100, and the new product that's coming in actuarially should be about $1,100. So there may not be any room in the industry for decrease because, one could argue, the marketplace has been very successful and competition in fact has driven the costs down and we're seeing some benefit from that, and the government's bill simply allows the companies off the hook with respect to the marketplace competition.

Mr Cooke: I think you have to substitute $1,400 when you said $400, but with that change, I think the observation or the way of using the numbers is likely correct, other than to say that these markets work in an extremely effective way if they're allowed to work. The fact they're working that way is why you've got an 18% drop.

I can't believe that with some 160-odd companies selling this, the degree of collusion that's otherwise implied could ever possibly take place. Somebody will lower prices and the market will fall. That's the way it works.

Ms Lankin: Then it certainly makes you wonder why the changes that the government's bringing forward and the way they're bringing them forward are needed. But let me ask, in terms of the actuarial study, first of all, I'd be very interested and I think other members of the committee would be interested in seeing that. Will you be providing us with a copy of that study?

Mr Miller: The body of the study and the major exhibits are included as appendix F in the handout here.

Ms Lankin: In that, will it provide us, for example, with the assumptions you've taken into account and the caveats?

Mr Miller: Yes.

Ms Lankin: Are there a lot of caveats on this study at this point in time?

Mr Miller: There are a couple of pages of bold-headed caveats and one of them relates generically to many assumptions so you have to read that carefully.

Ms Lankin: My understanding is that in the work you've done and in the projected 7% to 8% increase, as we see the costs of premiums continue to rise under this new proposed product, in fact those numbers don't contain things like contingency fees and transition costs. Obviously, they don't change any proposed changes to the Facility management, because we don't know what that will be yet.

The OHIP subrogation cost, the 2% tax that's going to be reintroduced, all of those things would in fact be passed on to the consumer potentially in terms of the premiums, or at least the actuarial assumption of what the cost of the premiums would be as well. Is that correct?

Mr Miller: With respect to the analysis I've done, one of the items you mentioned was increased transaction costs to do with the change in system. I believe that's accounted for in the analysis I've done. Basically, there is something called an allocated loss adjustment expense provision. The numbers I've used are based on calendar year 1994; aggregate statistics during calendar year 1994, the industry was retooling for Bill 164 and had those kinds of costs. They've been projected for, and I believe they're accommodated.

For the other two items, the OHIP levy is not addressed. There's a caveat in my analysis saying it's unknown. There's a provision that this may come about per regulation-making power. It's unknown at the time I did the report what the amount might be, so I've not included it. To the extent that it comes to pass, there will be additional costs beyond what's here.

With respect to contingency fees, there's also a caveat in my report. It's my understanding the government may be planning to introduce that, but again that's not certain at the moment; it's rumour, if you like. I have not taken it into account in this report and that is a particularly difficult issue to analyse, but my expectation is that it would tend to increase costs on the tort side in this product, and I have not accounted for it.

Mr Silipo: If I were to look at this from the perspective of the average Ontarian, to the extent one can define that by income -- it's my understanding the average Ontarian earns about $43,000 -- what will happen to that individual's premiums under this new plan? Will they go up? Will they go down?

Mr Cooke: That depends very clearly on the driving habits of that particular individual, whether he's claims- and conviction-free, what territory he's driving in, be it a rural or an urban area, what kind of vehicle he's driving, whether it's new or old, whether it has safety features or doesn't. There are any number of factors. Hence, that's why I make the comment that this average person that this thing is talking about doesn't exist.

Mr Silipo: Could you not, as an industry, give us some typical examples of what might happen?

Mr Cooke: Not in the five days between the time we saw the material and appeared this morning.

Mr Silipo: I appreciate that. Could you do that in the next week or two for us? The reason I persist on that point is that it seems to me that if part of what the government wants to do here, and part of what I think you're arguing in support of it, although with a number of additions and changes that you'd like to see, is that this will stabilize rates or perhaps even bring rates down. It seems to me we've got to give people some certainty that that's going to happen. Otherwise, we're just asking people to change from one system to another in the hope that this may happen but with no certainty that it will.

Mr Cooke: I share your concern about the need for assurance of stability and increased consumer confidence in terms of what promised outcomes will actually be delivered. The best I can say to you is that to respond on an individual-specific basis, it's going to have to be accompanied by company response. Some of the companies presenting before the committee may be able to do that kind of analysis in time for you. We certainly will pass along the request. I can't promise you that they can in the time that is available. This is not a hedge; it is simply a very difficult task to move from where we are to that kind of detail.

Mr Silipo: I appreciate it may not be easy to do, but if the industry is generally looking forward to the changes under this proposed legislation, it seems to me it's also quite frankly incumbent upon the industry to give us a clearer sense than you're able to give us this morning about what that's going to mean for the average consumer.

As I look at it and I look at the list of caveats that you've talked about, and a number of others, as I said earlier, it seems to me the average family is going to be looking at a situation where they're going to have, by virtue of this new legislation, less in the way of benefits initially if they are going to be involved in an accident. The initial instinct would seem to be that they ought to purchase the additional benefits. When you factor all those things in, I'm not sure that people are going to be any better off than they are now in terms of the combination of premiums they are paying and the coverage they are going to get as a result of those premiums.

If there's an argument to be made that proves my point wrong, I think it's important we have that.

Mr Cooke: The vast majority of Ontarians, I suspect, or at least the majority, would likely not require the additional coverage. That's why the element of choice and the options are a very important design feature in this product, or however it may be modified.

I will be here on Wednesday, appearing on behalf of my own company. To the extent that I can in the next two days, I will try to address that question in the specifics of my company.

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Mr Silipo: Two of the other points that you've made are that part of what has been driving costs up have been the medical rehabilitation costs and I guess the question of fraud or abuse in the system. Why could those issues not be addressed just as adequately within the present system?

Mr Griffin: In my presentation I referred to the concept of entitlement versus indemnity. I think the current system, the legislative portion of it that bars access to courts totally on the economic side, means that we've infused so many benefits into that side that it forces all of this. It forces this entitlement. It's hard to introduce it into the current structure.

Mr Sampson: Thank you, gentlemen, for your presentation. We'll pore through the appendices. I want to ask you a question, though, about how you as representatives of the industry view this proposal vis-à-vis competitive pressures in the market for auto insurance in Ontario. How do you, Mr Griffin, on behalf of your industry, view this product as it relates to whether or not you feel your industry is going to want to more aggressively sell it in Ontario or not, as opposed to and compared, I suppose, to what we have now, which is the 164 plan?

Mr Griffin: I find it difficult representing the more than a hundred companies here to talk about competition among them, but I might punt this one to Mr Rogacki, who is probably one of the more competitive in the province, to respond.

Mr Andrew Rogacki: Thank you. Under 164 -- let me start differently. We are a specialty company that insures drivers that are high-risk drivers. We were intending to get into the standard markets to insure good drivers some five years ago but decided not to when the NDP came into power, and particularly when 164 came in because it was simply not a good business proposition. That's a long way of saying that once the new legislation comes in, we will be very aggressively seeking to expand our markets and sell more insurance, so availability will not be an issue.

Mr Sampson: Do you think your view, to want to aggressively market insurance in Ontario, is different than anybody else? You have a specialty market you focus on, but do you have anything that leads you to believe that other companies might not want to follow suit and get more back into the business?

Mr Rogacki: Absolutely. I believe companies will get back into an aggressive mode of competing for auto insurance business.

Mr Sampson: What's the current state with respect to 164? Would you say that there are companies that don't want to write auto in Ontario?

Mr Rogacki: Yes, absolutely.

Mr Sampson: So even in that competitive environment the street price -- and again this is this average person, if I understand your data correctly -- even in that competitive environment where you say there are industries that really don't want to be here, even in that competitive environment we see a significant reduction vis-à-vis street price and the actuarial street price, if I can. Is that a fair statement? That even in a bad competitive environment some companies are selling below the actuarial street price?

Mr Rogacki: In a bad competitive environment some companies have not taken the rate they need to take and they're rate-deficient today in expectation of the law changing.

Mr Sampson: There are, by the way, some companies, is it not correct, that are selling at the actuarial street price or pretty darn close to it. They've actually taken the increases?

Mr Rogacki: That is correct, and those companies that are selling at the actuarially indicated price today would be able to take a significant decrease.

Mr Sampson: I guess you'd see those data if you took a look at the numbers that the OIC is now producing. They've produced rate profiles for various companies and for various sort of average client or target client groups. In fact, I think the last one showed there was a significant difference in price between one company and another for effectively the same risk. So you do see that in fact now, don't you, in today's market?

Mr Rogacki: You could make some informed judgements but no more than that because you really need to understand exactly how adequate the company rates are to understand whether they will or will not be able to take a rate decrease.

Mr Sampson: I want to talk to the expected price increases as presented by your actuary. What's driving those numbers? Do you have a sense of what's driving? Is it the tort component? Is the no-fault component? Maybe Mr Miller.

Mr Miller: If you're talking about the table that compares the government plan and Bill 164 and the percentages going to OHIP --

Mr Sampson: Yes, that's the one.

Mr Miller: The strongest driver in there is the increase in medical rehab costs, but it's not the only one. The tort bodily injury coverage is projected to trend forward at a rate of approximately 7%. Some of the physical damage to the vehicle, such as comprehensive, is projected to trend forward at significant rates as well, and also the disability income in the no-fault is going up around 7% or 8% a year. But medical rehab is the crucial one.

Mr Sampson: Okay, let's take a look at the med rehab side. If you took apart that increase and started to dissect it to its various components, is there a particular component? Is it usage? Is it the actual underlying cost of a neck brace, for instance? Are neck braces going up 7% on an annual basis every year, or are we getting 7% more access to neck braces, if I can put it so bluntly?

Mr Miller: I don't have that level of detail. The way I analyse this, as an actuary, I look at changes in frequency of claim and changes in severity or size of claim. There is some projected increase in the frequency of claim. The biggest piece comes from the projected severity, increases in the severity of claims. The increases in severity may be related in part to increases in prostheses and different things. They're also related in part perhaps to the same claimant last year versus this year getting some more treatment, a different kind of treatment, new treatment, and also, of course, the rates that have to be paid to the health care practitioners.

Mr Sampson: What were you able to incorporate in your costing estimates as it relates to our vision of getting a better handle on the industry, and within the practitioner industry as well, on what the appropriate treatment is for certain categories of injuries? Did you give much consideration to that, or is that just so new that you didn't know how to cost-estimate it?

Mr Miller: It's considered through judgement and selection, going forward. For instance, this table that shows up in the handout under Bill 164 projects a medical rehab trend forward in the mid-20%s per year; under the government plan, it has been reduced to 15%, by my judgement. That judgement recognizes there are certain features of this plan that are vast improvements over Bill 164 and presumably will contain that trend in costs somewhat. It's a very speculative and judgemental sort of item, pushing this forward five years in an environment where we're talking about significant changes to the system. One has to really make a judgement as to what those might be. So it's quite possible other actuaries would make different judgements.

Mr Cooke: Mr Sampson, I wonder if I could just add something there. In terms of this whole med rehab area, it is an area, in my view, where, first of all, you can best characterize it by saying there is no effective measure of outcomes that would be necessary to be able to even accredit these facilities. The result that we see is a phenomenal increase in the usage.

A lot of the treatment that is being applied has no basis in medical science, no research-supported information and in fact in many instances could be best characterized as feel-good therapy or alternatively one might even go so far as to say it's causing an iatrogenic reaction for the claimant or the person being treated such that it has a negative effect rather than not.

Mrs Marland: I'm sorry, I didn't hear what kind of reaction.

Mr Cooke: Iatrogenic: the treatment is in fact making the person ill as opposed to making them better.

If you look at the recently completed Quebec study on soft-tissue injuries and then compare what they predict -- and this is done with proper medical review -- ought to be happening, the duration here in Ontario compared to what one might expect is running almost twice, and the severity is sufficiently higher as well. What that suggests to me is that there are a lot of people receiving treatment that isn't doing any good at all for them or the public, and there's a huge cost associated with that.

Mr Sampson: So you would agree that there is significant benefit for both the insurance companies and the insured if we were to encourage such studies in Ontario. I'm not suggesting that there's a difference between Ontario and Quebec. I don't want to get into that discussion today.

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Mr Cooke: You don't need to study. The consumer will win. You don't need to study. The Quebec study is generically applicable.

Mr Sampson: Right.

Mr Cooke: What one has to do is take what it tells you and put it in place.

Mr Sampson: And use it. Right.

Mr Wettlaufer: Gentlemen, over the last five years the insurance companies significantly reduced their administration costs. Could you give this committee an idea how much in percentage terms?

Mr Griffin: Can you respond to that, Ron, the trend in expense factors?

Mr Miller: That hasn't been analysed in this report and I don't have those kinds of numbers at my fingertips.

Mr Griffin: It's certainly available and we could enter it into the committee as a follow-up.

Mr Wettlaufer: I think it would be helpful.

Secondly, Rob Sampson alluded to the marketplace shortage in automobile insurance over the last five years. Insurance brokers around the province have suffered greatly from the standpoint of not being able to place their clients' automobile insurance in many cases into the regular market because they did not have a facility for regular market insurance.

Now that would be in large part due to the fact that insurance companies have not been able to obtain a reasonable return on equity in the automobile insurance. Aside from mutual insurance companies, which are owned by their policyholders, the stockholding insurance companies, the stock companies are owned by their shareholders. Many of these shareholders are demanding a greater return on equity and many of these shareholders are pension funds and these funds are in fact held by unions. Correct?

Mr Cooke: That's correct.

Mr Wettlaufer: Monte Kwinter and Bruce Crozier both alluded to the old OMPP plan. Have any projections been done on what the increase in premiums would have been under OMPP over the next few years?

Mr Miller: I have not analysed that particular issue in this report or in this supplemental material, I guess, because the OMPP plan saw its sunset at the end of 1993 and isn't on the table.

Mr Wettlaufer: One short question. I think it's important to bring to the attention of this committee that the insurance brokers association, and, by the way, insurance brokers represent their clients, pointed out to the then Liberal government that there were two key areas of inadequate benefit levels under the old OMPP plan and those two key areas were self-employed individuals and the student.

The Chair: Thank you very much. That brings to a conclusion our hour together.

Mr Kormos: Excuse me, Chair. Mr Sampson only left the government members a mere minute and a half. I know some of those members have concerns about this bill. They've told me so privately. I wonder if on consent the government members could be given five more minutes for Mr Hudak, Mr Arnott or Ms Marland to ask questions of these people.

The Chair: I believe it's inappropriate for someone who is not a member of the committee to move a motion.

Mr Kormos: I didn't move. I said, "I wonder if."

Mr Sampson: That would be good for 17 hours.

Mr Kormos: A mere five minutes.

The Chair: I'd like to thank the Insurance Bureau of Canada for their presentation to us this morning. Thank you very much.

Mr Sampson: We don't have 17 hours, Peter.

Mrs Marland: Mr Chair, I'm wondering if I could suggest one thing while the next deputation is coming forward. Because there are eight or nine of us on this wonderful representation on this side, sometimes it's helpful before we start our questions if you could indicate that we're now going to the government members and there are three people who wish to speak.

It's very easy sitting side by side over there, and I know this from being in opposition, when you can say, "Look, I've got a question as well," to your colleague and you split up the time, but in this situation we can't do a run up and down and see how many people have got their name on the list.

Ms Lankin: Do you have a whip over there?

Mr Kormos: Mr Sampson took all the time anyway.

Mrs Marland: No, no, that part is fine, but it would be helpful to know if we've got other colleagues who want to speak.

The Chair: I will try to announce that when we move over. Advocate Rehabilitation Management notified us very late this morning that they were not able to attend today. So the committee will, without any further business to bring before the committee --

Ms Lankin: Mr Chair, why didn't you give us another half-hour with the committee? Why didn't you tell us this? They haven't gone. They're just outside the door. We could bring them back in, have the insurance bureau come back in and ask more questions.

The Chair: That was their time allowance at the time.

Ms Lankin: But you didn't facilitate this very well, Mr Chair. If you knew there was another half-hour coming available, they could have utilized that time.

The Chair: My apologies. We stand in recess. I would bring the committee's attention to the fact that we are reconvening at 1:20 pm after lunch. That's 10 minutes before time. Thank you very much.

The committee recessed from 1135 to 1322.

ST MICHAEL'S HOSPITAL HEAD INJURY TEAM

The Chair: This afternoon we have a number of groups with us. First is the St Michael's Hospital head injury team. Welcome to the standing committee on finance and economic affairs. We have 20 minutes together. If you would like to start with your presentation, we could finish perhaps with a few short questions. Identify yourself for Hansard, please.

Ms Sheila MacDonald: Thank you. I'm Sheila MacDonald, speech pathologist, head injury team.

Ms Kathy Townsend: I'm Kathy Townsend, the referral coordinator for the head injury team.

Ms Sue Balogh: I'm Sue Balogh. I'm a social worker with the head injury team.

Ms MacDonald: We'd like to thank you for hearing our concerns today. We're here on behalf of the individuals we serve who have traumatic brain injuries. The St Michael's Hospital head injury team provides multidisciplinary acute care, rehabilitation, referral to community services and follow-up to approximately 250 Ontario citizens with traumatic brain injury each year. Through our experience with now over 2,000 people with brain injuries, we've developed some expertise in identifying rehabilitation needs and required insurance benefits for these people. We see individuals with all levels of severity of injury, and to keep in mind the perspective of the person with brain injury, often we tend to think of them as some other group of citizens. We need to keep in mind that any one of us at any moment could become someone with a traumatic brain injury. What it means is that our personalities, our intellect, our ability to relate to others and our ability to continue with our regular functions would all be affected. Please, I'd ask you to keep this in mind as I go through the list of needs and benefits today.

Our perspective is a long-term continuum of services required for these individuals with traumatic brain injuries, and to this end we'll speak to our concerns primarily about the access to medical and rehabilitation benefits. Our concerns and proposed solutions are based on the inpatient and outpatient experiences of individuals who live with the long-term effects of traumatic brain injury. Again, more than bones and tissue, the brain is the essence of who we are, so we're making a distinction between brain injury and soft tissue injuries.

Our first concern is with the levels of severity, or the definition of "catastrophic impairment." A considerable percentage of people with mild brain injury experience severe disruptions in their daily functioning, so we have concerns about the use of the Glascow Coma Scale score as proposed as an index to determine eligibility for benefits, and here's why: The GCS will not help to divide patients into groupings that require similar benefits following traumatic brain injury. This is because someone with a low GCS may go on to require no or few services in rehabilitation and medical benefits, whereas someone with a higher GCS may require years of intervention. Here I'm reminded of two patients I saw, both lawyers. One had a GCS of 3 and is now happily returned to his law practice; another had a GCS of 14 and three years post-injury has not returned to his law practice. I hope that gives you an example.

Another problem with GCS scores is that they fluctuate from a higher to lower level post-injury, so it depends on when you take the GCS score.

Finally, and most important, a GCS score is influenced by blood alcohol levels. High blood alcohol levels can serve to lower the GCS, and we're concerned that using a GCS score to determine eligibility may bias benefit entitlements in favour of drunk drivers.

Our solution there is that individuals should be classified on the basis of their disabilities that undermine their independence and quality of life, following thorough multidisciplinary assessment. We also recommend that a brain injury task force be struck, with input from clinicians with expertise in brain injury, to create a disability or classification scale that accurately reflects the needs of those with a head injury.

Our second concern is with regard to the amount of benefits and impact on the health care system. We're all painfully aware of the pressures on the health care system today, and sometimes what can be Mr Eves's solution is Mr Wilson's nightmare. Here's our concern.

We understand that the new legislation provides for the government to recover costs incurred by the public health care system in treating motor vehicle accident victims. However, this does not address the current pressures within each hospital to reduce length of stay to ensure bed availability and resources for new admissions. As a result, the reality of acute care is to discharge patients as soon as they're medically stable, and these patients often require support and rehabilitation benefits in their homes. Frequently, they're sent home to await admission to an inpatient rehabilitation program.

To meet the pressure to discharge, hospitals rely on rehabilitation and attendant care insurance benefits to transition these patients to their homes. Many of these individuals require 24-hour attendant care. The proposed entitlement for attendant care for an individual with a moderate head injury is $3,000 per month. At $10 per hour for an attendant, this would result in 12 days of 24-hour attendant care. The waiting period for admission to a rehabilitation facility fluctuates from three weeks to months. The reality of the shrinking health care system demands that insurance benefits be tailored to meet the needs of individuals with brain injury who are returning to the community.

The solution we propose there is that we recommend that individuals with brain injuries be assessed for rehabilitation and attendant care benefits according to their individual needs, the available resources and their individual family situations.

Our third point is with respect to timely and fair access to medical and rehabilitation benefits. Research has shown that you can decrease the costs by increasing timely access to rehabilitation and medical benefits, and this occurs in the following ways.

First, you can identify all deficits proactively to initiate appropriate rehabilitation and prevent further complications. Second, you can promote early intervention by returning people to work or school and productive lives as soon as possible. Third, you can decrease the number of people who fall through the cracks and require other types of social assistance and government-funded supports.

We believe that timely access to benefits will be seriously compromised by section 42 of the draft Ontario regulations under the Insurance Act. For those of you who haven't memorized all of the acts yet, this section calls for the submission of a treatment plan and a statement by a health care practitioner about the feasibility of the rehabilitation plan.

We understand the insurer's need for a treatment plan, and as a large percentage of individuals with brain injuries are admitted to and discharged home from acute care hospitals, this treatment plan will likely be filled out in the acute care stage. At St Michael's Hospital what we presently do is we provide a prescription letter for the insurer that outlines the impairment to be treated, the services required and who should conduct them. This much we think is reasonable and necessary.

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However, in the current acute care environment of stretched resources and reduced length of stay, estimating costs and the duration of the treatment plan is unrealistic. This requirement will pose a serious impediment to the access of needed services, and more importantly, all aspects of a person's future rehabilitation needs cannot and should not be predicted at this early stage. Assessment and treatment planning must be viewed as an ongoing process.

The solution we propose here is that cost estimates should be the responsibility of the case manager or private practitioner. Time should not be taken away from direct patient care activities to determine future care expenses for the insurer.

The second issue related to timely access is the insurer control versus objective multidisciplinary assessment. When a person is in an acute care or rehabilitation hospital, a multidisciplinary team is usually involved in assessing the needs of that person. Because of this, the individual receives objective, coordinated, multidisciplinary assessments by people with proven expertise in brain injury. These assessments result in recommendations for rehabilitation services that are objective and tailored to the individual by people with expertise and who have no vested interest in making these recommendations.

The proposed legislation leaves it to the insurer to decide entitlement of benefits even though he or she may not have expertise in brain injury yet does have a vested interest in reducing costs.

Our experience has been that insurers too often overrule the recommendations of multidisciplinary professionals and insist on having the patient reassessed by their own therapists, who may or may not have expertise in brain injury. This can result in increased length of stay in hospital, which is expensive to taxpayers again; delaying the implementation of rehabilitation services and attendant care and thereby placing the person at risk; duplicating services at taxpayers' expense; and increasing the risk of further debilitation by keeping the person in the assessment mode and preventing them from getting on with their rehabilitation and in fact getting on with their lives.

The solution we recommend here is that the insurer should be required to follow through on recommendations of the comprehensive multidisciplinary teams that are available in the acute care and rehabilitation settings.

When a multidisciplinary assessment is not available from the treating hospital, the designated assessment centres for brain injury within the province could be used to provide these objective multidisciplinary assessments. We think it would be more cost-effective for the DACs to be used proactively in treatment planning rather than just for dispute resolution when there isn't an existing multidisciplinary team already treating the person.

Our final point today is with regard to the definition of "health care practitioner." Currently, the definition is restricted to physicians, chiropractors, dentists, optometrists, psychologists and physiotherapists. This definition does not reflect current clinical practice of assessing and treating individuals with brain injury. All qualified health care professionals should be represented in the definition of health care practitioner and therefore have the authority to endorse the treatment plan. The definition of health care practitioner should be expanded to include speech-language pathology, occupational therapy and social work.

Unnecessary delays in the initiation of treatment -- and we have seen delays of weeks to months waiting for a signature -- are caused when qualified professionals must have their recommendations endorsed by a practitioner from outside their area of expertise. Expanding the definition, we believe, will improve timely access, reduce blockages in services and work towards a more seamless continuum of care.

In closing, we ask you to consider the unique needs of all people with brain injuries as separate from those with soft tissue injuries, particularly with respect to determination of benefits and application for benefits. We would like to add that there are many opportunities in which the government, insurers and rehabilitation professionals can learn from each other, and our head injury team would be pleased to act as a resource in this regard in developing standards and procedures that are most fair and effective for those living with the long-term effects of brain injury. Thank you.

The Chair: Thank you very much. Your timing was perfect.

Ms MacDonald: We worked on that. Didn't want to waste the taxpayers' money, you know.

The Chair: Very good. Thank you very much for presenting to the committee today. We've used up our allotted time.

Later:

The Chair: Before the group from St Michael's departs, I'm afraid that for some reason my watch skipped some time during your presentation. Of course, the Chair would never admit to an error.

Ms MacDonald: How human of you.

The Chair: We do have five minutes left on your time.

Ms MacDonald: Oh, good, because we'd like to answer questions.

The Chair: You'd like to. I don't know if it's appropriate or not. I suppose we should ask for the committee's approval. But if there's no objection, would you like to come back up to the table and we'll have a quick two-minute round of questions. I do apologize.

Ms MacDonald: That's fine. Thank you.

The Chair: I can't even blame it on my lunch.

Mr Sampson: I'm happy to hear them answer the previous questions. Maybe then pick one of the above that you want to answer to and give us a shot. I'd be happy to hear your answer to those.

Ms MacDonald: I liked the one about the costs. I think it was Frances Lankin's question about the costs of medical and rehabilitation benefits skyrocketing. Actually, one can think that it's fraud and all sorts of other things that are happening, but in fact what we're seeing is an awful lot of duplication of service, the insurer sending in their own person to reassess and do rework on things that have already been assessed and determined through OHIP or health-care-system-paid resources. So that's one duplication we see that could reduce a lot of expense for insurers. A little trust would reduce their expenses.

Mr Sampson: How do you get rid of that duplication then?

Ms MacDonald: For example, have insurers refer out to other rehabilitation services instead of hiring their own case management firms; have them not have their case managers phone up the acute care team and ask for one to two hours of consultation time to hear what our opinions are, when we can just send it to them in a report and they could follow up on it. I think that Sue has one of the best example for you on that one.

Ms Balogh: Frequently we do have a number of case managers who come in and they want to understand what the needs of the patient are. This might happen when a patient still is in the intensive care unit and may be so for a number of weeks. So those kinds of calls are completely premature. On the other hand, we do have people who are ready to be discharged into the community.

We did have a case of an individual who was quadriplegic. We had contacted the insurance company to make sure that services and attendant care were in place at home. We were assured that was going to happen. The patient was discharged home, only to find that the insurance company had not put in any of those services, so that patient was at risk at home. On top of that, they wanted to redo all these assessments at some indeterminate time in the future before they would be willing to implement our recommendations. That patient had had a full multidisciplinary assessment done at our hospital and his needs were well identified. Yet, this patient still went home without having the proper services and was in danger.

Mr Crozier: An earlier presenter on behalf of the industry today stated that the plaintiff's bar regards head injuries as the whiplash of the 1990s, and that extreme care must be exercised to ensure it's only the most serious head injuries that receive the expanded coverage. Then they went on in fact to suggest that the Glasgow Coma Scale be used, and you kind of disputed that. With regard to its being the whiplash of the 1990s, are you seeing an increase in head injuries? Is it better diagnosis? What would prompt a comment like that, from your point of view?

Ms MacDonald: It would hard to imagine why the person would say that head injuries are the whiplash of the 1990s. We keep statistics on all people who come to us, and there are 250 a year or thereabouts. Those numbers have not increased, except for the fact that we are taking in more traumas because one hospital has closed down, so we can explain those increases. Is it better diagnosis? Perhaps. Mild brain injury is being better diagnosed now than it ever was. It used to be that people had hidden deficits and they would show up in mental health clinics and it would be diagnosed as a mental health problem as opposed to a brain injury.

Lastly, I think the "whiplash of the 1990s" would suggest to me that the speaker was concerned about fraud. You can't fake a brain injury very easily. I think it was Mr Sampson who said that 80% of DAC decisions were in favour of the insurer. I don't know that this is the case with the brain injury DACs, and there are separate brain injury DACs from soft tissue DACs in the province. I think it would be important to gather those data as well. Brain injury is different.

Ms Lankin: I would think one of the other differences that may have led to that kind of a statement is the increased knowledge in treatment modalities for acquired brain injury. There's been an incredible advance in that field, if you think of the work that you're doing; if you think of the longer-term care work that's going on through McMaster, a program of repatriation of patients from the States. We've learned a lot and yes, there are more costs involved. I think in general in medical rehab, with the focus on long-term care and attendant care and understanding different treatment options and support-people needs, that probably has led to some of the increased costs.

My concern is that a $75,000 cap doesn't fix the problem that the government sees in terms of increase in costs. We need to get at the root cause of that: Is it legitimate, or is it not legitimate? We need to work through that. But what it does do is, for someone who has an acquired brain injury, if it doesn't meet whatever the emerging legal definition of catastrophic injury will be, the attendant care and medical treatment they require to perhaps remain in the community is going to be cut off after $75,000. Do you have any cost estimates of these services over the course of a lifetime of someone who's in their, say, mid- to late twenties, what they might require?

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Ms MacDonald: We're not so much in the business of looking at cost estimates. Certainly, we see cost estimates from other rehabilitation companies come across our desks. I think there are some good case management firms in the province and good rehabilitation centres that would be good at providing you with more accurate cost estimates than we could. Certainly, $75,000 can be used up very quickly. I'm thinking of a client I have worked with a lot who was injured, unfortunately, when there was only tort and $25,000. Her $25,000 was used up within the first year. She's been spending the last eight years trying to get services, paying for them out of pocket when she can and hoping that her court case settlement will help her to keep going in life.

I wouldn't want to see us go too much one way, too much towards the tort system. I think that the $75,000 certainly wouldn't be adequate in the case of a lot of moderate injuries, or a lot of milds who still need some work hardening or have to retrain because it's too difficult for them to return to their original jobs.

The Chair: Thank you very much. I apologize for a split session.

GET WELL REHABILITATION CENTRE

The Chair: The next group to present is the Get Well Rehabilitation Centre, Fatima Bhyat. Welcome to the committee, Fatima.

Ms Fatima Bhyat: Thank you. My name is Fatima Bhyat and I'm a registered physiotherapist. I'm presently employed at Get Well rehab centres. I am a physiotherapist who has many years of experience, having graduated in 1969, and I'm not afraid to say that. I have also worked in various aspects of physiotherapy.

My experience as well as the many studies that I have accessed all indicate that early treatment yields the best results of the injured. The proposed changes to the auto insurance legislation and accident benefits schedule preclude this early access to treatment.

Under subsection 42(1), a treatment plan, together with a statement from the health practitioner stating that the expense is reasonable and necessary, has to be submitted to the insurance company. This we feel is giving much more control to the insurance companies. They already have that control.

I also question the ability of the individual or individuals who will approve or deny the application. Medical knowledge is absolutely necessary in order to make that informed decision regarding the treatment. I have in the past been questioned by insurance adjusters as to why I was treating a hip malfunction when the client had a low back problem. This just indicates to me that this particular person had no idea of the interconnectedness of hip problems to the low back and vice versa. There have been many such questions asked.

I've also submitted authorization forms for payments for devices which will aid the client's functions, for example, back supports, and they have been very remiss in responding to this. Again, I would state that the medical knowledge and a sound understanding of functional abilities is a must in order to make those informed decisions.

Physiotherapists, as primary practitioners, based on their education and medical knowledge, should be the ones making the decisions regarding the clients' treatments.

Under clause 42(5)(a), if the approval is denied, then the insurer will provide written notice within 14 days of its reasons for not approving the application. To date, my experience with insurance companies has been to provide no reasons, simply that the treatment was unnecessary and unreasonable.

Clause 42(5)(b), again when the treatment is denied, the insurer will provide notice within 14 days that it has referred the insured person to a designated assessment centre for an assessment. No time frames are specified either under section 42 or section 48 as to when that assessment will be done.

I again state that physiotherapists, based on their education, their expertise and the clients' doctors, are the persons to make the qualified decisions whether treatment is reasonable and necessary, and further, that physiotherapists continue to treat the client until the designated assessment centre report has been received; and further, that the physiotherapy clinics be reimbursed for all the treatments that have ensued so far. In this regard we'd be directed by the college and the physiotherapy associations to set the standards of care and practice.

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As no time frames are indicated when the assessment should take place, I looked at the times allotted for the application, the denial of approval and the assessment, and at least eight weeks would have elapsed. As I stated before, early intervention is paramount in preventing intensified problems and further disabilities and thereby reducing costs. Under clause 42(b), the insurer would only pay for 15 physiotherapy treatments or six weeks from the date of the accident, whichever is the lesser. This clearly denies the client's rights to necessary treatments towards a safe return to the former functional levels.

I also understand that the purpose of the designated assessment centres is to assess the nature and the type of the impairment and whether treatment is necessary, and not to make the decisions in terms of the expenses and costs. Clause 42(9)(a) mandates the DAC to do this and assess the expense, which we feel is incorrect.

Finally, as a physiotherapist -- and I've worked in many clinics -- having the insurance companies pay the clinics directly for treatments rendered -- with the insured persons' agreement, of course -- is imperative in order for them to continue to get the treatment they require. I ask that subsections 49(3) and 73(2) be amended to read "shall" instead of "may." This would definitely ensure continuity of treatment for the clients.

Lastly, I'd like to thank you all, members of the committee, for affording me this time to voice my opinion. In the interests of providing good quality care for injured persons, I trust that you will carefully assess all the submissions made to you. Thank you.

Ms Lankin: We appreciate your presence here and your presentation. One of the things that I heard as you were presenting, I think, was a concern about the bill, and what was underlying that is your experience already in dealing with insurance companies, who of course are interested in ensuring that the benefits they're paying out are appropriate and that the individual is getting the appropriate treatment for the right length of time. And, of course, they're concerned about the cost. We can all understand that is the range of issues that would be involved.

Ms Bhyat: Certainly.

Ms Lankin: The government has proceeded with the development of draft legislation because of a general concern of the escalation in premium rates. In meetings that I've had with representatives of the insurance industry, they all point to the medical rehab cost as being the primary driver of increased rates at this point in time. Of course, that makes sense, because under Bill 164 and the previous legislation before that, the right to sue had been taken away. Previous to those two pieces of legislation, the right to sue was what was driving the costs up, back in the late 1980s.

I'm wondering if you have any observations on what's happening in the medical rehab field. Why would the cost be going up so dramatically in that area? The insurance industries talk about no gatekeepers, no appropriate treatment controls, individual health care practitioners, perhaps in some cases conflicts of interest. There are a lot of things that they speculate on, but it's hard to know what the elements are that are driving the costs up in medical rehab. Could you give us your observations on that?

Ms Bhyat: My particular observations have not been that it's been the rehab as such. Right now, the insurance companies send a client to a DAC assessment if $2,000 worth of expense has been incurred in terms of the rehab. This is where we feel the waste has been in terms of the number of DAC assessments that are taking place and driving the costs up a lot further, whereas if the client was having that treatment all along and there was a continuum of treatment, we wouldn't be having that situation.

Mr Sampson: Two questions. Let me, now when I can remember it, deal with the issue of designated assessment centres, which I'm calling DACs because I have a hard time saying those three words together quickly. The fact of the matter is though, that about 80% of the requests that go to DACs actually get decided in favour of the insurance companies. That's been the history up to the last available data that I have, which incorporate a good part of 1995. If that's the case, isn't there some indication here that there is an overtreatment happening? There's something wrong with the proposals that are coming forward with respect to treatment plans and appropriate treatment if 80% of the cases that go to DACs, an independent assessment of disability, eventually are decided in favour of the insurance companies.

Ms Bhyat: I don't believe that is so. As I said earlier, I think $2,000 worth of treatment is really not very much before you're sending a client to a DAC. I think clients will need at least four to six weeks of treatment.

Mr Sampson: But haven't we provided that in the current arrangement where there's an access to medical and rehabilitation expenses for effectively 15 visits or six weeks, whichever comes first? That's what the current proposal has. It says you must file a treatment plan, yes, but you have access to the treatment, 15 visits or six weeks, on a pay-pending-dispute basis. Basically you have access to those treatments right off the bat.

Ms Bhyat: Fifteen visits or six weeks are the initial treatments. We're talking about getting over the acute phase of treatment. We're then looking at work hardening, we're looking at work simulation, after that. This is not happening in the current legislation, where you're only getting over the physiotherapy treatments, then not being allowed to get to that work hardening, work simulation stage at all.

Mr Sampson: Let me, if I can, just do a quick question with respect to the payment. I'm not exactly clear why you say it's important that the rehab units have access to the payment from the insurance companies directly as opposed to through the insured. How does that improve treatment if you get paid directly as opposed to your client getting paid and then paying you?

Ms Bhyat: It simply puts me in a better financial status to be able to continue treating the patients. If the insurance companies aren't paying me, I'm going to say, "Look, you can't continue having the treatment," because I'm not able to carry that client for that length of time.

Mr Crozier: I'd like your comments, if you could. There's been some concern with rehabilitation centres and the conflict of interest there might be in the ownership of these rehabilitation centres -- they may be medical practitioners; they may be somebody in the area of law -- and there is an attempt in this legislation to tighten that up. Do you have any comment with regard to that?

Ms Bhyat: Well, I also know of clinics which are owned by insurance companies as well. That to me would indicate a conflict of interest as well.

Mr Crozier: Well, we'll add them to that list then.

Ms Bhyat: I think they should be added as well. I don't think doctors have a conflict of interest in terms of making money out of a client, because they're ruled by the health professionals act which does not allow them to make money out of a disadvantage. The same would be true of physiotherapists. We're not allowed to incorporate, for instance.

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Mr Crozier: Maybe you wish not to comment on it, but do you see any problem then with conflict of interest, when it comes to the ownership of rehabilitation centres, that you're aware of?

Ms Bhyat: Yes, I would see conflict of interest with insurance companies owning clinics and perhaps lawyers owning clinics as well.

Mr Crozier: But not medical practitioners?

Ms Bhyat: Not medical practitioners or physiotherapists or rehab personnel, I should say better.

Mr Crozier: Yes, but notwithstanding the fact that it's controlled under any act, there may be that situation where -- I hope that it wouldn't be often -- somebody may be referred to a rehabilitation centre or a specific rehabilitation centre when perhaps it isn't necessary at all.

Ms Bhyat: I think clients have the right to go to the rehabilitation centre of their choice.

Mr Crozier: So that certainly would help, rather than being directed to a certain one?

Ms Bhyat: Yes, that the clients retain that right that they go to a rehab centre of their choice.

Mr Crozier: Although in all likelihood, the insured is going to go on the advice of someone, so we still have that concern that the advice be appropriately given. Or should someone be referred to a rehabilitation centre, or should someone be restricted from referring someone to a rehabilitation centre in which they have an interest?

Ms Bhyat: As I said earlier, I don't see a conflict of interest in terms of rehab personnel, and here I would include occupational therapists as well as physiotherapists and speech pathologists, because they're governed under the health practitioners' act and not being able to incorporate, so I don't feel that we would have the profit motive there.

Mr Crozier: Okay. Thank you.

The Chair: Thank you very much for presenting to us today. We certainly appreciate it.

ONTARIO SOCIETY OF OCCUPATIONAL THERAPISTS

The Chair: The next group before us is the Ontario Society of Occupational Therapists, Moira Sonnenberg. Welcome to the committee. We have 20 minutes.

Ms Christie Brenchley: My name is Christie Brenchley. I'm the executive director of the Ontario Society of Occupational Therapists, a voluntary professional association of Ontario's 2,700 occupational therapists.

OTs work in both public and private rehabilitation settings where persons injured in car accidents are receiving health care and rehabilitation. In such settings, occupational therapists play key roles in the assessment and treatment of injured persons with the goal of identifying and facilitating the achievement of appropriate functional goals in order to promote independence and self-sufficient community living.

This legislation is important to occupational therapists and to our clients. We share the government's commitment to develop a legislative framework that will provide for an auto insurance policy that works towards a fair, efficiently delivered benefits schedule to victims of car accidents. We're delighted to have the opportunity to present to you.

We have participated in the consultative process to date. In October 1995, our association made submission to Mr Sampson in the form of key principles that occupational therapists value and would wish to see represented in the legislative draft. In fact, we are delighted to note the congruence of philosophy in principle that Bill 19 reflects.

At this time, however, we wish to identify a number of significant issues and areas of concern where we feel the legislation still falls short or that it has not yet addressed, areas that we feel make the legislation even better.

At this point, I'd like to introduce our president, Nancy Gowan, and our vice-president, Moira Sonnenberg, who bring to you not only the voice of the association but also personal experience as professionals who work specifically within this sector.

Ms Moira Sonnenberg: It's great pleasure to be here. I have had the pleasure of meeting with Mr Sampson and of presenting him with our statement of principles.

We have had a good opportunity to review the draft legislation. I think we've been paying primary attention to the statutory accident benefits schedule, and particularly the medical rehab benefit end of things, where we felt we had the most to offer this committee in our review.

There are a few areas of concern to us as a professional body. We feel that these concerns also would be concerns to our clients and to the community as a whole.

First of all, we have some concerns regarding the definition and role of the health practitioner. We have some concerns around the use of treatment plans, the designated assessment centre role in evaluation of treatment plans, the overall reduction in benefits, the setting of fee schedule and the definition of catastrophic injuries.

I'd like to have an opportunity to speak to our primary concerns, which are the definition of "health practitioner" and the whole implementation of treatment plans.

We occupational therapists assert that we should be, are prepared to be and are qualified to be designated as health care practitioners. The statutory accident benefits schedule defines a group of health professionals who establish eligibility for funding and eligibility for access for funding to health care and rehabilitation. This group completes certificates for the purposes of determining and claiming benefits, preparing treatment plans and providing statements with respect to reasonableness of costs. This group is given the designation of health practitioner. Under the SABS at this point a health practitioner is a chiropractor, dentist, optometrist, psychologist or physiotherapist if the impairment being treated is one which that profession by law is allowed to treat.

Occupational therapists are key assessors and service providers in the area of disability and impairment. Occupational therapists don't diagnose medical conditions. However, within our scope of practice we do communicate and identify to the client the functional impact of that diagnosis on their life. Occupational therapists assess the potential to restore functional ability, and we assess the potential to resume the demands of former lifestyles in the areas of self-care, productivity and leisure.

At the core of our training and of our practice we provide a holistic approach and a very functional-based approach to the assessment and treatment of individuals. I have included for you in your handout the definition of the scope of practice of occupational therapy as defined in the Regulated Health Professions Act. This profession, which is focused on the assessment and restoration of function, is conspicuously absent from a listing of professionals authorized to certify that a functional disability or impairment of function exists.

Occupational therapists are currently being contracted by the insurance industry directly throughout the rehabilitation process to complete a very overall service to the injured party.

Within the first week or two following an injury, an occupational therapist may be called in at the acute stage in the hospital setting to assess a person's level of function and to assist that person in maximizing their potential within the hospital environment.

Upon discharge, the occupational therapist is being asked to complete attendant needs assessments. We're being asked to identify those attendant care needs. We're being asked to determine the level of self-care the person can do. We're asked to look at the accessibility to the home, to the work environment and to school. We're being asked to prescribe mobility devices and other adaptive equipment that will allow that person to return to their community and to their home.

Occupational therapy is a required team member in the designated residual earning capacity assessment centres. While other DACs do not actually require an occupational therapist as part of their team, they are hiring occupational therapists to complete the functional capacity assessment portion of the DAC assessment that does determine the basis for the outcome of that assessment.

We are asked to determine job demands, both from a physical and cognitive perspective. We're asked to assess the client's ability to meet those jobs demands and, through functional capacity assessments, recommend strategies for return to work.

The occupational therapist is really the person and the profession required and asked by the insurance industry to facilitate a client's return to normal life. These are the definitions used in your draft legislation. The whole idea of "return to normal life," "return to work," "return to function," is just an integral part of what an occupational therapist does in our day-to-day practice.

We would ask that at this point the committee consider our application to be included as a health practitioner, given the role and the importance the insurance companies have given us in the whole process of rehabilitation.

We have had verbal endorsement by the Guarantee Co of North America and the Ontario Physiotherapy Association at this point. They do support our application. We are currently in discussion with other insurance, litigation and health practitioner groups, also seeking their support and endorsement.

I'd like to move on to our concern regarding treatment plans. Ironically, the Ontario Society of Occupational Therapists, in our statement of principles and in some of our direction to Mr Sampson, did request that a treatment plan be required by all health care practitioners and health care professionals. We continue to support that a treatment plan is required and should be required not just by a "health care practitioner," as defined, but by all regulated health care professionals.

Our concern regarding the implementation of the treatment plan is that the way it's currently written, it's the health practitioner who establishes that treatment plan. If occupational therapy, for example, is not included in that treatment plan prepared by the practitioner, which we are currently not, does that mean we do not have access to funding, that our client does not have access to occupational therapy? We would like to see if that could be reworked to improve access to other regulated health professionals.

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It also appears that this creates a gatekeeper role in that the health practitioner would be the individual who would determine funding for other necessary services.

We also have some concerns regarding the implementation of the dispute process around the treatment plan. There seems to be a significant delay in turnaround time in the designated assessment centres. The way the legislation draft is written at this point, if an insurer disputes a treatment plan, the treatment plan would then be required to go to a designated assessment centre for review. This process, in our experience, could take six to eight weeks. What this is doing is delaying the initial acute intervention of therapy services, which could have a significant impact on how quickly we can restore function down the road for that individual person.

The Ontario Society of Occupational Therapists supports the continued use of the established designated assessment centre for dispute resolution. It's imperative that within the designated assessment centre, if we are going to continue to use them to review treatment plans, it be a peer review. We have some concerns that somebody other than an occupational therapist, for example, would be reviewing that treatment plan and either accepting it and approving it or denying it if that person were not an occupational therapist. Likewise, it's not within the scope and the expertise of an OT to look at a chiropractor's treatment plan, for example, and determine whether that is fair and reasonable and whether we would endorse funding for it.

With respect to the overall funding available for the injured party for health care and rehab, the occupational therapy society believes that $75,000 available for all injuries and $1 million for catastrophic injuries should be sufficient to provide adequate assessment and intervention. It is unclear whether the costs for case management are included in the $75,000 and whether case management services will be limited in duration or will have dollar caps attached.

We recognize the need for cost control measures that will stabilize premiums. We are particularly committed to working along with this committee in any further consultation you may require. Thank you very much.

Mr Crozier: Thank you for your presentation. I was interested, among other things, to see your question that it's unclear whether costs for case management are included in the $75,000 and whether case management services will be limited in duration or have dollar caps. I wonder if that might be a question we could direct to the parliamentary assistant.

Mr Sampson: The answer is the case managers are additional expenses under the expense category, so they're not included in the $75,000.

Mr Crozier: That would answer your question, that the full $75,000 would be available for the rehabilitation treatment.

Ms Sonnenberg: Will there be caps placed on the dollar amount available for case management?

Mr Crozier: Back to the PA. I feel like the Chairman.

Mr Sampson: Thank you, Mr Chairman. The answer is that case manager expenses are covered under the expense category, under the accident benefit schedule. It says "reasonable expenses," so the cap would be whatever is reasonable. There is no dollar cap, no hard cap, but it's a "reasonable" definition -- if I'm not speaking out of order. I'll check to make sure that's the correct direction to you. They're out of the limit, but reasonable.

Mr Crozier: The presenter just previous, with regard to brain injuries -- I suppose we're going to get a variety of opinions on this, but their concern was that the $75,000 cap was not enough. I can't recall specifically what they said about the million, but you're affirming that when it comes to your treatment plan, $75,000 would appear to be adequate in most cases?

Ms Sonnenberg: And that's the clue: in most cases. We're still convinced there will be a small group of individuals who will have substantial, significant injuries that would not fall under the "catastrophic" definition. If you note in our submission, we do voice some concerns regarding the Glasgow Coma Scale 9 used for brain injury. It's hard to tell. We don't have the statistics on who that population would be. I expect the insurance industry would have those numbers. They would know what the costs are and they could look at their records to determine who has gone over a $75,000 limit that has not gone to $1 million.

Mr Silipo: Thank you very much for the presentation. A similar question to you that we posed to earlier presenters around this concern we heard from the government as well as from the industry this morning, around rehabilitation being one of the areas they're very concerned about as it relates to costs. Could you comment on that?

Ms Nancy Gowan: We believe that under past legislation, the costs have been as a result of some learning curves, and some of what has been spoken to in the past presentations were to the fact that we've learned more about mild head injury; we've learned more about the treatments around that. We've also, I believe, become more educated around early intervention. So I think we're seeing a lot of upfront costs, which in the past tort systems, you wouldn't have seen until five or six years later, given some of the court settlements. So we believe that a lot of the costs you're seeing in some of the no-fault legislation is a result of learning, of early intervention.

We do agree that there is some duplication in the system and that it needs to be really seriously looked at. Also, there is a need for insurance companies to take a look at the information they have and to act on that information. I've seen a number of situations where insurance companies have asked for repeated assessments which continually say the same thing. Probably, use of the DAC system would help this, but we need to be able to actually act on the assessments being given, not just repeated IMEs and repeated reassessment.

Ms Sonnenberg: The other thing we've seen happen is that the insurance industry has recognized the need for costs to increase in the rehabilitation area in order to more quickly have a person return to work and return to normal function so that their file could be closed at an earlier time.

Mr Douglas B. Ford (Etobicoke-Humber): You just partially answered the question I was going to ask. How do we distinguish between necessary treatment and desirable treatment for the auto accident victim? Will treatment plans and the DACs achieve that balance?

Ms Gowan: It's our belief that accurate treatment plans with goals, target dates, time lines will help provide some of that information.

Mr Ford: Will that be cost-effective?

Ms Gowan: I believe it will be cost-effective, because it provides a guideline by which to monitor when a cost becomes more significant than what was originally reasonable. Your treatment plan will be a good guideline to be able to provide some targets as to when those costs are becoming more than what were expected.

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Mr Joseph Spina (Brampton North): Thank you very much for the presentation. It brought something to light that I wasn't that clear on, that is, the recognition of your association or occupational health therapists as a recognized practitioner.

In your comment, you indicated that the therapists are currently being contracted by the insurance industry, I gather on a fairly private, direct basis. Who approves those services? From the insurance side of it I can understand it, but is there any recoup of that expenditure by any party after that? Is there a cost to the injured party? Is there a cost that comes out of the government system or anything like that?

Ms Sonnenberg: I can certainly speak from my practice and I believe also Nancy's practice: We bill directly to the insurance company for our services. The individual is not charged for any of our costs. Is that your question?

Mr Spina: I think that's the answer, but I'm not sure because what I'm trying to understand is, if you are recognized as a qualified health caregiver, like the others, where would that change the financing or the funding? That's probably more importantly the question. Would that change anything in terms of who pays you or how much you're paid?

Ms Sonnenberg: I think it just ensures that clients have direct access to occupational therapists. It will not change how we are currently paid or how we currently practise. It does give us the recognition, though, of having the responsibility and the ability to certify impairment and disability.

Mr Spina: Which is what you want included.

The Chair: Thanks to the Ontario Society of Occupational Therapists for presenting to us today.

MOTORCYCLE AND MOPED INDUSTRY COUNCIL

The Chair: We now have the Motorcycle and Moped Industry Council. Mr Ramsay, welcome to the committee.

Mr Robert Ramsay: Good afternoon and thank you very much for allowing us this opportunity to address the standing committee. The Motorcycle and Moped Industry Council is a national, non-profit trade association which represents the manufacturers and distributors of motorcycles and motorcycle-related products and services in Canada.

Its members and its affiliate members account for over 95% of all new motorcycles sold in Ontario. In total, the MMIC members and affiliate members contribute over $1 billion to the economy of Ontario and employ thousands of people throughout the province. In Ontario at the present time there are over 400,000 people who have a motorcycle licence, and insurance is one of the major factors that affect motorcyclists and the motorcycle industry.

Let me give you a little bit of background to begin with. Currently, only one insurance company offers standalone motorcycle insurance. What that means is that if you're going to look for insurance, you only have one company you can get it from if you don't have other kinds of insurance. If you're a new person trying to get insurance for the first time, you only have one choice, one company.

What that really means is that there is no competition for motorcycle insurance, and even that one company that does insure motorcyclists on a standalone basis requires that a person have many years' experience and clean riding records. If, for instance, you are a young person or if you ride a certain kind of motorcycle, they won't give you insurance. So what does that leave? That leaves Facility Association. It doesn't matter if you have a clean driving record. If you have no accidents, no claims, 10 years' riding experience, if you're riding a certain kind of motorcycle, the only place you can get insurance is that Facility Association.

What we're trying to do is bring some reason and some competition back to the insurance industry.

Let me just tell you very briefly what has happened over the last three years. We did a survey last year, 1995, of motorcyclists. We surveyed 2,500 motorcyclists randomly across the province. What we found was that between 35% and 40% face extreme difficulty getting motorcycle insurance. "Extreme difficulty" means they can't get it, basically is what is comes right down to.

What we also found among the motorcyclists is that they've seen huge increases, not because of claims, not because of anything they've done, but because of changes to the insurance system. Huge increases: average 50% to 60% for compulsory coverages; average 30% for all coverages. Most motorcyclists only buy compulsory coverages mainly because they can't afford to buy the rest of the coverages; it's not cost-effective. For those people who are only buying compulsory insurance, in the last two years, their insurance has gone up 50% to 60% on average, not because of anything they've done, just because of the changes to the insurance system.

Finally, one of the biggest results and one of the most frightening results is that between 15% and 20% of those people riding motorcycles are riding uninsured. They're riding uninsured because it's more cost-effective not to get insurance, and they can't afford it in many cases. If you can't find it, and you can't afford it, some people choose to ride uninsured. I think that's unacceptable and we have to bring back to the insurance system a system where people voluntarily want to get insurance because it's cost-effective and because it's affordable.

There are three priority issues for the motorcycle community. First, the proposed amendments must lead to an actual decrease in motorcycle insurance premiums. At this point, even though it's not in the handout, the submission I provided, we contracted some actuaries to do an analysis on the impact on motorcycle insurance.

The reason we did this was because the last time we sat in this chair and the last time we had these discussions, we went around the circle. No one in the government had bothered to cost up what the impact would be on motorcycle insurance and we couldn't take the chance again this time, so we did an actuarial study. In fact, at lunch time, I was sitting with our actuary to get a full explanation so I could understand it better and they make all sorts of interesting assumptions.

The bottom line of that actuarial study is that for a needed premium -- we heard that this morning from the Insurance Bureau of Canada -- there was going to be an increase of 10%. Now that in and of itself sounds quite frightening, because we're already aware of what's happening with people not getting insurance, but the goods new is, if there is good news in this scenario, is that the needed premium under Bill 164 would have been 60% higher. So it does address, to a certain extent, getting cost down from a motorcyclist's standpoint. We believe there is still room, there is still opportunity to further control increase in costs.

Over the next few weeks, we will be making a further, more detailed submission to all the members of this committee, but for today's purposes, we wanted to bring that to your attention.

The second item that is a priority for the motorcycle industry and for motorcyclists is loss cost transfer provision. This provision was initially introduced in OMPP, it was maintained in Bill 164, and we urge very strongly that this provision be maintained. If it's not, it's going to result in skyrocketing costs.

The final item is the verbal threshold and the $15,000 deductible for non-income loss for catastrophic impairments. We believe, as defined, this is a reasonable verbal threshold and a reasonable deductible. Any reduction in that threshold, any reduction in the deductible, we believe, will put increased pressure on costs, and if the costs go up, then it doesn't become sustainable. The insurance system will have to be revisited in two years' time or three years' time.

It's very important that we put in place -- because as we've heard many times, this is the fourth system in six years -- finally a system that is sustainable, a system that benefits all the people of Ontario and a system that is fair to all the people of Ontario.

I want to give you lots of opportunity to ask me questions about the motorcycle industry and motorcycle insurance, so I'll cut off my little comments here and open up the floor.

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Ms Lankin: This morning I offered a general disclaimer that I had no relationship to the insurance industry, and probably won't in the future, but it also means that there is much about the lingo that I'm learning as I go through this experience on this committee in having read this bill and trying to come to understand it. I'm going to ask you as we go through the questions if you could explain a little bit more the issues around the loss cost transfer provision and why that's so important and how that works with respect to your industry in particular, and a bit about the verbal threshold.

The general question I wanted to ask you is, as a layperson listening to you, you're saying that under Bill 164 the rates would have gone up 60% for motorcycles on top of large increases that you've already indicated in the last year or so. We recognize there's still a problem under this bill in terms of it doesn't really produce the stability that the government wants, but that's an issue we'll have to get at.

I'm wondering if you can explain to us the nature of the problem and why it affects motorcycle riders so much. A layperson might presume it has to do with nature of injuries for motorcycle accidents and the severity of the injuries and the costs of the medical rehab, but I don't know and I'd like to understand that better.

Mr Ramsay: There are a number of factors involved. The main factor is that a motorcycle is a relatively small vehicle. It's operating in an environment with a lot bigger vehicles. A motorcycle hitting another vehicle usually causes little or no injury to the occupants of the other vehicle. Another vehicle hitting a motorcycle usually causes, or may cause, extreme injury to a motorcyclist.

As a result of no-fault benefits, and particularly the accident benefit component of that, it shifted the costs associated with those accidents back on to the motorcyclists. As a consequence, the provision that was allowed for loss costs helped to ameliorate that situation by moving that back on to the larger vehicle. Without that, the costs for motorcycle insurance would even be much higher than they are now.

Ms Lankin: Why did it go up so much? Is there a difference in the frequency of accidents or --

Mr Ramsay: That's a very good question in the sense that motorcycle accident frequency has actually been decreasing and has decreased more than automobile accident frequency.

It's from severity. We heard earlier this morning that there are two components, basically: frequency and severity. The result is, because of the severity, and particularly the cost of the benefits associated with injuries, that is where the cost has been driven up.

Ms Lankin: Where in the system do you think the costs for that should rest? One of the things the government has stated is that, for example, they want to see good drivers benefit and have decreased rates. We still haven't got a definition of what that means, because most of us think we are good drivers but probably wouldn't qualify in the insurance company's rating.

If there is a greater chance of a more severe injury on a rating scale, isn't that always going to produce a higher cost to the insured driver of a motorcycle?

Mr Ramsay: Not usually; let's put it that way. We are a national association, so we deal with British Columbia, we deal with Quebec. In those provinces, there are put into place, whether it's government insurance or private insurance or whatever, mechanisms so that the not-at-fault party does not have to absorb the costs associated with injury he or she did not create.

A few years back, just to give you a very short history here, there were rising costs in British Columbia. We went to the government there and explained what was happening, and we asked ICBC to sit down with us and work out where these costs were coming from. What they found was that costs were being inappropriately attributed to motorcyclists; they were actually costs being incurred by other vehicles hitting motorcyclists. So the claims cost was going up, but they were affecting motorcycle premiums rather than the at-fault party.

When we did this actuarial analysis in British Columbia, they readjusted their insurance premiums and actually lowered motorcycle insurance costs significantly and premiums significantly. That happened over the last three years. It was a good example of government working with industry and working with consumers to find what is responsible for all parties, and that's what we're trying to do here.

Mr Sampson: Just following on that theme of discussion, a higher tort component, though, could achieve the same result that you just found in BC, could it not?

Mr Ramsay: In fact, that's absolutely right. In the system pre-OMPP, motorcycle insurance was the most profitable insurance in Ontario. If you go back to 1987-88, the actual claims cost on motorcycle insurance would be around 65% or 60%, mainly because of the fact that I mentioned earlier, where the motorcycle rider very seldom causes injury or much damage to anyone else.

Mr Sampson: I think the last time we spoke we talked briefly about having sort of a separate plan, so to speak, if I can couch it in that phrase, to cover motorcyclists. I don't see any sort of reference to that, just quickly going through your schedule. Have you kind of dropped that idea?

Mr Ramsay: Actually, I do mention it very quickly. When we met at the end of August or early September -- I can't remember the exact dates -- we had put forward what we called the Ontario vehicle insurance plan. The Ontario vehicle insurance plan -- what we thought was its greatest strength was its flexibility. We felt that many of the basic ideas that are incorporated in the proposals that you have brought forward are reflected in the sense that we'd like to see the opportunity for basic insurance coverage with a lot of options for people to purchase up.

What happens is that motorcyclists tend to be three different categories: some of them are very young, just getting started, and they need an inexpensive means of transportation; some of them are well established, what are called the rich urban bikers, I guess, the lawyers, doctors, the parliamentarians, those sorts of people, that can afford big bikes, and those people want to buy higher insurance and better coverage; and then there's a group of enthusiasts that love riding motorcycles, they've done that since they were eight or whatever and just want affordable insurance to fit their own situation. That's what we were proposing back then.

We believe that the proposal you've brought forward addresses that in many senses, and in that regard we're quite happy. We are concerned with a few things that aren't spelled out, but those will be coming forward, I'm sure, over the next few weeks, in particular rates; that's one of our major concerns.

Mr Sampson: I'll look forward to seeing your actuarial costings of this.

Ms Annamarie Castrilli (Downsview): Thank you very much, Mr Ramsay. I have two questions. I wonder if you might turn to appendix C of your presentation and if you might help me understand it. It deals with increases in premiums by company over a two-year period, 1994-95.

Mr Ramsay: That's correct.

Ms Castrilli: I'm not quite sure what the distinction is between the left-hand column and the right-hand column, but they deal essentially with the same period. Is that different types of insurance? Is that what that is?

Mr Ramsay: No. What we've tried to do is, in the left-hand column, 1994-95, we've shown the actual percentage increase that was approved by the Ontario Insurance Commission. So if you look just at Jevco, for instance, 1995 is 12% and 1994 is 25%; the two-year average for that would be 18.5%. What the next two columns show, the two columns to the right of that, is that based on their percentage of the market, which is 33.443%, that total increase of 12% works out to 4%. So what we've tried to do in the next two columns is show how much the weighted average has increased for motorcyclists across the board, with no changes in claims record or anything else; this is just because of changes to the insurance system itself.

Ms Castrilli: So it goes from 0.2%, in your weighted averages, to 6.2%, is that right? You have 0.2% for Royal Insurance and Pilot, and 6.2% for Jevco.

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Mr Ramsay: Yes. What that is, it's based on their market share -- so in the case of Pilot, for instance, 2.810% -- times their increase, which in 1994 was 11.3%, gives you actually what they contribute to the total increase of insurance across the board.

Ms Castrilli: What accounts for the difference between companies, in your view?

Mr Ramsay: This is very difficult. I wrote articles for several magazines over the last few years. Insurance, like many businesses, is competitive in the sense that there are many different companies that are offering insurance. They select their own criteria on which to base their premiums and how they're going to underwrite the cost of insurance. Different companies use different systems for determining risk and trying to set, based on assumptions, what the premium should be to cover that risk.

One of the most difficult and frustrating things from a consumer standpoint is, usually most consumers have no idea why they're being rated the way they are. They're being told, "This is how much you have to pay in insurance," but they don't know what factors are involved, if it's their number of years for riding, number of claims, if they have traffic convictions, if they have a young son or daughter that's 17 or 18 years old, things of that nature. They don't know what percentage of the entire premium that makes up. They're told accident benefits make up this much and third-party liability makes up that much and collision might be this much, but they have no idea what is within that framework, how that was determined.

Ms Castrilli: There are no comparisons available; basically, you have to shop around.

Mr Ramsay: You have to shop around, yes.

Ms Castrilli: I'm concerned about the statement that you made that somewhere between 15% and 20% of motorcycle owners do not have insurance. This is just staggering. I wouldn't have thought that. What do you think could be done?

Mr Ramsay: We believe it's not enforceable, in the sense that you can't set the police out checking everyone, pulling everyone off to the side of the road making sure they have insurance. The only way you can get people to voluntarily buy in there is to show value for what they're getting. Right now, a young motorcyclist, or many motorcyclists, do not see the value in paying $2,000 for motorcycle insurance when their motorcycle might only cost $4,000. They might be covered if they get in an accident. As we saw with some snowmobilers recently who didn't have insurance on their snowmobile, if they get in an accident, their accident benefits are covered under their automobile policy.

So from the standpoint of voluntary adherence to the system, unless it's affordable, unless it's value for what a person is getting, some people are going to opt out of the system.

The Chair: Thank you. I appreciate the Motorcycle and Moped Industry Council presenting to us today.

WAXMAN, CARPENTER-GUNN

The Chair: Our next presenter is Waxman, Carpenter-Gunn. Welcome to the standing committee on finance and economic affairs. We look forward to your presentation today. We have 20 minutes. Please proceed.

Ms Kim Carpenter-Gunn: I appreciate the opportunity for the two of us to be here today. I am Kim Carpenter-Gunn, and my partner, Rhona Waxman, is with me today. We are plaintiffs' personal injury lawyers from Hamilton of a two-person firm in Hamilton. We've been doing this type of work for 13 or 14 years in total. We're lawyers that are involved in the front lines both with respect to fighting on behalf of victims' rights with respect to their own first-party insurers and with respect to the tortfeasors, the negligent parties responsible for accidents.

A little bit of background: Both of us are former trustees of our local law association. I'm the past president of the Hamilton Medical-Legal Society, and I'm an elected bencher of the Law Society of Upper Canada. We do a lot of work in this area, and I hope that today we can give you some insight as to the practical problems that we see arising out of this draft act and regulations. I'd first like to turn over the first issue to my partner, Ms Waxman.

Ms Rhona Waxman: My major concern with the legislation is how economic loss, or real loss of the innocent accident victim, is dealt with in the legislation. I'm talking about lost wages in particular.

As you know, under the no-fault benefits, a person is entitled to 85% of their net lost income. They're also allowed to sue for any lost income up to 85% again of their net income. My concern here is that real financial, economic, out-of-pocket loss for lost income will not be covered, either through the no-fault system or through the right to sue. "Net income" is not defined, either in the regulations or in the statutes. I'm concerned that the way it's set up, a definition based on past earnings would be used.

Now, there's a real difficulty whenever you look at or attempt to construct an artificial definition of lost income based on past performance. The NDP legislation attempted to do that and came up with an extremely comprehensive way of doing it that failed dismally in dealing with a lot of real loss. However, someone can look at a situation and a judge can assess a situation and see real economic loss, which I'm concerned would not be covered. Examples are situations that come out of our practice: young people who have just entered the workforce who are underemployed, someone who's working part-time with the intention to eventually work full-time. If they're unable to work as a result of an accident, it would be logical to expect that they eventually would have been working on a full-time basis. I'm concerned that this would not be covered.

People who are not yet in the workforce: This is something that under the tort we used to be able to deal with. I'm concerned that it's not covered here. A situation where a five-year-old had a moderate head injury: The child will be able to continue in school, but there's no question that their ability to work and their ability to earn in the future would be seriously impaired. What about the people who are out of the workforce with the intention to return, people who have decided, say, to stay at home to raise children and are involved in an accident at that point?

I'm concerned that the legislation also doesn't cover impairment of earning capacity or competitive edge. I represent an engineer who, as the result of an accident, suffered an injury. He was able to go back to his job, which was modified so that he could remain in the office and work at a desk, but he was unable to continue to go to the job site. Clearly, his ability to advance in the company, his ability to earn, his marketability if he's ever let go from that one position, are impaired. I'm concerned that this kind of real economic loss is also not addressed.

Small business people who are forced to close their business for a short period of time and then go back and open it up: There's the real issue of loss of customers, loss of key employees and losses they will incur once they start their business up again. The legislation, I'm concerned, does not allow for losses for raises based on inflation or for promotion. Also, the loss cuts out automatically 15% of the net income, which is real loss that people who are involved in accidents and unable to work are just giving up.

Our suggestion here is that the issue of real economic loss, real financial losses, should be left completely open for full recovery through the tort system. We're not offended by a lesser amount of no-fault benefits for economic loss to keep the person going while the tort case is being decided.

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Ms Carpenter-Gunn: The next area we'd like to look at is the various notice provisions that appear in the act and the regulations. I have real concerns about two specific notice areas, and one is the notice that within 120 days of the accident the victim is to put the tortfeasor on notice of the claim, and if that doesn't happen, there's a real problem in terms of prejudgement interest flowing from any damages arising out of the accident.

In our experience, more often than not we never even see a victim within 120 days of an accident happening, so what I see coming out of this particular section is that we are going to have application upon application to the courts, which are already overflowing at the seams, for a judge to direct that despite the fact that notice was not given within the 120 days, the victim has the right to have that prejudgement interest.

I'm not quite sure where this section came from. Under the Courts of Justice Act, which deals with prejudgement interest, that's a discretionary item in any event; it's not an automatic that the plaintiff obtains prejudgement interest. I don't know why we have these new notice provisions having to do with it.

Once the notice is given, assuming the person's even at our door within 120 days, there's a whole raft of bureaucracy that kicks in, including defence medical examinations -- in the plural, not in the singular. My concern, from a practical point of view, is that we're going to have a situation where, if we do have someone with the 120 days, we're going to be dealing with the no-fault carrier with respect to the treatment plan and their reaction to it. Assuming what normally happens, they won't like the treatment plan and they'll be sending our client off for an IME. Because we've put the tortfeasor on notice within 120 days, we have another insurance company that's going to elect to send our victim to various doctors for observation and report writing.

We're going to be so diverted here in terms of what the various doctors are saying, and we're going to lose sight of what the important issue is: getting the treatment for the person. I have a real concern that the control for the treatment of the individual is being taken away from the person who should have control of it, that being the family physician, usually, and the treating specialist that he or she may have sent the person to.

There's another notice provision in here for which I'm not quite sure what the consequences are, but it says the person's supposed to give notice within seven days of the accident happening if he or she is going to access the no-fault rehab provisions. In my experience, quite often the individual doesn't know within the first seven days whether he or she is going to have need for the no-fault rehab provisions.

For most of these time lines, the seven days and the 120 days, most victims of accidents have never even seen legal counsel, so how in the world is he or she supposed to know that these provisions are there? It leads to a highly inequitable, unjust situation. They're going to be raised, one can be sure, down the road by the insurance companies, yet the public's not going to know about it. On the other hand, if the insurance companies are going to spend a fortune advising people of these rights under these sections, we're going to have a flood of cases and increase the number of claims we presently have. Whichever way it goes, I see a very unfavourable result.

Ms Waxman: I'm also concerned that there does not appear to be any provision to allow for dependency claims upon death, which means there does not appear to be either the ability to obtain no-fault benefits or to sue for people who are dependent upon a breadwinner who was killed as a result of the car accident. They can't sue or obtain benefits for the loss of support or for the financial contribution this person made to the livelihood of the dependant.

Ms Carpenter-Gunn: Another area of concern is structured settlements. It's not clear to me, in the material we've been given, what types of damages are to be covered by the structured settlement proposals. You should know that whenever there's a structured settlement at present, there's increased paperwork and attendance before a judge for approval. I don't know whether that's what's being contemplated here. You should also know that we normally use structured settlements in situations where we're trying to deal with offsetting gross-up. Perhaps Mr Sampson or someone from the government can assist me as to what types of damages are being contemplated here.

I'm very concerned. If what's being said is that all damages should be encompassed within structured settlements, that seems to me to be a very paternalistic attitude and one that would be inherently unfair to a victim if perhaps he or she had a huge debt load at the time of the accident and in fact a more prudent, conservative approach would be to pay down their debt. As I say, there isn't enough information before us for us to speak specifically as to the proposal restructured settlements, but certainly I'd wave a caution flag that it would be very unfair to have a mandatory policy that one would have to structure moneys that fall into certain categories of damages. That's really the only thing I want to say there.

The only other matter is that when we do structures, typically the tortfeasor insurers take a discount on the moneys being paid, so it certainly is to the insurer's advantage to have structured settlements as opposed, in some cases, to the victim's advantage. I can see that from an income tax point of view, it's sometimes a very prudent thing for people to do, but in our democracy, I tend to like options for people as opposed to dictatorships for them in terms of what they have to do with their moneys arising out of an accident that was no fault of their own.

Ms Waxman: With respect to the $15,000 deductible, my understanding was that the purpose of the deductible was both to reduce costs and also to rid the system of insignificant claims. I'm concerned, however, that it appears that many claims for contributory negligence are taken off and then the deductible is taken off. With that method, you're not achieving the purpose of ridding the system of insignificant claims. Rather, what you will be doing will be depriving seriously injured victims from compensation for pain and suffering. I would suggest that the deductible come off first and then the reduction for contributory negligence.

Ms Carpenter-Gunn: Last, another matter that I see heading us towards a recipe for disaster is part XII of the regulations. Part of my concern may very well be that there isn't a whole lot of information provided there. This is the particular regulation dealing with the responsibility to obtain treatment, participate in rehabilitation and seek employment.

It's unclear to me, upon my review of it, who is going to be in the driver's seat as to whether the individual victim has breached, encroached that particular section of the regulation. Who's going to be dictating when that occurs? It has a very far-reaching effect to the victim in that their benefits are then reduced 50% if it's deemed they have not obtained the appropriate treatment and participated in rehab. Is it being suggested here that someone six months out from the date of the accident is obliged to mitigate their damages, cut down their damages, and take a job doing a far lesser status type of work than they were doing at the time of the accident, despite the provisions of the regulations in the other areas, that is, two years for the lost income being paid while you're unable to do what you had at the time of the accident? I'm concerned what abuse will result from part XII of the regulations.

As I say, it's not clear to me whether that person's supposed to return to any form of work. We've seen from other provisions under Bill 164 and to a lesser degree under OMPP where we get into this difficulty time and time again as to who is controlling the situation, who is calling the shots, and then we end up in mediation and then from mediation into arbitration. So that is a concern.

One final point. It appears from the material we've been given that with the motions with respect to threshold, as I read it -- and I may be misreading it -- they're contemplating that the judge, he or she, at first instance is to decide, "shall" decide, whether the person's over the threshold.

My concern there is that defence counsel for the insurance companies could bring a motion at a very early stage. We, the plaintiff's counsel, have the burden of proof. Usually, at that very early stage there's not an overabundance of information, and if what's being contemplated is that we're telling a judge what he or she shall do and they're forced to make the decision at that point as opposed to deferring it to the trial judge, I think we're going to see a great many unfortunate situations where people who have very significant injuries could be shut out at that early motion stage. I applaud the government for trying to rectify the difficulties of the present motion legislation, but I don't think that's the solution we want, and I can't imagine any legislation telling a judge what he or she "shall" do, in any event.

We'd welcome any questions from the committee, and we thank you for affording us the time today to address these concerns we have.

The Chair: Thank you very much. You have used up the 20 minutes in your presentation, so there won't be time for questions, but I believe there was one point of clarification. Did you want to make a comment on that?

Ms Carpenter-Gunn: Perhaps it was structured settlements?

Mr Sampson: There are a number of points of clarification. I don't know if I should be chewing up time --

The Chair: We are out of time. Perhaps you could respond to them in --

Mr Sampson: Yes, why don't we respond without eating up the other people's time. I'd be happy to meet with you afterwards. Are you giving us something in writing?

Ms Carpenter-Gunn: We can afterwards, yes. Thank you, Mr Sampson. Thank you, Mr Chair.

The Chair: Thank you very much, Ms Waxman and Ms Carpenter-Gunn.

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COLUMBIA HEALTH CARE INC

The Chair: Our next presenter is Columbia Health Care, Mr Allan Walton. Welcome to the committee. We have 20 minutes together.

Mr Allan Walton: Thank you, and good afternoon. I'll attempt to leave time for questions. My name is Allan Walton, and I am the senior vice-president and chief operating officer of Columbia Health Care. I would like to thank you for the opportunity to appear today. I'll begin with a brief outline of what Columbia does, where we fit into the auto insurance system and our views on the proposed changes.

Columbia Health Care operates 19 clinics in Canada, 16 of which are in Ontario. Columbia is one of the largest suppliers of rehabilitation services in Ontario. We offer wide geographic coverage and provide a comprehensive range of services. Columbia has a superb reputation for the quality of care we provide and is one of the few facilities in Canada accredited by CARF, the Commission on Accreditation of Rehabilitation Facilities.

Columbia provides interdisciplinary rehabilitation services to clients with work, sports or motor vehicle-related disabilities. All our revenues are obtained from private sector payors, including employers, automobile and other insurers, and the Workers' Compensation Board. The company has established a reputation for excellence and achieved a high level of consistency in its treatment protocols across all clinics. As a result, a growing number of major nationwide employers and insurers have designated Columbia as a preferred provider for rehabilitation and health services. As well as being one of the largest providers of rehabilitation services, Columbia is the first private company to establish a comprehensive neuro-rehabilitation centre in alliance with a public sector health provider: a large public hospital. We pride ourselves on our excellent relationships with government, WCB and insurance companies.

Our mission statement is to constantly strive, through innovation, to provide people with the best possible treatment, delivered by professional, experienced staff, utilizing a client service interdisciplinary model. The company's goal is to offer cost-effective rehabilitation to patients that will return them to meaningful activity.

In terms of the government's proposed automobile insurance changes, first let me say that Columbia supports the government moving forward with changes to the current system. We have studied the government's proposals carefully and we are supportive of the approach the government has taken. However, we do have some questions on the legislation and would like to offer our suggestions for changes to the draft bill and regulations.

Columbia, like many groups and individuals, has concerns about the current system. We are concerned that the premiums paid by motorists are too high. We also believe that the benefits available are too generous and represent a disincentive to rehabilitation and return to work. We feel that the goal of any insurance system, tort or non-tort, must be to compensate for actual loss and return the individual to the pre-accident state as quickly as possible. Insurance should not be viewed as a windfall.

As a company that has experience in both a tort and non-tort environment, we caution that any return to a tort system without adequate thresholds and safeguards will lead to higher costs. While we are supportive of many of the administrative improvements contained in the bill, we are concerned about the provision that will require an individual to serve notice of a tort claim within 120 days of accident. We believe this will increase the number of tort claims, as individuals will file claims before rehabilitation is complete in order not to lose the right to sue.

We have particular concerns that the current benefit of $1 million for rehabilitation in all cases is too generous. Based on our experience, this encourages abuse. We also have questions regarding the process for the initial assessment of claimants. Under the proposed legislation, a rehabilitation plan must be sent to the insurer within six weeks of the accident. However, a plan cannot be effective without an assessment. In the proposed bill, there is no indication of who will cover the costs of that plan. We believe this is an issue that must be addressed if the current legislation is to be successful.

We are also concerned that the definition of "catastrophic injury" is unduly restrictive. For example, to be defined as a catastrophic injury, the proposal requires a total loss of vision in both eyes or the loss of both arms or legs. However, an excellent clinical case could be made that the result of the loss of one eye, one arm and multiple orthopaedic injuries, while viewed as catastrophic, would be excluded under the proposed definition.

Columbia also believes that the current issues surrounding the designated assessment centres, or DACs, are not addressed in the new legislation. The basic questions of control, accreditation, training, licensing, delivery and standards of service need to be specifically addressed. We believe it is of utmost importance to the system that all DACs deliver high-quality service to all parties, especially clients. Insurers have also expressed a number of concerns about DACs. What seems to be lacking are, to be blunt, commonsense controls. One suggestion has been to establish a rotating roster of DACs, accessed by a 1-800 number. In this system, the client would be sent to a centre at random in their geographic area, rather than having the client referred to a DAC selected by the insurer or client, which is what currently goes on.

The government's current proposal also does not address the issue of accreditation of treatment centres. We hope the government will look at establishing some form of accreditation, as the current system is largely unregulated. The only regulations in the industry are those covering the professionals, which are administered by the various professional colleges. In Alberta, WCB requires CARF accreditation of rehabilitation centres in order to access funding, and this is true of a number of US states.

We believe it is important for all parties to have an accreditation system of the highest quality; however, we understand that this may not be a task that the government itself wishes to undertake. One proposal would be for an overseeing body to issue a request for proposals setting out the important accreditation issues in motor vehicle accident rehabilitation. This would allow many interested organizations to be selected as a recognized MVA accreditor.

We at Columbia are also concerned about conflict of interest. We believe there is an issue of conflict when the ownership of a facility puts a practitioner in direct conflict with another part of his or her professional dealings. It is important to the integrity of the auto insurance system that no DAC or treatment centre be perceived as having improper links with any group or party that could benefit from a referral or any other transaction. It is important for the system that all parties have faith in the DACs and their treatment facilities. We believe it is important that the issue of conflict of interest be examined closely and that some regulation or disclosure of interest be required.

A further issue we would like to draw your attention to is the interim plan of treatment that is in place while the DAC assesses the reasonableness of the treatment plan. One suggestion is to allow treatment to continue during the DAC process, but payment would only be made if the DAC report approves the treatment plan. This suggestion would also deal with the situation where the DAC time frame exceeds 30 days and the treatment plan would have been approved. Interruption of a reasonable treatment plan is not only unfair to the claimant but ultimately increases costs.

In closing, I would like to reiterate our support, as a major rehabilitation company, for this package. We believe the current system does not function well and that there are disincentives to rehabilitation. We think the proposed system will remove those disincentives and will result in a better auto insurance system in the province. We hope the issues we have raised are helpful in your examination, and I would be pleased to answer any questions you may have.

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Mr Wettlaufer: Mr Walton, I have two brief questions. The cost of health care rehab has gone up dramatically over the last few years. Could you indicate to us why you think it might have risen so dramatically, and second, what would you do to control those costs in the future?

Mr Walton: I think it's risen dramatically because the control for those rehabilitation expenses has shifted, really, to the attending physician and ultimately to the rehabilitation providers. Speaking as a COO of a company in this business, we have virtually complete freedom in what we want to do. The family physician has not acted as an adequate gatekeeper. As a consequence, there's been a proliferation of rehabilitation providers.

What would I recommend we do? I would recommend that we put stiff controls in terms of accreditation of facilities, using an outside body to monitor that. The real difficulty in the past has been that the physician has not been a good gatekeeper. The insurance company has a conflict, and frankly so do we as rehab providers. We've never seriously looked at a system of controls that sees outside monitoring by a non-profit organization.

Mr Wettlaufer: You say, "We are concerned about the provision that will require an individual to serve notice of tort claim within 120 days of the accident," and that you believe it would contribute significantly to an increase in number of tort claims. What would you suggest as to the number of days?

Mr Walton: My background is clinical, not legal. If I had to take a stab at it, I would probably say one year. My real concern is that to cover the bases -- many times rehabilitation is not complete; many providers don't even get the patient up prior to that time -- what will happen is that everybody will file a statement of claim to make sure they're safe. If I had to pick a time, what would it be? Would it be six months or a year? There's a lot of complicated legal issues. Off the cuff, as a citizen, I would probably say a year.

Mr Wettlaufer: Would six months cover most of the people you would see, for instance?

Mr Walton: No, not the more complex ones. The reason is that if a patient is referred to acute physiotherapy and they're successful, they will be successful within that time frame. If they are unsuccessful, it may be very close to the end of that time frame before they are referred to a facility that deals with more complex issues.

Mr Crozier: Thank you, sir. I'm interested in your comments on conflict of interest, because that is an issue of concern. But I'd like to ask you about the interim plan of treatment and the treatment plan. Just so I completely understand what you've said, "One suggestion is to allow treatment to continue during the DAC process, but payment would only be made if the DAC report approves the treatment plan." Is there an element of risk in there for the treatment giver?

Mr Walton: Yes, there should be, in my view. The risk to the treatment provider would be that the treatment plan as proposed would not be accepted as a reasonable plan; in which case, had treatment continued based on that plan, funding would not be forthcoming to pay for that. Providers who have confidence in their assessing ability and in their treatment plan would continue with treatment in the comfortable knowledge that a DAC, should that occur, would approve that plan. There may be a small percentage of cases where it's a legitimate clinical difference of opinion, but I think that would be acceptable.

Mr Crozier: Do you know if any other treatment providers share your opinion?

Mr Walton: I believe they do. I was the founding member of the Canadian Association of Rehabilitation Centres; I stepped down to become chair of the accreditation committee. I believe that my fellow members share my view in terms of the mechanism to reduce interruption of rehabilitation services, but I believe the current president of that association will be speaking in front of this group.

Mr Crozier: That's certainly a bold suggestion, and I give you credit for having put it forward.

Ms Castrilli: We had previously the Ontario Society of Occupational Therapists, whose evidence or testimony was that when they looked at the bill they thought one of the deficiencies was that it didn't define health practitioner broadly enough, didn't include all the individuals who would be giving treatment. They would like to see something in the legislation that included all regulated health professionals and other service providers in that definition. Would you agree with that?

Mr Walton: I'd have to hear their proposal in more detail, but the concept of including all regulated health professionals would not be inconsistent with what we're trying to do, which is to bring some control to the industry.

Mr Silipo: Thank you very much for the presentation. I just want to make sure I've understood you correctly in a couple of areas. You're saying that as a supplier of rehabilitation services in Ontario, you would actually prefer to have someone else approve the rehabilitation plan you're providing?

Mr Walton: Yes.

Mr Silipo: Because you think that diminishes the potential for abuse, or it means there is greater security of that plan being what is necessary? I don't want to put words in your mouth. Why?

Mr Walton: Yes for both of those. I think what we have now is an unregulated, undifferentiated rehabilitation industry. There are very good providers and there are not-so-good providers, but they have the freedom to virtually provide whatever service they want and the mechanisms under Bill 164 almost guarantee payment for those services. There is no mechanism currently to have an adequate review of their treatment policies or their treatment plans. We believe it will not only save costs in rehabilitation but will require those who are offering substandard service, either through lack of interest or through financial conflict, to bring their service provisions up to something that would meet an outside standard.

Mr Silipo: Who are you suggesting should provide that direction or that approval?

Mr Walton: I think there are a number of groups interested in doing that. There is Curran Accreditation, for example, out of the United States. We have groups in Ontario. For example, the Institute for Work and Health, the various colleges, have all exhibited an interest in accrediting. I would suggest, and it was part of our recommendation, that an independent body, perhaps the OIC, put forth the proposals salient to auto insurance and that any number of groups could step forward looking to be a motor vehicle accident accreditor. They would have to demonstrate that their accreditation process adequately addresses those issues that are particular to motor vehicle accidents.

The Vice-Chair (Mr Tim Hudak): I'd like to thank you, Mr Walton, for your presentation before the standing committee today. Have a good day.

ASSOCIATIVE REHABILITATION INC

The Vice-Chair: The next delegation is from Associative Rehabilitation Inc, James Campbell. Welcome to the standing committee.

Mr James Campbell: While there are positive changes provided in the proposed new automobile insurance legislation, there are also some potholes for people with disabilities.

I'm the president of Associative Rehabilitation Inc, ARI. We have provided disability management to motor vehicle accident victims since 1981. We are the oldest and largest Canadian-owned rehabilitation firm. We have provided service to over 16,000 Canadians with disabilities. We obtain our referrals from insurance companies, lawyers, employers, government agencies, doctors and individuals injured in motor vehicle accidents. ARI has presented to the standing committees on OMPP and Bill 164, and is now making a presentation to this committee.

Having extensive experience working under the standard Ontario automobile policy, OMPP and Bill 164, we feel that for the most part this draft legislation constitutes an equitable resolution to the problems that permeated previous automobile legislation. We do, however, have some comments and would like to share these with the committee. We will confine ourselves to rehabilitation issues and assume that you have heard from the insurance, legal and medical communities in detail. Our focus will be on the vocational rehabilitation and case management issues presented in the draft regulations and their impact on people with disabilities.

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When Mike Harris, MPP, spoke to the insurance brokers of Metropolitan Toronto on February 9, 1995, he stated:

"We're going to repeal Ontario auto insurance Bill 164.... We're going to set weekly accident benefits at a reasonable level for the basic accident benefit coverage.... We're going to facilitate optional benefits `top up' coverage.... We're going to restore tort for significant economical loss in excess of the no-fault benefit.... We're going to modify payments for rehabilitation and medical expenses to differentiate between serious and less serious personal injuries. Our rationale is just common sense."

These promises have been accomplished in the draft of the accident benefits submitted February 9, 1996, through the Ministry of Finance.

As a rehabilitationist, I do not agree with a diagnosis or injury-based definition of "catastrophic." Depending on the interpretation of clause (f) of the definition, there may be many disabilities with severe functional limitations that do not meet the definition. For example, mild head injury or multiple severe fractures can be devastating injuries from a functional point of view but would be restricted to their entitlement to benefits under the current classification system. I understand that the committee has heard from the Ontario Society of Occupational Therapists today, and they may have some suggestions as to alternative types of definitions.

I would like to comment, however, that given the proposed definition and the associated expenditure limits, the average, if not most, injuries will find sufficient access to funds in the legislation. I am only pointing out that this legislation will not satisfy all the needs of people with disabilities originating from motor vehicle accidents.

The average wage in Ontario is just over $610 gross per week. Given the benefit levels proposed by OMEGA, being $450 per week and 90% of net, I am surprised that the Ontario government is now proposing a lower limit of $400 per week and 85% of net. The levels set by the OMEGA plan would seem to be closer to the actual needs of the average motor vehicle accident victim. However, I suppose one cannot argue this point too stringently, given that the right to sue for economic loss for not-at-fault accident victims and the opportunity to purchase optional coverage exist and all benefit levels will be reviewed by the minister every second year.

As a rehabilitationist, one could argue that a drop to $75,000 as a basic benefit, with a 10-year limitation, is excessive. However, on average, the people that we see never reach $75,000 in medical and rehabilitation expenses. Again, given that some not-at-fault accident victims with higher needs than these proposed coverages will obtain funds through the restoration of tort and that there are increased optional coverages available to motorists, some of the potential problems have been addressed. The legislation as proposed will not, however, satisfy all of the needs of people with disabilities suffered in motor vehicle accidents.

We do applaud the opportunities being provided to the public to purchase coverage for enhanced accident benefits. However, the government must take appropriate measures to ensure that these additional coverages are offered at an affordable rate and are offered to the public on a consistent basis. In the past, optional coverage for accident benefits has not been handled well throughout the industry.

We have an issue with the emphasis being put on designated assessment centres as a procedure for dispute resolution. While we like the fact that the insured has a duty to obtain treatment, participate in rehabilitation and seek employment, we feel that the DAC system of dispute resolution is ineffective at present and cannot see how it could be a more effective way to resolve difficulties. The mere introduction of a committee to oversee it will not solve the problems inherent in this system. We feel that there may be unnecessary delays with this system and would urge you to reconsider a different format for dispute resolution rather than this unwieldy bureaucratic process.

While we understand that those who have been involved in presenting this draft legislation and in putting together OMEGA have given some thought to the setting of medical and rehabilitation fees, there has been little in terms of consultation with the providers of these services. If the OIC is to venture into fee-setting, I hope it does so after significant consultation with providers. Better yet, the OIC should stay away from fee-setting altogether and let market forces bring what may.

We are wholeheartedly in agreement on the Ministry of Health releasing a discussion paper that proposes that health professionals disclose conflict of interest to claimants, insurers and professional colleges. We have had grave concerns over conflict-of-interest matters, and while the Task Force on Rehabilitation and Long-Term Care Benefits touched on this issue, it was never followed through in a legislative sense. For rehabilitation to be successful, the process must be objective and done independently, at arm's length from the claim. Any claim system is inherently adversarial and the rehabilitation process that works on the side of the insurance company or works as advocates only for people with disabilities can only bring subjectivity to the process.

Some of my insurance colleagues have suggested that a simple declaration of conflict of interest is still not sufficient to protect the person with a disability. I have enclosed copies of the "conflict of interest" definition provided in the April 1993 Report of the Task Force on Rehabilitation and Long-Term Care Benefits, and I applaud their efforts to try to ensure that ownership between insurers, lawyers, doctors and various treatment providers and assessors is openly declared and avoided when possible.

I am practical enough to believe that it is impossible to develop a system that will provide all of the right answers to all of the possible problems. Overall, I believe that this system has been developed fairly well. Without having worked in this new system yet, I would score the system a B+. It is not an A, but it does meet the criteria established by Mike Harris and it is expected to meet the rehabilitation needs of most people. Find a better dispute resolution process than the DACs and ensure that not only health providers but insurers, lawyers and other providers involved in dealing with accident victims deal appropriately with their conflict-of-interest positions and the system will be even further improved.

Thank you for the opportunity to present today.

Mr Crozier: Under the designated assessment centres, I recall that a year or so ago when I was discussing it with claims adjusters in the insurance industry there was a great deal of concern about the designated assessment centres and the role they play and how efficient they are. You as well have suggested that there are unnecessary delays with the system and you're urging that we reconsider a different format for dispute resolution. Do you have any suggestion, through your experience, on how that format should take place?

Mr Campbell: Unfortunately I'm not able to sit here today and offer you a great solution to dispute resolution. I am more comfortable saying that the DACs in their current format probably aren't going to provide the service that you want them to. I believe some kind of arbitration process that works efficiently, quickly, to solve the problem might be a better format.

Mr Crozier: And that's fair. Your experience is that it doesn't work very well, so we should put our heads together and try to come up with a better method. That's fair enough.

Mr Kwinter: I think you'll acknowledge that all of these exercises over the past 10 years have one common theme, and that is to provide insurance at an affordable price to the drivers of Ontario, who are mandated that they must have insurance. Otherwise, you'd let the market do whatever it wanted to do. But because it's compulsory, the government has an obligation to make sure it stays affordable.

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There seems to be a contradiction. On the one hand, when you talk about the optional coverage, you suggest that the government should ensure that these additional coverages are offered at an affordable rate, and then when you talk about fee schedules for the services that are being provided, you say, "Let the market forces bring what they may." Can you explain to me why on the one hand you say let the market go, whatever it gets is fine, and on the other hand you say the government should ensure that the fees schedules stay affordable?

Mr Campbell: I think you're asking a rather philosophical question. I believe that insurance is compulsory. There are certain benefit levels that will be set for people. Part of the problem I see with the optional coverage is that you're probably going to get a small pool of people purchasing the optional coverage. I think the general public has a tendency to believe that they'll never be involved in a motor vehicle accident, and it's a benefit that they probably won't need to have. I think the general public continually screams for lower insurance rates all the time without realizing the consequences on the other end. I probably could say a non-regulated insurance system might work very well; a market-based, a market-driven insurance system with little government involvement might work really well.

Mr Silipo: Sir, in a couple of places -- more than a couple of places, I think -- you make the point that you support generally the direction of the changes, but you say, for example, under the definition of "catastrophic" that the new definition would pick up most situations, but there may be some that it would not pick up, and you have some concerns there, if I've understood you correctly. Later on, you make the same point with respect to the income replacement benefits, that they will pick up most of the situations but there are still some people who will be left out of that. Again under the medical rehabilitation you're saying that the $75,000 threshold will cover on average the people that you deal with but there may be some who are above that.

I'm assuming, therefore, in the situations in each of those three categories and others, that we're not talking about large numbers of people who would be outside of that in those three areas, so I guess it begs the question from my perspective of why we need to make these dramatic changes if we're only talking about a relatively few number of people in each of those areas.

Mr Campbell: As a rehabilitationist, I would rather see the system err on excess treatment, if it had a choice, rather than undertreating a patient. I think it is a shame should somebody require a service and because they have exceeded the caps they're no longer entitled to it. It's a difficult call to set a limit or a cap and to try to please all of the people, but clearly there will be people with legitimate disabilities that will not get the service that they require because of the cap and definition of "catastrophic."

Mr Silipo: So you would agree that in fact leaving the definitions more broadly or leaving the cap at a higher amount would be more sensible than trying to bring it down, when in fact by bringing it down we're not -- the number of people who are being excluded would not be large in the overall scheme of things, but it definitely would cause hardship for some people.

Mr Campbell: Exactly, cause hardship and may in fact not be a legitimate financial reason to bring the caps down to --

Mr Silipo: Right, because presumably if there's a problem with costs -- and we've heard a lot so far even in the few hours that we've been here about the rehabilitative costs being one large factor -- if we're only talking about a relatively small number of people who are above those thresholds now, then presumably that isn't where the bulk of the problem is. In other words, if we have those cost problems now, we're going to still have them even after we've lowered these thresholds in each of those areas.

Mr Campbell: Exactly.

Mr Silipo: The other part I would add to that is, to me it's particularly more clear on the question around the income replacement benefits where it seems that what people are going to have to do -- and there I guess is the clearest area where people can see it and make an immediate decision, and that is they'd have to calculate whether on the basis of what they're earning now it makes sense for them to have to purchase additional coverage. There at least they can see it.

I worry about and I would argue if that's going to happen it's likely going to offset any reductions they might otherwise get, which brings us back to the question of cost overall against a product that people are getting. I worry on some of the other areas around, for example, the medical rehabilitation and attendant care benefits where again there's an option to purchase beyond, but initially, it seems to me, people aren't going to be thinking necessarily about that and the fact that they may need more than that threshold. They may, you know -- most people will not -- but again, who's to know where each of us is going to fall in terms of those needs as we get into our cars and go about our ways.

Mr Sampson: I appreciate you providing the government with a grade of B+. I'll tell you that my response to that grade is like it has been in the past when I've received other grades in my life. I'm glad this is only the mid-term and not the final exam.

I want to talk about treatments and treatment protocols and treatment plans. Part of what we're trying to bring forward is -- and it may not be terribly obvious in the legislation -- a committee that will deal with the DACs, but I think also be charged with the responsibility, as it should, to establish appropriate treatment protocols so that those who are delivering the treatment plans know a general roadmap to follow in dealing with an injury and an injured person. Do you see any common sense in having the treatment protocols established in a more definitive format?

Mr Campbell: One of the suggestions I've heard from people at the Canadian Association of Rehabilitation Personnel is that there should be a standardized IWRP, individualized written rehabilitation plan, that is set down on paper and brought forward, freely available, for all parties to review and discuss. I guess what I do object to are the potential delays that the DACs might then introduce. I'm not sure, if the insurer decides to appeal most treatment plans that are being brought forward, that the DACs are the appropriate system to do that through.

Mr Sampson: I guess where I'm coming from is that they wouldn't if the treatment plans were in accordance with the protocol that they were part and parcel of establishing. It would be very difficult for them to say, "Well, I've got troubles with this treatment plan," when it in fact maps out quite closely to a protocol that they were part and parcel of creating and establishing.

Ms Nancy Gowan: I think what you're saying is that there should be standardized protocols, standardized treatment plans for most injuries and illnesses. Is that what you're saying?

Mr Sampson: To the extent you can, yes.

Ms Gowan: I guess the difficulty there is in terms of the learning that we talked about earlier that's happening in the industry. There are not necessarily standardized treatment protocols. I think what the last speaker spoke about was in terms of accreditation systems, and systems in place to be able to make sure that the provider is following the most up-to-date protocols are probably your best bet. You're not going to be able to have a standardized treatment for every whiplash injury or every mild head injury, but yet being able to have a process where you're sure that that process is in place for accreditation of that facility or of that provider, that's going to be more of a suitable way to make sure that they're following appropriate protocols. You also have, with regulated health professionals, the colleges to ensure that they're following the best standards of practice. So there are several systems there to help with that. I think you have to be careful that you're not going to be able to set specific protocols in every situation.

Mr Spina: Just quickly, I wish we could all have a B+ all the time, and you've done a good job as well.

Just to shift for a moment to the timeliness of the delivery of rehabilitation, under the proposals do you think that we can make that delivery a little more timely without opening the door to more expensive processes?

Mr Campbell: I think in rehabilitation time is of the essence. I'm sure you've probably heard people today talk about early intervention and the need to get in soon following an injury in providing the services that are required, and that should in turn provide you with better outcomes. As a rehabilitationist, I guess what I worry about is again the DAC, the dispute resolution process, slowing that down and then in the longer term doing the injured person a disservice.

I still believe, contrary to what Mr Walton had to present before me, that a lot of the treatment should be left with the attending physicians and the attending regulated health professionals and that there should be an emphasis on getting that treatment started quickly and not delaying it. I think that in itself will cut down on costs in the longer term.

The Vice-Chair: On behalf of the standing committee, thank you for your presentation today on auto insurance. Have a good day.

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ONTARIO PSYCHOLOGICAL ASSOCIATION

The Vice-Chair: The next delegation before the committee is the Ontario Psychological Association -- Dr Ruth Berman, Dr Ronald Kaplan. Hello and welcome.

Dr Ron Kaplan: We have a change of names and I'll announce the changes. Mr Chairman and the members of the committee, I am Ron Kaplan, psychologist, co-chairman of the Ontario Psychological Association task force on automobile insurance. With me are Dr Greg Hamovich, president of the Ontario Psychological Association, and Dr Faith Kaplan, member of the board of the Ontario Psychological Association and our task force on automobile insurance.

The Ontario Psychological Association is the voluntary organization which, since 1947, has represented the profession of psychology in Ontario. Our membership of approximately 1,400 includes clinical and academic psychologists, psychometrists and graduate students in psychology. Psychologists hold doctoral degrees and, as service providers, have been independently regulated under statute in Ontario for over 35 years. Currently, we are regulated by the College of Psychologists of Ontario under the Regulated Health Professions Act.

Let me begin with a personal comment: We are all here today because of the immensely destructive power of the automobile. Although our road transportation system is liberating and enriches us all economically, it produces countless personal tragedies. Indeed, automobile accidents produce the largest number of years of life lost of all causes of death up to age 65. Our challenge is to balance the costs of driving with the realization that each of us is a potential victim of automobile accidents, and we all want the best possible care after such a tragedy.

It's a pleasure to have an opportunity to express the viewpoint and concerns of professional psychologists regarding accessibility to health and rehabilitation services in the proposed legislation.

Firstly, we have been gratified with the openness of the Ministry of Finance and its staff to a wide range of stakeholders in the last six or seven months. One of the particular satisfactions of work in this area of public policy and legislation is the receptivity we of the OPA have always encountered at the Ministry of Finance and the Ontario Insurance Commission. My co-chairman of our auto insurance task force, Dr Snow, who is currently in Florida, and I had the opportunity to present before this committee in 1989 and 1993 during the debates over Bills 68 and 164. I welcome the opportunity to speak to this committee again.

Members of our association provide psychological services to accident victims and their families. Psychologists provide a range of specialized assessments, treatment planning, provision and evaluation as well as rehabilitation programs in the following areas: brain injury, traumatic psychological disorders, depression and anxiety disorders, chronic pain and its consequences, adaptation to physical impairments, bereavement, childhood trauma and injury, vocational disruption and reintegration, disability determination, and consultation with other health professionals, insurers and lawyers.

This past summer, Mr Sampson, the parliamentary assistant to Mr Eves, asked all of the stakeholders the following: (1) to propose reforms whereby treatment and rehabilitation benefits could be related more closely to severity of injury and impairment; (2) to suggest means to limit excessive treatment provision; and (3) to indicate how health professionals could be more fully involved in monitoring treatment appropriateness, reasonableness and effectiveness.

We responded to this challenge by developing a full auto insurance reform proposal which we called ALPHA. The ALPHA proposal was the official submission of the Ontario Psychological Association to the Ministry of Finance. The heart of the proposal was: (1) a three-level system of health care rehabilitation benefits based on severity of injury impairment; (2) service provision based on explicit treatment plans by regulated health professionals; (3) health professional peer review by a streamlined designated assessment centre, DAC, system.

The government's legislative proposal includes the latter two principles -- access to health care by treatment plans and the use of health professional peer review. The government has taken a clear stand to protect access to health and rehabilitation benefits by not providing a veto over health care services to insurers, as was proposed by the Insurance Bureau of Canada. Denial of access to necessary care by insurer veto was a key concern voiced by Justice Osborne in 1988, based on his evaluation of the failure of the prior tort system to provide available health care benefits.

We also want to congratulate the government for continuing to provide basic health care and rehabilitation while not unduly offloading costs of health care for accident victims on OHIP.

Now with respect to ALPHA's third proposal, we understand how difficult it is to create a three-level system of benefits. However, the reason for the middle level in the ALPHA proposal, up to $150,000, was to ensure that those with multiple moderate injuries or severe injuries which failed to meet the catastrophic test, approximately 2% of accident victims, would have access to the services they need. Overall, the health care rehabilitation benefit has been reduced by massive proportions, a reduction of 93% for approximately 99% of accident victims. Our fear is that the more this benefit level is reduced, the greater the number of injured victims who will go without treatment.

We are pleased to see that there is no discrimination against those with psychological injuries in the definition of impairment criteria for benefits -- "impairment" means a loss of abnormality of a psychological, physiological or anatomical structure or function -- in the draft regulation. Unlike some previous threshold language, there is no exclusion from tort claims for those with serious, post-traumatic psychological disorders. However, there is discrimination against those whose injuries are psychological rather than physical for access to urgent care within the first six weeks post-accident. I want to make a few comments about that.

The Ontario Psychological Association has a specific concern regarding the ability of our members to provide psychological services to traumatized accident victims in the first six weeks after an accident. Psychological services may be urgently needed in situations of traumatic death and acute stress disorder as well as catastrophic injuries to family members. Timely intervention is considered a hallmark of good mental health care. Provision of urgent care reduces the severity and chronicity of post-traumatic disorders with their resulting financial and personal costs. Rapid intervention supports continuity in work and personal life functioning. This is similar to treatment protocols in other areas. For example, rapid response is considered crucial when treating people traumatized by disaster, violent assault or sudden tragedy.

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We believe it is inappropriate for traumatized accident victims and survivors of accidents to have to wait up to one or two months while a treatment plan is reviewed by an insurer and then possibly a DAC. Psychological emergencies should not be treated differently than early-identified physical injuries. We note that there is access to physiotherapy and chiropractic treatments according to a treatment plan without prior insurer approval within the first six weeks after an accident for up to 15 sessions. We propose that early psychological intervention for traumatized accident victims within the first six weeks of up to 10 sessions be available commencing at the time of a treatment plan but prior to insurer response to the plan.

In conclusion, the Ontario Psychological Association thanks the committee for this opportunity to present to it our viewpoint on automobile insurance reform. Critical to the success of the legislative proposal is the implementation of its central mechanisms: streamlined DACs and DAC review committee. We will continue to offer suggestions to maintain an effective health care rehabilitation benefit system under auto insurance so that Ontarians can expect timely and effective treatment after injury.

Ms Lankin: I'd like to ask you about the alpha proposal. I like the name. It's a good play there, the alpha and the OMEGA, and we've got the various extremes of provisions. The third proposal that you spoke about in terms of creating a three-level system of benefits, I actually think this is interesting and it gets at the heart of one of the problems I have with the draft legislation as it is now.

The cap of $75,000 for non-catastrophic -- first of all, the ability to get any agreement on a definition of "catastrophic" is problematic. Secondly, there will be people who will require services beyond $75,000, I think, as you've identified, particularly when there are several injuries, maybe multiple moderate or severe injuries, and those people really aren't going to have the access to benefits that they need.

Yet we know at the same time that the biggest cost driver right now under the no-fault system -- and I'm not at all conceding that it wouldn't have been the same case under a tort system -- is in the medical rehab area. From questioning insurance industry representatives over the past couple of weeks, they inform me that it is at the low end of claims, it's the volume of number of claims that come forward and at the low end; it's not the ones that exceed $75,000 and that this cap isn't going to solve their problem, but it might well prejudice the access to treatment for a percentage of accident victims.

Could you tell me from your profession's perspective, and particularly multiple injuries that might be psychological and physical, how many people you see who might go over that cap, or is that cap a problem in your perspective?

Dr Kaplan: Yes, as I suggested, we thought long and hard about the issue of tying the benefits to the injury impairment level. We determined, in consultation with our actuary, as best we could, that approximately 2% of individuals would need more than the $75,000 or $50,000, which was our level one, but not fit the common definitions of "catastrophic." So we thought it would be about 2% of accident victims.

In terms of our experience as psychologists, who these people might be, I think I've been clear that these are usually people with multiple injuries, a person with a single amputation who, for example, has a mild or moderate head injury and has a lot of difficulty with their stump, needs a number of prostheses and then needs to go back to school and be rehabilitated and has pain over a number of years. So there is a category of people with a combination of physical and psychological and brain injuries who need a greater benefit level but would not meet the test of "catastrophic."

The problem we faced in proposing a three-level system to the government is it's difficult to come up with objective criteria to define who fits into these categories, so we proposed that level determination would be by the DAC system. Just as the current proposals suggest that a difference of opinion as to whether a person was catastrophic or not could be resolved by the DAC on the first basis, we thought that assignment conflicts could be dealt with by the DAC system.

Ms Lankin: Mr Sampson, The issue of immediate treatment for psychological treatment plans versus physical -- is there a reason why that was excluded from the legislation, or is that something you'll be looking at?

Mr Sampson: We can look at that, but it was excluded because we were just following the --

Ms Lankin: OMEGA?

Mr Sampson: No, what was available under 164 with respect to access under the pay-pending-dispute arrangement.

Ms Lankin: Do we have any data of problems with that or is there anything that maybe you could share with us with respect to that issue? It's an interesting point that's been raised.

Mr Sampson: You mean whether the psychological are included or are not included? There's no empirical data and I'm not sure what empirical data you're looking for as to how the injuries classify. We're prepared to look at the suggestion of the 10 visits. That was going to be one of my questions.

First of all, I want to thank you very much for coming today and also taking the time and effort to put together one of the six full proposals we received. That's certainly a lot of work you did. I know you worked overnight a couple of times to get it to us in short order and I appreciate that.

We had a couple of concerns when we saw your proposal. One was the name. I guess it forced me to almost follow suit and have a Greek name for this one. You notice we didn't. I don't know what the name of this one is. I'll have a lottery, perhaps.

Second, the definition of "injury" on your three classifications is something that we struggled with, as you know, when you presented it to us. I think I hear from you that's perhaps something that the assessment centres can help define. Have you done any work since the time we last talked to help us come to grips with how one might classify three categories of injuries as opposed to the two that we're proposing?

Dr Kaplan: It's a very difficult issue. We have thought more in terms of the number of injuries a person has. In other words, if a person has several moderate injuries or one or two severe injuries, maybe they could achieve our second level. But once again, it's hard to have objective criteria. We have thought about it some more and certainly would be prepared to think about it further. We appreciate your continuing interest in that difficult issue.

Mr Sampson: As you know, it's something we struggled with. The problem is the definition as to when you go from the first level to the second level or to the third level and how those boxes are defined. I guess it's a lot simpler, and that was one of our objectives, to try to get some level of simplicity back to this. It's a lot simpler to have two levels, as you know; either you're in or you're out of the box. There's one level of grey. If you have two levels, of course, now there are two levels of grey and some definitional problem for the new category. Whatever you can do to help us out there, we'd appreciate.

Dr Kaplan: Certainly, one alternative is to look at the catastrophic level, but I do appreciate you don't want to widen that too much.

Mr Sampson: We tried. As you know, there's sort of a tailing definition, a catch-all definition for the catastrophic. That was an attempt to try to come to grips with I think what you were trying to do, that middle level of injury, middle class of injury and how one deals with that.

Mr Kwinter: Thank you very much for your presentation. Dr Kaplan, I have to tell you that I agree with everything you've got in it. I have some problems, though, with how you implement it.

One of the previous presenters talked about the whole idea of tort claims within 120 days of the accident and said, "We believe this will increase the number of tort claims as individuals will file claims before rehabilitation is complete in order not to lose the right to sue."

My concern is you've asked that psychological emergencies be treated no differently than early-identified physical injuries. My concern is, how do you do that evaluation? Do you then get to the point where what you're saying is that in order to not be precluded from having it qualified, anybody who might reasonably have a trauma is categorized as an emergency psychological situation? Then you get into the problem that some people who are not -- and I'm not saying ethical or non-ethical, I'm just saying, "I've got to protect myself," so automatically classify them as emergency trauma.

Dr Kaplan: Let me address that question. This is only a very small percentage of people who are sent to psychologists. What I did hear is comment on the fact that within the first six weeks, two of the other professions are allowed to begin treatment pending the insurer's review. We're saying that for a very small number of accident victims who are referred to us within six weeks -- that's a very tiny number of people, people who have been badly traumatized, a love one's been killed -- we'd like to be able to begin work within that six weeks.

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Beyond the six weeks, the regulations are very clear that we write a treatment plan and the insurer says yea or nay within two weeks, and a DAC then has another two weeks to look at it. That's quite acceptable. We're only talking about a few people and I would propose to the committee that we would come back with a detailed description of how we can determine who those people are and we'll come back with an actuarial estimation of what that would cost.

Mr Kwinter: So what you're saying is that the primary care evaluator will submit his plan for the treatment, will make the initial determination that there is psychological trauma, and as a result of that, once that determination has been made, regardless of how long it takes for approval, you want to start treatment.

Dr Kaplan: Only for a certain small percentage of people who have been traumatized, and only within the first six weeks after an accident, not year one, two or three. That's correct.

Ms Castrilli: I'm just curious, Dr Kaplan, not having read your alpha proposal and looking at the comments by the Insurance Bureau of Canada with respect to catastrophic impairment, I wonder how you feel about the definition of "catastrophic impairment" and how it applies to the people that you see.

Dr Kaplan: We don't have the time to discuss a brain injury. I'm a neuropsychologist. We are concerned about the definition by which brain-injured people achieve "catastrophic" cutoff and we're also concerned with the catch-all category at the end of the "catastrophic" definition, how broad that would be. We generally believe that the DAC system, if it's given good guidelines, can define "catastrophic" if it's given maybe some criteria other than the specific list of injuries, but of course that might lead to a broadening, so we have to be aware of that.

The Chair: Thank you very much. We appreciate your presenting to the committee today, for your help.

MOTORCYCLISTS' COALITION ON INSURANCE

The Chair: The Motorcyclists' Coalition on Insurance is our next presenter, Allan Johnson and John Cooper. Welcome to the committee, gentlemen.

Mr John Cooper: Thanks for the opportunity to speak today.

Mr Allan Johnson: I'm Allan Johnson of the motorcyclists' coalition. This is Mr John Cooper. The coalition is a group, an ad hoc committee, representing three motorcycling organizations, as listed on the front cover of our submission: the Canadian Motorcycle Association, which is 20 clubs in Ontario; the Ontario Road Riders Association, which is 45 clubs; and the Canadian Vintage Motorcycle Group, on which Mr Cooper and I are long-serving members. They have over 1,000 members in Ontario alone. So we're the first sort of consumers, I think, that you've seen today, people whose connection to the insurance industry is that we have to buy it.

The earlier presentation you had from the motorcycle industry council indicated some of the problems which are outlined on page 1 of our submission. I will simply reiterate that seven years ago, motorcycle insurance was affordable but was difficult to get through adverse business practices, which had always existed. But through the permutations of the various systems, the substantial increase in premiums under the OMPP -- 42% in three years -- the first year of Bill 164, 1994, increases ranged from 8.7% to 27%, depending on which company you looked at, and the loss costs rose 51%. As a result, a lot of riders are riding without insurance.

Now, this is a hard figure to get, but some data from 1994 from the Ministry of Transportation said that 111,326 motorcycle and moped validation stickers were issued and submissions from the insurance industry suggest only 102,532 motorcycles and mopeds had contracts of insurance issued on them. In previous years those figures generally balanced at around 111,000, 112,000, so there's quite a difference there.

A recent study of fatal motorcycle accidents, and this is the study here, found that in 1990-91, 27.6% of the motorcycles involved in fatal accidents were uninsured. In 1992, this was 31%. In 1994, it's 32%. These are derived from actual police accident reports.

So the half a dozen basic problems on page 2 are:

Probably 25% to 30% of the motorcycles on Ontario roads are uninsured because of the cost of even basic insurance.

A minimal policy can be two to three times the value of the machine. You can get a good, running motorcycle, certifiable, for $1,000. If you're a fairly young man, even with a clean record, the Facility wants up to $2,725. That doesn't cover collision, fire, theft; that's just to get on the road.

Illegal business conduct by brokers and companies using practices such as tied selling, blacklisting and whitelisting make it difficult to even purchase insurance. This is tightened up because companies basically are losing money with the current regime.

No Ontario-based insurance company will insure a motorcycle unless the client brings other business. One Quebec-based company will write motorcycle-only insurance, subject to a large blacklist of non-insurable makes and models. That company, by the way, has total assets of only $35 million. Most large insurance companies that we're familiar with that write car insurance are firms with assets of a billion dollars or many hundreds of millions. So it's a small company owned by literally one person, and it may or may not be in the market in the future, and they're 30% of the motorcycle insurance market in this province.

A substantial percentage of Ontario motorcyclists who may have paid hundreds of thousands of dollars for accident benefits coverage are unable to claim significant benefits due to their collateral benefits coverage or their failure to meet various criteria.

Referral to the Facility Association, the insurance pool of last resort run by the companies, is used by many insurers to avoid insuring, to avoid quoting at regular rates. If you quote somebody a high rate, even if they may not deserve that rate, they go away. You don't have to worry about taking a motorcycle on your book of business.

Now to the Ministry of Finance's proposed plan: While the plan proposed by the Ministry of Finance goes some way towards reducing the upward price spiral of costs, it does not go far enough towards actually reducing the cost of basic motorcycle insurance. Significant reductions are needed in order to convince that large number of uninsured motorcyclists to purchase insurance. The proposed increases in fines for non-insurance will do little to convince riders to buy if the cost is still double or triple the fine and availability is as limited as it is today.

Our proposals for change are five basic points, page 3:

(1) Tort provisions should be expanded to allow suit for physical damage to the motorcycle and associated property in cases where the motorcyclist was not at fault in an accident. This would eliminate the direct compensation portion of mandatory insurance coverage in a motorcycle insurance policy. This is section 263 of the Insurance Act.

(2) Mandatory accident benefits coverage for death benefits and funeral benefits should be eliminated from required coverage in motorcycle insurance policies. This is proposed regulations 22 and 23.

(3) Motorcycle accident benefits coverage for repairing and replacing clothing and medical or dental devices damaged in an accident should be eliminated from required coverage, proposed regulation 30.

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(4) The loss transfer process for not-at-fault motorcycles in collisions between cars and motorcycles, as embodied in section 275 and regulation 664 of the Insurance Act, should be retained. Now, this retention appears to be intended in the proposed revisions to the Insurance Act and I was assured by one of Mr Sampson's staff that this was what was intended, but it has been a very valuable clause, first proposed by the Osborne commission, and it is an essential component of motorcycle insurance.

(5) Section 438 of the Insurance Act should be enforced by the commissioner in regard to the tied selling of motorcycle insurance, clause (j), and misclassifying motorcycles and riders, clause (k).

Now the impact of the proposed changes that we're suggesting: We did a detailed costing based on this information here from the IBC via the insurance commission, and this is actual loss cost data from 1984 through 1994. Assumptions were made that motorcycle tort costs under the proposed system would fall between the tort regime of 1989 and the limited tort system in force in 1992. It was also assumed that medical payments under the proposed system will be 75% of those under Bill 164 and that wage replacement will be 80% of that experienced under Bill 164.

Loss costs expected on the basic motorcycle insurance plan proposed by us would average $177.06 per motorcycle. Allowing a loss cost percentage of 75% of net premiums -- I think in the insurance industry it is considered that if you lose 75% of your premiums in loss cost, you are laughing, you are doing all right. When it gets up over 80% and to 85%, you're in trouble unless there are very high interest rates available for you to recover some of your money through investments. So 75% loss cost would result in a net average premium of $221.33 and a retail average premium of $248.99. Now, to compare our proposal of an average premium, the 1996 average basic premium under the current Bill 164 is expected to be between $450 and $460.

The last page is a detailed comparison of the current no-fault, the Ministry of Finance proposal and our coalition modifications, noting the deletion of certain categories and the expected premium at the end.

We invite any questions. I'd just like to make perhaps two comments as we close: One, we really do need to do something about the people who are uninsured. A lot of them are younger people. They don't realize, but they know they can't afford to be on the road. We have a care, the state has a duty in loco parentis to look after its citizens to some extent.

The second point I would make is that three years and 22 days ago, Mr Cooper and I appeared before this same committee -- and I think everybody except Mr Carrozza, the clerk, are new faces -- and I was asked by Mr Klopp, who was then a member of the House, did I not think that Bill 164, as proposed, was a better system than what we've had before. I responded that I had no clear answer except that if it is too high a price impact, the same thing might happen as happened in 1990. People were unhappy with the eventual system and voted for somebody else.

If they vote for somebody else again, we're going to be back revising the system again and there we go. It could well happen. We're just trying to get a system that we think motorcyclists can live with and can be economically affordable and will pick up the pieces better than it has in the past.

Mr Wettlaufer: Thank you, gentlemen, for your proposal. As a former insurance broker and an insurance company executive, I find your proposal interesting. I can vouch for what you say in so far as the tied selling going on in the industry. I agree with what you say there.

I have a concern with your proposal in so far as tort provisions being "expanded to allow suit for physical damage to the motorcycle and associated property." That cost would have to be passed on someplace else, and it would be passed on to the insurers of the automobiles as opposed to the motorcycles.

Do you feel there would be such benefit to the motorcycle owner that he or she could find insurance at an affordable price that it would be worth a split insurance system, allowing tort for motorcycles and allowing only no-fault with limited tort access for automobiles?

Mr Johnson: Let's put it this way. I think the current system requires motorcyclists, as it requires car owners, to buy physical damage insurance on their cars.

Mr Wettlaufer: Allows.

Mr Johnson: It requires a direct compensation.

Mr Wettlaufer: Under the direct compensation.

Mr Johnson: It's a mandatory component. And you aren't required to have house insurance. You aren't required to have insurance on something. You're required to have third-party insurance on a motor vehicle.

Why should you have to buy physical damage coverage to insure your own vehicle? Eighty per cent of motorcyclists do not buy fire, theft or collision insurance on motorcycles. For one reason, over 50% of the motorcycles on the road in this province are over 10 model years old. They're not worth that much, but we have to buy that physical damage coverage.

Mr Wettlaufer: For not-at-fault accidents. For at-fault accidents you don't have to.

Mr Johnson: Right, but it's still $2.8 million on there, and we're trying to reduce the loss cost to the point where motorcycle insurance is affordable, because the product is not affordable. If you've got some other way to make it affordable, I'd like to hear it, but I don't see it coming out of the IBC proposal this morning. All they say is it's got to go up in price, and with all due respect, asking the insurance industry to propose a cheaper form of insurance and to do the costing of it is a little bit like asking the fox to look after the hen-house.

Mr Crozier: Thank you, sir. A couple of the statistics you have given us are both interesting and in some ways shocking. You've noted approximately how many motorcycles and mopeds there are in the province and what number of those are insured. If my mathematics are correct, about 8% of the motorcycles and mopeds in the province are not insured. I'm not sure whether that's a --

Mr Johnson: That's the difference between those that have validation stickers on them and those that apparently don't have insurance. But we know there are 336,000 plated motorcycles somewhere in the province.

Mr Crozier: Oh. Okay.

Mr Johnson: And only the 111,000-odd get a sticker put on them. So there are many thousands of motorcycles out there that never get the sticker on.

Mr Crozier: So you're telling us only a third of them are insured then?

Mr Johnson: We think a large number of those are probably not functional or may have been scrapped, but there are many, many thousands of plates on the Ministry of Transportation's registry that could well be on motorcycles riding around, and all you need is a magic marker or a piece of coloured tape to get a validation sticker that looks okay from 20 yards.

Mr Crozier: Of course, we also could assume then that some of them are written off. They're in a junk yard somewhere, if that's the case.

Mr Johnson: Oh, yes.

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Mr Crozier: That's something I think we are going to have to address in the not-too-distant future, some sort of registry for vehicles that are no longer on the road but for which validation or at least vehicle identification numbers and so forth may still be hanging around.

In any event, that changes my view of the number that were in accidents who didn't have any insurance, which is upwards of 32%. I was trying to relate it to those not insured having accidents. It seems to me a high proportion of those who do not have insurance are having the accidents and that tells us something too as to why they weren't insured in the first place; maybe it doesn't.

Mr Johnson: This is very difficult because we haven't begun to discuss the motorcycles and all-terrain cycles under the Off-Road Vehicles Act, which are supposed to be plated and insured, and there may be 40,000 or 50,000 of those. I think very few insurance policies are ever written on those.

Ms Lankin: In addition to the practice of tied selling that you spoke of, you talked about extensive blacklists of unwritable makes and models of motorcycles. I wonder if you could expand and explain that to me; also, the use of the Facility Association bad driver rates as a screening tool. Could you explain to me how those things work.

Mr Johnson: It's very easy, and it happens very widely in automobiles too. A fellow walks into a broker's. The broker doesn't know him. Particularly if he wants a motorcycle, looks like a young kid and has a black T-shirt on, the broker quotes him the Facility rate and he goes away. It's really high. He doesn't have to try and convince his insurance company, and since virtually every insurance company will only write a motorcycle if you have other business -- at 55 years old, without an accident in 38 years of motorcycle riding, I could take you around to any of the big companies and walk in and say, "I'd like motorcycle insurance," and I'd be quoted a Facility rate: Co-operators, State Farm, Zurich, Pilot -- you name it.

I could get insurance at Jevco because I don't have a sporty model motorcycle, or what they consider a sporty model. The blacklist consists of machines that they happen to think might be a bad risk, and it's a fact that Jevco has the widest blacklist, which is also used, I think rather illegally, by other companies. They put motorcycles on that list that were not even available for sale in this country, so there was no experience that they were risky motorcycles or that somehow there was a basis for adversely rating them.

Ms Lankin: Why have they done that then?

Mr Johnson: It's cream skimming; you only want the good business. Mr Rogacki was here this morning; he is a cream skimmer. Progressive Casualty just takes the old men with nice touring bikes who are not a big risk; old people are not a big risk in cars or bikes. He wouldn't insure a bike under 400 cc, a small bike; he wouldn't insure anybody under 25; he wouldn't insure motorcycles for basic coverage, just full coverage -- bigger premiums. When times got tough, he ran out of the country as far as motorcycles were concerned and left 1,000 people looking for motorcycle insurance.

Ms Lankin: The list of changes you've proposed with respect to mandatory accident benefits: Is that simply to find a way to bring the cost down? You're saying those things are not essential and people can buy them extra if they want them.

Mr Johnson: If you can't afford a $500 topcoat for the winter, you can only afford a $40 parka, you've got to take something out. We've got to take these components that we feel are not needed. With only 60% of the motorcyclists killed is there a death benefit paid. If they're single, they have no spouse.

Ms Lankin: So these would be optional purchase plans.

Mr Johnson: If somebody wished to have that coverage, I suppose they --

Interjection.

Mr Johnson: I think if you're buying life insurance, you should buy life insurance; if you're buying motor vehicle insurance, you should buy motor vehicle insurance.

The Chair: Thank you for presenting to us today.

ONTARIO MASSAGE THERAPIST ASSOCIATION

The Chair: The next group is the Ontario Massage Therapist Association. Welcome to the committee.

Ms Elizabeth Leach: My name is Elizabeth Leach; I am the executive director for the Ontario Massage Therapist Association. With me today is John Sanderson; he's a registered massage therapist. He also works for a medical rehab DAC. We are here on behalf of 1,200 registered massage therapists in Ontario.

I would like to thank you for the opportunity to address the committee on this very complex and important issue. In general, the association is supportive of much of the draft legislation and recognizes the hard work that has gone into preparing this legislation.

The Ontario Massage Therapist Association, as the professional association of registered massage therapists in Ontario, provides support, professional development and networking opportunities for its 1,200 members, as well as a referral and information service to the public.

There are currently 23 self-governing health care professions in Ontario that are governed by the Regulated Health Professions Act, and 21 specific acts that articulate each profession's scope of practice. Massage therapists are regulated under the Regulated Health Professions Act, RHPA, and the Massage Therapy Act, 1991. The RHPA establishes regulatory colleges as independent bodies responsible for regulating the profession, and for developing and maintaining standards of qualification and standards of practice. Massage therapists are regulated by the College of Massage Therapists of Ontario.

The Massage Therapy Act, 1991, defines the scope of practice for massage therapists as follows:

"The practice of massage therapy is the assessment of soft tissue and joints of the body and the treatment and prevention of physical dysfunction and pain of the soft tissues and joints by manipulation to develop, maintain, rehabilitate or augment physical function, or relieve pain."

Today I'd like to address one issue and one issue only -- I'm going to keep it really short -- and that is the need to include "massage therapist" in the definition of "health practitioner." You heard earlier this afternoon the same request by occupational therapists.

The reason for this is very simple. Under the current legislation, massage therapists have been assessing and treating auto accident victims. Under regulations for the Massage Therapy Act, the client health record must include a copy of any treatment plan. If this draft legislation remains as is, a person who sustains an injury that requires massage therapy must submit a treatment plan prepared by a health practitioner to the insurer for approval.

But the insured person would only be able to ask a physician, chiropractor, dentist, optometrist, psychologist or physiotherapist for a treatment plan for massage therapy. This doesn't make sense. How can a proper assessment and treatment plan be prepared for the injured person if a massage therapist, who is not defined as a health practitioner under this draft legislation, is not permitted to submit the treatment plan?

If it were the case that very few accident victims required massage therapy, this would not be an issue. However, soft tissue injuries are very common consequences of different types of accidents, including automobile accidents. The 1994 annual report of the Institute for Work and Health states: "Soft tissue injuries are the largest category of compensable injuries in Canada. Soft tissue sprains and strains involve muscles, tendons and ligaments in the extremities or the back and represent more than half of all compensation claims which require time off work." I've included this quote in the appendix.

If you refer to appendix II, and these are statistics that I've been able to get from one insurance company with respect to OMPP, you'll see that for this one insurance company, soft tissue injuries accounted for 51% of total costs and 58% of total injuries under OMPP.

Injured persons must have access to appropriate, reasonable, timely and cost-effective rehabilitation by the regulated health care professionals who can help them best. Injured persons must have access to registered massage therapists who, by virtue of their scope of practice, are the experts in providing assessment and treatment of the soft tissues and joints of the body.

I urge this committee to include registered massage therapists in the definition of health practitioner in the auto insurance legislation and allow registered massage therapists to continue to assess and treat injured persons who sustain an injury of the soft tissues or joints of the body.

I appreciate the opportunity to share these comments with you. If you have any questions, we're happy to answer them right now.

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Mr Crozier: I thank you for your presentation. I think what you're asking it's fairly straightforward, and for me to delay you by any further explanation of it would be unnecessary. I just hope that the committee and the government takes your requests into consideration.

Ms Lankin: Perhaps I can take Mr Crozier's time then. In terms of the one issue you put forward, I think it's fairly straightforward. It's understandable. I don't know the reason the government has excluded some of the regulated health professions and included others. I guess we will hear from them at an appropriate point in time on that.

I'd actually like to ask you some questions about your experience with the DACs. We have someone for the first time here who could perhaps talk about the process that you have seen and what some of the problems are. Let me preface this by saying that in trying to understand what the government's doing here, they're looking to try to change the benefit package, the basic product provided by the insurance industry, to bring down the cost of that so that rates won't continue to go up.

If you look at and examine what is driving the rates up, and the experience in the last couple of years under Bill 164, the insurance industry tells us that the majority of that is being driven by medical rehab costs. They also say that the majority of it is a volume of claims at the lower end, not at the $75,000 cap. They say they don't think the $75,000 cap is really going to change anything in terms of the cost drivers there. It's more getting in, getting the appropriate treatment plans -- we've heard from other presenters -- ending duplication. There's a suggestion of a lot of fraud there. I think the fraud might also exist under a tort system, not just under a no-fault system.

I'm just interested in your experience at the DACs and your perceptions of the reasons why med rehab costs are escalating so quickly, and have we got the right answers or is there more we have to do to fix that problem.

Mr John Sanderson: There are a number of different reasons why we see people at the DACs. At the DAC I work at, our main premise we go in with is, "People aren't responding and let's just find out why," not looking too closely at some of the issues which surface. Those are issues such as overtreating or perhaps inappropriate treating. We find people we think are ready for discharge and we state that clearly up front.

Ms Lankin: I guess I'm asking you, why is that happening in the system? Even with this proposal, for example, for your profession to be added to the group that can write a treatment plan, where is the decision-making going to take place and who's going to have the control over what professions the individual gets referred to and what is an appropriate standard of treatment? The treatment protocols, particularly for soft-tissue injury -- I think it's going to be a long time myself before there are actual treatment protocols that are going to meet a whole lot of the situations we're going to face out there.

I worry about the whole thing we faced in OHIP under the OHIP system, the fee for service, who's the driver in the system, who's the gatekeeper. I see some of that replicating itself in the insurance-paid health care system. I'm wondering if you have any comments on what you see there and how in fact we can control that. I don't think the bill does it, but I do agree with the government that's the area that needs to be controlled.

Mr Sanderson: I see the draft legislation is trying to control that simply by excluding, at least in our case, one group of billing practitioners. From my perspective, we're limiting people in the treatment they can get, or at least limiting in that there are only a few number of gatekeepers. The way I perceive it happening, if someone has an accident, if one of the gatekeepers doesn't happen to think about massage therapy, it's not going to be included in the treatment plan. Then perhaps if and when it becomes DACed, then that's when the DAC might say, "Did you consider it?" and, "Why not?" But we can't ask those questions like, "Why not?" We can just recommend it at that point.

Ms Leach: I think part of the thing that we'll find is that if there are treatment plans, the control will be there. If you have a multidisciplinary health care team, there is self-control there. Some of it is education, suggestions from other practitioners, knowing what other practitioners are doing or second opinions. We support the idea of the treatment plan; that's very important. I think when the DAC or the insurer receives a treatment plan, if they provide these treatment plans to the different health care practitioners who are involved in the treatment, some of the duplication will be removed.

The other thing too is that you have a list of 23 health care professionals who are experts in their particular area. What you want is the patient, the person who was injured to have the appropriate care. What happens if you're hurt and you don't have access to the person who could give you that appropriate care? What do you do? You keep going back to the person who's giving you the inappropriate care. If that person doesn't recognize that what they're doing is inappropriate and is trying to do the best they can, you can't blame that person. There's no other place to send them, so they keep going back and back and back, looking for the answer.

Mr Ted Arnott (Wellington): Thank you, Ms Leach and Mr Sanderson, for your presentation today; it's been most helpful. As Ms Lankin said, your suggestion is very straightforward and we appreciate your precision. I know of no reason why massage therapists would not be included in this legislation and I'm quite certain that the government and members of this committee will give your suggestion all due consideration.

I was just wondering if you've been tracking the demand for the services that your members provide. Is it increasing? By what level is it increasing? Could you give members of the committee that kind of information?

Ms Leach: I don't think we've been tracking it specifically. The insurance companies and the employers who provide extended health care plans are telling us that they are seeing more and more use of massage therapy and they're asking us why we think that could be true. I can speculate as to what the reasons could be. I think part of it has to do with general recognition by the public of what's available and people recognizing that there's a regulated health care professional who can provide them with appropriate care. I can give you lots of other reasons, but I really would just be speculating. Do you want to add anything?

Mr Sanderson: I think as our profession matures, more and more of the other health professionals recognize the work that we can do and see results. I feel personally that the fact of being invited to be on a DAC team was a step in the right direction, and I'm given equal say when I sit around the boardroom table with the physician, the chiropractor and the physiotherapist. They all listen to my expertise -- it's different than theirs -- and we meet on a level playing field.

Ms Leach: If I could just add, we've surveyed our members and referrals to them come from physicians, psychologists and chiropractors.

Mr Ford: I'm sitting here listening to this. I've had several people go to chiropractors and massage therapists and masseuses -- body rubs. Could you explain to me how do you define between those three categories? Because you're talking about manipulating bones, rubbing and muscle relaxation, and these are three different areas. Would you explain it to me? Because I'm not too familiar with massage therapists.

Mr Sanderson: You mentioned chiropractic first of all, and their main scope of practice is to work with the joints of the body. They're well trained with soft tissues as well, but they usually defer to either physio or massage to work with that. The other two are massage therapists and, as you said, body rubbers?

Mr Ford: Yes, masseuses.

Mr Sanderson: Well "masseuse" and "masseur" used to be old accepted terms for what are now called "registered massage therapists." We, by virtue of our education and the fact that we're under one of the regulated health professions acts, have our own act, are separate from body rubbers, who are just simply people who offer a public service, with no training necessarily.

Mr Ford: Where do you get your referrals? Which medical profession usually refers to you?

Mr Sanderson: Personally, more physicians. That's my personal practice.

Mr Ford: Well, I wouldn't see a chiropractor referring to you. Do they?

Mr Sanderson: Very much.

Mr Ford: I'm not sure; I just don't know.

Mr Sanderson: I'm personally more doctors, but I have a few chiropractors who refer to me.

Ms Leach: The top three are physicians, chiropractors and psychologists who refer to registered massage therapists in Ontario.

Mr Ford: That's good. Thank you very much.

The Chair: Thank you for presenting in front of the committee today. We certainly appreciate it.

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CANADIAN BRAIN INJURY COALITION

The Chair: The next presenter is the Canadian Brain Injury Coalition, Bernard Gluckstein. Welcome.

Mr Bernard Gluckstein: Thank you for having us. First of all, I've circulated our brief, which was actually the brief that we gave to Mr Sampson when we met with him. I want to compliment Mr Sampson, first of all, on his extensive work. I've had to live through all the various committees dealing with all the changes to the motor vehicle reparation system and this is probably one of the most thorough pieces of work that you've been able to assemble in the shortest period of time. On behalf of the coalition, we would like to congratulate you on the work that you've done.

First of all, in our brief we tell you a little bit about what the Canadian Brain Injury Coalition is all about. I'm their legal counsel. It's marked on the list that I'm the director. I am not the director. I represent them here today as their legal counsel.

We are basically the umbrella organization representing all the recognized provincial brain injury organizations throughout Canada. Theoretically, I would think that we represent every brain-injured victim -- or survivor, as we call them -- and their respective families. Brain injury does not only affect the individual who's been injured but also their family, their extended family and their relatives.

Just at the outset, I wasn't here for their presentation, but I was able to get a copy of the brief of the Insurance Bureau of Canada. There's one particular item in their brief that, on behalf of the coalition, I take extreme issue with. On page 2 of their brief, under appendix D, when they deal with the definition of catastrophic impairment, they refer to head injuries. We refer to them now as brain injuries, because head injuries aren't necessarily a lesion to the brain. They say, "Head injuries which are not serious can get through to the higher levels." Any injury to the brain, in our opinion, is serious. It may not be categorized as serious by definition, but the effects of that injury can have catastrophic results.

The time that I've been allotted has limited me to not comment on the various definitions. These will be addressed, as I understand, by the Ontario Brain Injury Association as to its views on the definition using the Glasgow coma scale. I see you've increased it from eight to nine; you're getting there but not quite there yet. Again, we endorse their views on that and I think you can direct any questions to the professionals who will be addressing that. I understand that a neuropsychologist by the name of Dr Gates will be making that presentation and you can see why that definition may not be the answer as far as we're concerned. But I'm going to leave that for now.

We're concerned, as a Canadian organization, with any changes to the Ontario motor vehicle reparation system. There is no question that we are far more advanced in first-party benefits than any other jurisdiction in North America, apart from maybe Michigan. We would like to keep it that way and we realize that in order to keep it that way there have to be some compromises. So the fact that I may not address any particular issue, I hope that our constituents who may be listening to this in some form or other may not -- I don't want them to think that I'm agreeing necessarily with the changes, but I would say overall it is a tremendous compromise for all factions.

I understand that for the first time in my 34 years practising law in this field exclusively, we've had the insurance industry, the lawyers, the rehab industry, the government and some other interest groups communicating. That is a first. Whether or not we all agree on various issues, you'll hear throughout these hearings as to the various views. Far from me to comment on all of them, but I'm going to highlight just a few of the changes that we are concerned with and hopefully assist this committee in coming to some changes that may make it an even better amendment than it is.

First of all, dealing with the notice of claim, again I wasn't here when this was addressed earlier. But from the comments and the questions that were asked, it would appear that someone has brought to the committee's attention that anyone injured in a motor vehicle accident within a short period of time will understand that, in order to protect his rights, he will have to serve a notice of claim. This notice of claim and the corresponding statutory declaration will obviously be premature in any claim that will form part of the exception to the act. As a matter of fact, the courts have stayed away from the word "threshold." I see you've put it back in here, so I'm going to address it as a threshold, but it's an exception to the act.

What will happen is that the smallest little whiplash claim will then start arising, whereas, as I understand it, to keep costs down, these were literally done away with under Bill 68 and Bill 164. They will arise again, not necessarily that they will pierce the threshold, but that in order to protect any potential claim, they will have to be serving this notice of claim.

With the inherent costs involved in that, because each insurance company will have to address the issue even though they may not have before -- now, I understand the rationale behind it in order, of course, to allow the insurance company to be given adequate notice for their IBNR. However, on the other hand, are we not going too far the other way by putting this unusual demand on a person? There may be other ways of addressing it, and at a later stage, if anyone wants to sit and discuss it, we can discuss it at length. But this is a tremendous hardship on the brain-injured community especially; for instance, if somebody is in a coma. What about children, anybody disoriented? One of the criteria of a moderate brain injury is the fact of denial, that he will deny he has a brain injury. He won't go to see a lawyer necessarily until almost the two-year period, if he's lucky. Subsequently, these people will be penalized not only in prejudgement interest but in costs.

If I can go very quickly, because I want to cover this in the time allotted, I want to congratulate you on the advance payment provisions. The starving of a plaintiff out of an action is now going to be done away with. However, there still is a slight opening here for the insurance companies to stonewall in the fact that they must admit liability. You'll find that on the slightest pretence they will deny liability. Our suggestion is that an amendment be made so that if in the judge's opinion they should have admitted liability, the cost consequences flow.

Mediation before commencement of action: Again, that is in our opinion not a cost-efficient way of doing things unless it is definitely a case that's going to be over the threshold. I would suggest that the mediation come in after the claim has been issued, not before the claim has been issued. You've already got a statutory declaration, if that goes through. You've already got a notice of claim. You've got a defence. You've got an insurance examination. Why do you need a mediation before the claim is issued? At least allow the ones where you are assured that there are cost consequences in the event that it fails.

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Examinations by health practitioners: When I read this, I just saw the injured victim going from doctor to doctor, not at the instance of his lawyer but at the instance of the two insurance companies who are competing, because the third-party insurer would try to get as much paid by the first-party insurer and consequently do everything in its power to do so. The same would happen with respect to the first-party insurer. I would hate to see it fall back to the old situation where the first-party insurer denies the claim; the third-party insurer is then stuck with it. However, the poor innocent victim then has to commence proceedings against both insurance companies, with the cost consequences.

Our suggestion is that there be a coordination of the exchange of medical information and that the third-party insurer be allowed only one medical; after receiving all this medical information, if they require another one, that they bring an application, as was the case previously. It'll be chaos if they are allowed to have as many medicals as possible.

Again, you've addressed it, because you said unnecessarily repetitious medicals would not be allowed. That will lead to so much litigation as to its interpretation as to what is "unnecessarily repetitious."

With respect to anyone who has been brain injured, it's going to be very difficult for this person to get instructions. They go to various doctors, tell different stories at different times etc because they're not the best historians. This will be interpreted as malingering and, unfortunately, going from doctor to doctor, we've known historically, whether it's at the instance of his own family doctor or the lawyer or the insurance company, all tends to cause the injury to be emphasized unduly with respect to the individual, causing psychological problems. So all you're doing is compounding by allowing too many medicals. There has to be some restriction.

Again, addressing the issue of what experts should be used in any particular case, if only one medical was allowed, then the appropriate expert would be used, rather than expert-shopping. And that's what's going to happen: You're going to have expert-shopping until you finally get an opinion that's going to coincide with what you want it to be.

One thing that has been missing in all of the legislation is the fact that the providers are unable to go to mediation-arbitration on their own. Consequently, the insurance industry is able to somewhat stonewall payment of rehabilitation. The only access that they have is through the insured. The insured, especially the brain-injured, is unable to possibly give instructions in this respect. Consequently, many of them go without appropriate rehabilitation.

Somebody, I think it was the honourable Frances Lankin, was mentioning before, are we getting into a situation where we have too much rehab? With respect, prior to Bill 68, there was no rehab. The insurance company strictly stonewalled rehab completely.

I remember a situation where I had a severely brain-injured child who probably, under the new legislation, could've utilized the maximum rehabilitation available. Unfortunately, I couldn't spend the $25,000 that was available. There were no providers. So there has been a tremendous positive effect of this legislation. The thing is that we have to examine if all the providers out there are giving appropriate treatment. I think you've addressed that very well.

So that I have some time for questions, if there are any, I'll stop my comments as of now.

Mr Silipo: If I could pick up on that last point that you made, because you talk also in your summary about the need for early access to rehabilitation, and you certainly talked about it earlier in your comments. One of the concerns that I have with this legislation is that I wonder if the government isn't trying to resolve the wrong problem here. If the problem is that there is a real concern about some dubious rehabilitation services that are given or situations where in fact that may be given beyond what's necessary or if there are some issues around conflict of interest, I can't imagine that any of us would have any problems dealing with those and rectifying those problems. Certainly, as somebody who supported the previous legislation, I would be the first to say that if there are areas like that which need to be addressed as a result of our experience, let's do that.

But I guess what I worry about in this legislation is that, in addressing some of those issues, I think we're seeing potential loss of other benefits that now exist, that people now have. My fear is that at the end of the day we're going to see something that's going to cost the average person a lot more than it costs now. I just wanted to put that out and get your reaction to it.

Mr Gluckstein: I see this legislation as a very positive step. The thing is that we've learned over the last six years that rehabilitation is here to stay; it's a matter of how we control it now. The pendulum has swung too far to one side. The pendulum has been swinging back and forth between the insurance companies and the victims. Now rehabilitation has come into the equation. It's a positive thing, not a negative thing, if properly utilized. The thing is now, how do we control that?

I think this legislation has gone a long way to control it by utilizing the DAC system that's in place, by tightening up the DAC system. It may have been a little loose at the beginning as to who was awarded a DAC, but I think it's something that we've learned a lot from since June 22, 1990. You're to be complimented on the first aspect of that, passing Bill 68. However, I think that what was lacking at that stage was the adequate compensation that was necessary that's coming back in through this act.

Mr Silipo: Just to pursue that a little bit more --

The Chair: Is it a short pursuit?

Mr Silipo: Yes, it is, Mr Chair. We also heard earlier the concern by some presenters that in fact the caps that are being put in here, whether it's the $75,000 or some of the other restrictions, in fact would leave out not that many people at the other end of it. So again I would ask the question, why bring those restrictions in to such an extent if all we're leaving out are potentially few numbers of people, but people who none the less would now be left out of that additional coverage?

Mr Gluckstein: If I had a crystal ball, I think you'd probably be right in that respect, that the $75,000 cap is sort of artificial, a psychological more than an actual cap. But it's realistic. It's a lot better than a $25,000 cap. We are concerned about the $75,000 cap because, again, we feel that there are some seriously and catastrophically brain-injured victims, innocent victims, who will not get adequate treatment because of that. There are also people who are at fault who will definitely be left out. How to compromise on that, I don't know.

I certainly think that in Canada -- and I happen to be aware of all the jurisdictions in Canada and their treatment -- brain-injured victims are the best treated here, as far as the automobile reparations system is concerned. Certainly they're better treated under Bill 68, Bill 164. However, the other side of the coin is that they are losing because they were not allowed to sue for the excess economic loss and the excess wages. That is a very positive step as far as this legislation is concerned.

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Mr Sampson: Thank you very much for coming and presenting to us. Certainly the work that you and other stakeholders and ministry staff put in helped us get to where we are now. So I appreciate your comments, but I want to pass that through to the people who actually did most of the burning of the midnight oil.

There were a number of items that we had on the table, so to speak, that you don't see in the form of the draft legislation and regulations, and one of them dealt with the topic of the exchange of information, the very item that you raised just a few minutes ago. I'd be interested to hear from you how you think that might work, the exchange of information between the first-party and the third-party insurance company.

Mr Gluckstein: It could be very simply done, and this is just off the top of my head, while you've asked the question. The first-party insurer supplies to the plaintiff all the medical reports, including the medical report that the insurance company will have following the service of a notice of claim, because that's something that's missing. I forgot to mention that, if you could just make a note. There's no provision in the changes for delivery of the report to the insured after that examination. That's the examination before commencement of action.

Mr Sampson: Right, okay.

Mr Gluckstein: If that could be corrected, I'm sure nobody would complain about that.

If all the reports are supplied to the plaintiff and the plaintiff is obligated to turn those over to the third-party insurer, then he has more disclosure than he ever had before. So he can't say he hasn't had notice of what the injuries are. This insured will have been picked over by that first-party insurer every which way because they literally have unlimited examinations.

Now, you've got DACs, which you didn't have before. These are independent medicals. What happens when you get into the hands of a third-party insurer is that you get the hired guns coming in. Again, it's hard to educate every judge and jury on who the hired guns are. Fortunately, the arbitrators were getting on to them, but you don't necessarily have that at the trial of a jury action.

Ms Castrilli: Mr Gluckstein, we've had some conflicting evidence with regard to limitation periods, and I wonder if I could ask you about that, as a practitioner in the area. As you know, the proposed subsection 258.3(1) and following states that to bring a tort action you must bring it against the third party within 120 days, and moreover, under subsection 258.3(2), that if a third party receives a notice of claim, you have to give it to your insurer within seven days. We've had some discussion as to whether that's too long, long enough or too short. As a practitioner, does 120 days seem reasonable to you?

Mr Gluckstein: No, that's totally unreasonable, again because very seldom is a claim on a catastrophic injury or a serious injury -- now, remember, we're only dealing with serious injuries; they have to pierce this threshold. I would think that an astute practitioner would wait the maximum period before issuing his claim so that he doesn't have to start bringing amendments at a later stage, each with cost consequences. The claim would not be formulated before that period of time. There are so many hidden injuries that come out within the two-year period. We're not happy with the two-year prescription period, let alone a 120-day -- it's not a prescription period, it's a cost consequence and prejudgment interest consequence limitation period. You're going to be penalizing a lot of people who otherwise should not be penalized.

There doesn't seem to be a remedy because the word "shall" is in there. I find that a difficult thing for me to understand, as to why that's put in, in view of all the other protections that they have. If there's an exchange of information, the third-party insurer is going to be able to get all the benefits that the first-party insurer had. People are still living in the pre-Bill 68 mentality. That doesn't exist any more. That limitation period is not necessary any more, and it's only going to lead in the long run, if they only would look into their crystal ball, in costing them more money if the insurance industry insists on it.

Ms Castrilli: What would you say is a reasonable limit, sir?

Mr Gluckstein: I would not have any limit. It would be the two-year limitation period in exactly the way the courts interpret it: If a person is not aware that he has a claim it's two years from the time that he becomes aware he has a claim.

Ms Castrilli: So the standard rule.

Mr Gluckstein: Exactly the way it is now.

The Chair: I'd like to thank the Canadian Brain Injury Coalition for presenting to us today and for the work you've done leading up to this day.

CANADIAN ASSOCIATION OF RETIRED PERSONS

The Chair: We now have the Canadian Association of Retired Persons, Mrs Morgentaler -- Mrs Morgenthau.

Mrs Lillian Morgenthau: I'm not Dr Morgentaler.

The Chair: No, I'm sorry. Welcome back to the committee.

Mrs Morgenthau: Thank you for having me. I wonder if I could get a clean glass, gentlemen? Thank you very much. I feel very comfortable with some of these familiar faces.

The Chair: We have 20 minutes this time. If you --

Mrs Morgenthau: What did you do, cut me down again?

The Chair: Yes.

Mrs Morgenthau: And you know that's not enough time for me. That's a phone call.

The Chair: It has been a challenge. Please proceed when you're ready.

Mrs Morgenthau: Well, first of all, I want to comment on your burning the midnight oil. I presume I'm not the last one, because there are more people behind me, and that's really great of you to be here.

My name, as many of you know, is Lillian Morgenthau and I'm the president of the Canadian Association of Retired Persons. I really would like to begin by thanking you for taking the time to hear about our organization. The Canadian Association of Retired Persons, CARP, is an association representing people over the age of 50 whether they're retired or not. We provide both social and financial benefits to almost 240,000 members. We work actively with government on issues of interest and concern to Canadians over 50. Auto insurance is one of those issues.

CARP has been concerned about the continuing increase in the cost of auto insurance in Ontario, particularly that which we have experienced in the last two years since the new auto insurance system, Bill 164, was introduced. We met with Rob Sampson last September as part of his consultation process on auto insurance, and I'm glad to see, Mr Sampson, that you took some of our advice.

We believe that auto insurance should be affordable and accessible for consumers, particularly seniors, many of whom live today on fixed income and as they get older are often increasingly dependent on their cars. It is our view that the current system of auto insurance is not affordable and that major changes must be made soon to stop the rising cost of insurance premiums. We believe the changes outlined in the government's proposals are moving in the right direction.

Affordability: CARP has previously stated that the current Bill 164 system of auto insurance provides benefits which are too generous to those who have been involved in an accident. Benefits of up to $1,000 per week or up to 90% of net income is just too high. Furthermore, seniors are paying high premiums to subsidize these high benefits which seniors cannot benefit from because most of them are not employed. It's not fair for seniors to pay higher premiums so that employed people in auto accidents can obtain rich benefits. We believe that 85% of net income up to $400 outlined in the draft bill is a far more reasonable level of benefits.

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CARP has also expressed concern that the level of medical and rehabilitation benefits at $1 million for every injury is too high. Once again, seniors are paying high premiums for high benefits which could be pared back and still provide adequate coverage. We support the government's proposal of separating benefits for catastrophic and non-catastrophic injury and providing coverage of up to $1 million for medical and rehabilitation benefits for catastrophic injury, while limiting the amount to $75,000 for non-catastrophic injury with an additional top-up benefit being available for consumers to purchase additional coverage.

CARP strongly believes that the rich benefits under the current system invite fraud and abuse because accident claimants know that this money is there for them. Philosophically, CARP believes that benefits should be obtained only where they are deserved. We support this government's crackdown on auto insurance fraud and abuse. The measures in the proposal that allow insurance companies to request sworn statements from claimants that make it an offence to give false information to insurers and suspend accident benefits if there is a wilful and material misrepresentation are a step in the right direction.

Access to the courts: We also believe that one of the ways to make auto insurance more affordable for seniors and consumers in general is to allow access to the courts for auto accident injuries. It is our understanding that under the current system accident victims are not allowed to go to court for economic loss. To compensate for this, the accident benefits have been increased and now we have an expensive system which seniors and others must pay for in premiums that go up every year.

While CARP supports restoring the right to sue for significant economic loss and maintaining the right to sue for serious injuries, non-economic loss, we do not want the Ontario system to become like the American system with clogged courts and ambulance-chasing lawyers. There must be a system of checks and balances so that every case does not end up in court. Otherwise, we will end up with a costly, slow legal system. This isn't beneficial to consumers, as our experience with this type of system in the 1970s and 1980s has shown.

We believe that a sensible amount of deductible for non-economic loss and the recovery limit of 85% of net income for economic loss that are contained in the proposed legislation will provide those checks and balances. However, we do not believe that the proposed threshold of $15,000 is correct and request that it be lowered to $10,000. The reason is that when a senior sustains even a non-life-threatening injury, such as a broken leg, this might take several months to heal and several more months of rehabilitation. We also support the expansion of the right to sue for medical rehabilitation, attendant care, housekeeping and home allowances, and are supportive of the changes in the dispute resolution process at the Ontario Insurance Commission, the introduction of evaluation and arbitration and other measures to ensure that claims are settled quickly and fairly.

The removal of the $185-per-week benefit: It is CARP's understanding that the insurance industry had proposed that the $185 weekly benefit to students and seniors be eliminated under the new insurance system. While we understand the cost implications of providing this benefit and believe that consumers, including seniors, should receive those benefits they are entitled to -- that is, if you are employed you should receive the no-fault benefit payments based on your income -- we are pleased that the government has retained the $185 benefit with a six-month waiting period before obtaining this benefit. We believe this benefit will be a disincentive for seniors to proceed to court and will help to eliminate frivolous suits which tie up the courts.

In conclusion, CARP supports the government's proposed changes to the current auto insurance system. We encourage the government to move quickly to eliminate the current rich benefit payments so that seniors must not endure another year of rising premiums which enable the working population to enjoy overgenerous accident benefits. We support allowing individual policyholders the option of purchasing additional benefits to suit their individual needs. CARP supports these changes only if premiums truly become lowered. In this world of technology, we can determine immediately who causes accidents and what is the cost. Accidents caused by seniors are usually fender-benders, seniors do most of their driving in the daytime and they rarely speed. It is our contention that seniors' premiums should reflect these facts. We also believe that these proposals, which make benefits more realistic, will reduce the incentive for fraud and abuse.

Ladies and gentlemen, thank you (a) for staying, (b) for listening and (c) for being polite. So what do you want to know?

The Chair: Thank you very much, Mrs Morgenthau. We'll be going at it until 6:30 tonight, so we are doing long hours.

Mrs Morgenthau: Do you get time out for dinner?

Mr Sampson: Thank you very much; good to see you again. One of the things that we are looking at responding to, perhaps as part of the final package, is how we deal with a rating variable change that would allow the insurance companies to ask the question, "Are you retired?" in the hopes that it would help them properly assess the risks associated with underwriting the insurance plan for a retired person. Is that something you'd --

Mrs Morgenthau: Rob, that's a bad idea.

Mr Sampson: Is it?

Mrs Morgenthau: Yes, and I'll tell you why. You don't mind my calling you -- I did in private so I might as well here.

First of all, when you say "retired," lots of people are retired. Today, people are retiring at 52. They're being downsized, they're getting a window, they're getting out, they're retired. But with the economy the way it is today, most seniors and most retired people have to have two days, three days, work at night -- they have to have extra. The word "retired" is not a good word. I would say something else: "Are you a senior?" "Do you work full-time?" I would evaluate that question. But certainly, anyone who is retired, or older, is just not driving the same as a housewife who's running car pools and a million other things, skating and everything else. They should not be paying the same penalties.

Mr Sampson: Okay.

Mr Kwinter: Thank you very much for your presentation. As always, you get right to the point.

Mrs Morgenthau: The bottom line.

Mr Kwinter: I appreciate that. One of my concerns that I have with the government's plan -- and I don't think anybody will criticize the need for change to get the system right, and I'm prepared to support anything that will get the system right. One of my concerns -- and you have raised it when you say that efforts must be made to stop the rising cost of insurance premiums. Then in your conclusion you say that you support these changes only if premiums truly become lowered. I'm sure you know, if you take a look at the proposal that was put out and the evaluation by the insurance bureau, that in fact with this plan, over the next five years, insurance premiums are going to increase by at least 35%.

Mrs Morgenthau: Monte, basically speaking, if that's true, then we may as well throw it out. The idea of a new plan is so that we keep premiums within a very low level. If premiums are going to go up, then this government, which is cutting all sorts of things, may as well cut the premiums.

Ms Lankin: I'm not sure that I have anything to follow up on that, Lillian.

Mrs Morgenthau: Frances, you always have something to say, so I'm willing to listen.

Ms Lankin: I think that Monte underscored the important point that you make, that only if premiums are going to be stabilized by this could you look at supporting this kind of package, and in fact, all of the assessments say that won't happen. I think we need to go back to the drawing board and take a look at what the problem is.

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You talked about the very high benefits under Bill 164, and yet the experience out there is that people who were receiving benefits weren't receiving them to the maximums that were in that. The problem in fact is the volume of growth in medical rehab. You know yourself, in terms of long-term care, dealing with the seniors population, we've learned a lot more about the value of rehab, of attendant care, of support in the home. I think that there are some issues about gatekeepers, who's making the decisions around the treatment plans, and I think there are some issues to recognize legitimate growth as we understand more about rehab and how important that is in saving costs to other places in the system, to the taxpayer. But yes, it is getting picked up in the insurance system. So I'm just not sure we've got the right prescription here for the problem.

Mrs Morgenthau: It may not be the right prescription, but when it's rehab, you don't go running to rehab unless you need it. When you go to rehab, first you have to get there, then you have to wait for your girl; I mean, it's a real hassle. So no one in their right mind would go to rehab. If you need it, it should be paid for. We're not discussing the payment of a legitimate claim for rehab or long-term care or home care. We're not discussing that; what we're discussing is that that should be taken care of but that the premiums -- you're not going to have that sort of thing happening all the time. That's why you pay these premiums, so that when it happens, God forbid, you are going to be taken care of.

Ms Lankin: That's the point: You want to be taken care of.

Mrs Morgenthau: I'm sure that the government feels exactly that way. Some of them are not 20 years old.

The Chair: We won't direct that comment to anyone in specific. Thank you very much, Lillian, and I appreciate CARP's presentation today.

Mrs Morgenthau: You're very welcome and thank you again. I hope you do get dinner; McDonald's is around the corner.

The Chair: There's no question about that one.

CO-OP AUTO GLASS ASSOCIATION

The Chair: We'd like to move now to the Co-Op Auto Glass Association, Mr Pinto. Welcome.

Mr Nick Pinto: Mr Chairman, honourable members, good evening. My name is Nick Pinto and with me I have Mr Fred Collucci and Mr Roy Gomes, who is the president of our association. They're here to assist me with any questions that you may have at the end of our presentation.

We're here not only on behalf of the Co-Op Auto Glass Association, but we will be speaking for many of the independent auto glass companies operating throughout Ontario. Recently, we sent out a survey to nearly 600 independent shops and, with almost half of them returned, we can safely say that we are speaking for most of the industry.

We come before you because we feel that this our best, if not our only, chance to bring to the attention of the provincial government of Ontario and to the attention of the motorists of this province what we deem to be unfair and discriminatory practices by most insurance companies.

We, as representatives of our industry, are glad to see that a section of this bill before us, section 447, deals with fraudulent claims, and that is of concern to us more than it may be to the insurance industry. Fraud sheds a negative light on all of us, but not only that, it has made all independents victims of a knee-jerk reaction by some insurance companies.

We feel that this committee should consider adding to this bill a new section or subsection to further protect the insurance companies against fraudulent claims, but it also must prevent them from discriminating against the businesses operating in this province. We feel that this government, with the support of both the opposition parties, must make it illegal for insurance companies to direct business to preferred shops. This is an unfair practice that is putting many of us on the verge of bankruptcy and has already been the cause of many layoffs.

It should also be illegal for insurance companies to participate in what, in essence, is a predatory pricing policy, a policy designed to eliminate the independent component in our industry to the benefit of a few groups, which by the way are based outside Ontario and, in a few cases, are controlled by foreign interests.

If this bill is truly intended to protect both the insurance companies as well as the consumers, provisions must be made to ensure that it does happen. Insurance companies must be regulated in how they set deductibles, and a clear and uniform policy must be implemented to regulate when and how those deductibles are raised. Also, deductibles must be maintained at an affordable level if we do not want to see an increase of unsafe vehicles on our roads. Deductibles must be made payable to the insurance companies directly, and waiving of deductibles should be made illegal, along with any other incentives, to ensure that only actual claims are processed.

The reason we insist that deductibles be maintained at a reasonable level is that if there is an uncontrolled increase, many people will not be able to afford to replace what of late has become a very important component of their vehicle's structure. In fact, both the windshield and the back glass on most vehicles are consequential to the vehicle's structural integrity. To better explain this point, we have submitted for the benefit of the honourable members a video cassette of an episode of Market Place which was aired last October on CBC.

We're not sure if this is the right forum, but what we intend to propose would certainly give both the insurance companies as well as the consumers a great deal of peace of mind. In the not-so-distant future, we intend to see our shops and our technicians certified by the provincial government in order to eliminate what we deem to be unqualified and unscrupulous installers. At present, we are working with the Ontario Training and Adjustment Board to set up a training program, but such a program, to be worth the paper it's printed on, must be recognized by the proper provincial authorities. Then, and only then, insurance companies may recommend that certified shops be used.

In the meantime, if insurance companies want to proceed with inspections before or after the installations take place, we have no problem, on the condition that such inspections are carried on by a third party and not be limited only to independent shops, which is what's happening these days. If the insurance companies truly want to save money, they could operate drive-in centres where the policyholder would receive an inspection sheet, pay the deductible and then go on to wherever he or she may choose. However, these centres must be operated by the insurance companies and they may not suggest or recommend any particular shop or chain.

The insurance companies, if they intend to remain in the automotive insurance business, must get their priorities straight. Their concern must be first and foremost that the work is done according to specifications.

On the pricing issue, if I may touch on that briefly, our industry throughout North America relies on National Auto Glass Specifications. We have supplied the members with a copy of one of the pages of these calculators. Yearly, they print a complete list of all domestic and foreign auto glass parts. With those lists, we also get the prices for the parts, the accessories, the materials and the time needed for the proper installation. That, and only that, should be used in determining the costs.

Insurance companies, with the support of the chains, have nearly put us out of business but certainly have not passed on to the consumers the savings they obtained when windshields went from a 20% discount off the list price to 40% or more. Instead, we have seen double-digit increases in premiums, higher deductibles and more motorists driving around with Scotch tape -- and this is for real; we're not kidding you -- holding together their windshields.

Mr Chairman, honourable members, we appeal to you, our elected officials, to your sense of justice and to your sense of fairness, to please put a stop to these discriminating and unfair practices. We ask that you send out a message that Ontario not only is open for business but is also a place for fair business to take place.

I hope I have respected the 10-minute time frame that we were allowed, and if you wish, we're ready to answer any questions.

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Mr Crozier: Thank you for your presentation. Just a quick question and then I want to lead on to something else.

Item number 2 on the first page that you presented us with: "Prohibit auto glass repair companies from the practice of waiving deductibles." It was my impression the only time deductibles were waived was if it was a repair to a windshield as opposed to replacement and that was waived by the insurance company. Does it go further than that?

Mr Pinto: No, it goes further than that, sir. Unfortunately, it has become a practice, not only in the auto glass industry but basically in the entire automotive industry, to find ways of bringing business in because of the fact that insurance companies are directing traffic in certain directions. So the only way that a lot of these shops have had to attract that business back has been to take an additional loss and waive part of the deductible or the entire amount, depending on what the amount is, just to bring the customers back in.

Mr Crozier: We're certainly concerned in this instance with small business and your ability to have at least a fair marketplace, although we have to weigh that I suppose with the insurance companies' attempt to at least control costs to some extent. You're suggesting here that if you have to go to an insurance company's appraiser or inspector, and that if one of their preferred repairers or replacers is one of these companies that doesn't provide quality service but just a low-ball price, then your concern is that when they go to one of their own choice, the bill has to be no higher or you pay the difference so that they're not getting the quality that they're paying for.

Mr Pinto: We're not here to smear anybody. We're not here to suggest that the chains do lousy work and that we're better than anybody else. We're simply here to ask that we be given a fair chance to have a piece of the market. We don't want to be discriminated. Right now, what's happening, ladies and gentlemen, is that the insurance companies first send letters to us telling us that if we are to do any repair work for them, we have to get in the customer's vehicle, drive over to one of their preferred shops and have them give us a glass breakage form. Basically, they're telling us we're crooks. If we tell our customers that, the customers are going to assume that we're crooks. We want to put a stop to this. Some of us have been around much longer than the chains have been around, we've never had any problems ourselves with the insurance companies, but because there has been a problem somewhere along the line, now we're being made the scapegoat.

I mean, if you were to come to my place and you happened to be insured with Royal, what sense does it make that I have to get in your car, drive over to Crystal or Standard Auto Glass and get a piece of paper just so that I can get paid? If you're in my shop and I call the claims department and you're right there and you confirm with them that you do have a damaged windshield, why should we go through that process? They're basically saying that you're a crook just as much as I am.

Mr Crozier: It would only make sense that I don't want to put in a claim when it's not necessary, because it's going to affect my insurance rate.

Mr Pinto: Correct.

Mr Silipo: What you're suggesting to deal with that, just to follow up on that, is in effect that what would have to be done is, as you state in your first point, to prohibit insurance companies from having the preferred shops so that basically anybody could go to any reputable shop that they would want to and have that claim then determined on the basis of your saying this is what needs to be done.

Mr Pinto: I just want to point out one thing: We as an association are also moving in a different direction. We understand where the insurance companies are coming from. We're not saying that they don't have a point altogether and that they're falling off a tree. But we are moving in the direction where we're trying to have all our members bonded. We have a code of ethics which I think we included in the package that was submitted. We're trying to prove to the insurance companies that we are willing to work with them, but when we approach insurance companies, and this time I'll have to mention again Royal Insurance, they tell us that they have a list of suppliers, that's it, that's all, too bad and so on. I don't think we can survive. If this starts to spread out, pretty soon we're all going to be out of business. This is what we would like to see in this bill: Give us a chance to do our job.

Mr Silipo: I think one of your colleagues wanted to add something.

Mr Roy Gomes: I would like to address the question you've asked, Mr Silipo. If we look at the so-called preferred shops from every insurance company's point of view, there are four of them that show up in every single case. None of them have their headquarters here in Ontario. We independents are not included in that list. We just saw over the weekend what happened to the funeral homes when the competition was not there. If the competition's not there, the prices go through the roof.

This is a predatory business that's going on right now and I think the owner of the policy is not really the insurance company but the insured and the insured should have the right to choose where he or she takes a vehicle for a repair.

Mrs Marland: I'm really pleased that you're here today and that you are stating this case because on behalf of three small guys in my riding, for the last six years I've been trying to get to the bottom of this. I wasn't aware of it until the first shop told me about it, and I said, "Well, there's no problem in resolving that." Then I found that there's some relationship with the federal government in here too, isn't there?

Mr Pinto: They tell us that there is some sort of tie with the federal government, but it seems that every time we turn around, like when we approach the feds, we're told it's a provincial matter; when we approach the provincial government, we're told it's the federal government. That's why we said that we felt this was probably the best chance for us to express our concerns, and hopefully this committee will be able to help us in some way in somehow straightening out the situation.

Mrs Marland: I think it's great that you're here because it's absolutely nuts that you get pushed back and forth between the two levels of government.

From somebody who pays an insurance premium, I also should have the choice of supporting my local businesses, and that applies to all of us all across the province. We would want to have that choice. In a small community it may be that the local business is one of the large chains, whatever, but the fact is that those four large chains actually end up with almost a monopoly because they agree on the price, they tell the insurance companies that this is the price and the little guy can't compete, but it's not reflected in our insurance rates. It's been a big little bugaboo that I've been trying to cope with for a while.

I know our government is very sympathetic to small business in this province and I'm sure that if there's something we can now do to help ensure equity of opportunity for anyone in business and equity of choice, Mr Parliamentary Assistant, for the person who purchases the coverage as to where that work is done, we certainly will hope to get it resolved for you.

Mr Gomes: I'd like to thank you for your comments because that's very promising to us, seeing that you are on that side of the table for a change.

Ms Lankin: Yes, Margaret, you've got the opportunity and the power.

Mr Gomes: Thanks. Good. I would just like to add that these price lists are also compiled by these four companies or by three companies together with the manufacturers of course and that we haven't got any say in the price list of which you have a sample on the front page of the NAGS, what's called the NAGS calculator. Not only that, we are told how much we are going to be paid for the job. So the prices is established by the marketplace, established by the price list, established by the insurance companies. Even so, we are discriminated against as an independent business in Ontario to the chains that are operating from outside this province. I think that should be brought home to all of us.

Mrs Marland: What you're saying is that if you're given the opportunity, you're willing to meet the same price.

Mr Gomes: We're doing it right now.

Mrs Marland: The price isn't the problem. You want the equal access opportunity.

Mr Gomes: Yes.

The Chair: I'd like to thank the Co-Op Auto Glass Association for presenting to us today.

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NANCY COLDHAM

The Chair: Our next presenter is Nancy Coldham, if you'd like to come forward, Ms Coldham. If it's more convenient for you to stand, you may do so.

Ms Nancy Coldham: Actually I'll have to stand and sit. My tolerance isn't good on either.

The Chair: I have had a back operation myself, so I understand your dilemma.

Ms Coldham: I know time is of the essence. As you stated, my name is Nancy Coldham. I'm here today because I thought it would be useful to this committee to hear the victim's perspective on what really happens after a motor vehicle accident. I would also like to use this opportunity to make some recommendations as to how this legislation could be improved based on my experience as an MVA victim.

I'm a small business owner and I'm self-employed. I'm a founding partner in a Toronto-based consulting firm that this year celebrates its 15th year in business. It was June 21, 1995, the longest day of the year. It became the longest day of my life. At 1:55 pm, as a passenger in a car that was proceeding through a four-stop intersection, I was rammed by a Jimmy 4_4 that had failed to stop at that intersection. The impact of that hit still reverberates throughout my body today.

Mine were soft-tissue injuries. What a relief, I thought. The rescue workers kept telling me I was a spinal and I assured them I couldn't be because I had to walk because I love to dance. We all joked with each other because we were all scared. I've learned I would have been far better off if I had just broken something.

I also learned that as frightening as a motor vehicle accident can be, the real ordeal was only to begin because I would have to organize contact with and insurance coverage for treatment and disability through three insurance companies.

I didn't know that despite the fact I wasn't driving at the time, and my car was not involved in the accident, it was my automobile insurance company, and not the company of the person who hit us or the company of the driver of whom I was a passenger, that would have to foot the bill. It took a lot of time, almost two months and a lot of fruitless dealings with filing reports to other insurance companies before we figured this out.

I had to deal, as I said, with three separate insurance companies and insurance plans: my automobile insurance company, my company group benefits insurer and my disability insurer. Each of the three insurance companies had different standards, different fee schedules for treatment coverage, different reporting requirements, and one insurance company does not rely on the assessments done by the others.

I got jostled back and forth between companies as they claimed it would be the other insurer who was responsible for coverage of this or that. The onus, you see, is on the MVA victim to sort things out and to get what is due under the MVA coverage, the coverage you have paid for, the coverage you have contracted for in good faith.

Yes, welcome indeed to the MVA system. With one accident you go from being a valued insurance company client to a potential criminal. You are their enemy. You are a potential fraudulent claim. That charming insurance agent is replaced by a claims investigator who is openly aggressive and hostile. He badgers you during an almost three-hour meeting. On and on it goes. Lengthy interviews and he expects you to sign the results of that conversation.

"Do I need a lawyer, someone to review this statement?" I ask. "No, no," he tells me, "it's not a legal document, just a summary of our conversation and the accident as you recall it." By this time, I'm in agony because my sitting tolerance is about five minutes at the time, now expanded to about 20. "You can make changes or corrections at any time and we'll send it to you later." Unfortunately, later on this report becomes the Bible.

I began physiotherapy sessions within days of the accident, thank God, at the suggestion of my doctor. The insurance company did not cover those expenses until almost five months later. You can't ask a clinic owner to survive on goodwill and the hope for payment. I covered the first few months out of my own pocket with the verbal commitment by the insurance company to the clinic owner that services would be covered based on their own fee schedule.

The MVA system I experienced is full of waste, full of duplication and full of unnecessary costs. There's multipayor confusion, different forms, different requirements, different fee schedules, different physical assessments. In seven months, I had been seen by family physicians five or six times, I'd had three independent assessments, reports and more reports. The physiotherapy team also submits monthly reports, all checking my status and my progress -- thank God the progress -- in great detail.

The insurance companies say soft-tissue injuries should be healed in three to six months. Rehabilitation professionals say soft-tissue injuries of the extreme nature I sustained take 12 to 18 months. The truth is, and I've been told by doctors assessing me, that the medical profession does not really know or understand soft-tissue injury.

The doctors rely on CAT scans, MRIs, X-rays and other diagnostic tools of minimal use in assessing soft-tissue injury. In fact, the doctors kept turning to the rehab team for assessment and guidance on my injuries. But not the insurance companies. They rely only on doctors. That in itself adds significantly to the cost of the MVA program.

The doctors have offered me drugs, painkillers, muscle relaxers, anti-inflammatories, but my rehab team, led by a physiotherapist who specializes in sports and orthopaedic medicine and injuries, includes a massage therapist and an acupuncturist. That team has been the only source of effective treatment. It's a drug-free program, except for headache remedies I have to succumb to from time to time, and I am an active participant in my wellness. My progress has been real and measurable, but the insurance company wants to know, "Is it fast enough?" The real question isn't speed, it's efficiency.

It's my understanding that most injuries of the tier I level, up to $75,000, are soft-tissue injuries, yet the MVA system is totally unprepared and totally unable to effectively deal with soft-tissue injury.

So ignorance breeds fear and mistrust. Money and time are wasted on medical assessments, none of which provide the tools of assessment diagnosis required for my type of injury. In the 1990s, why not turn soft-tissue injury assessment and treatment over to the other primary care providers, health care professionals such as physiotherapists who are trained, experienced and understand the nature, source and best treatment course for soft-tissue damage? I believe the cost savings would be immediate.

But is cost the rationale for yet another change in MVA legislation? The insurance company lobby efforts are significant. Insurance executives are quoted regularly in the newspapers saying that MVA fraud is now parallel to welfare fraud. God help us all. If that's true, it is shocking. It is shocking to think that this multibillion-dollar industry is so inept that it cannot better administer a process it almost totally controls.

Ask any credit manager. Good credit risk assessment begins before you sign up that customer. Insurance companies often sign up automobile insurance customers using a 24-hour phone operator system or through a network of independent agents. They often never see or even meet their customer. The transaction is based solely on the payor's ability to pay premiums in keeping with their driving record. It isn't until the insurer becomes a payor that character becomes an issue.

Having been through the system and having been subjected to these countless assessments, report-filing and form-filling, I don't know how victims become fraudulent claimants. I do know that the insurance companies are keeping many doctors and other health care professionals busy and the fees are much better than the OHIP schedule.

Let's have some common sense prevail. Is the government saving MVA victims from a costly system or protecting the interests of insurance companies? There is no legitimate role, in my opinion, for government to play by intervening in the relationship between insured and insurer. What government could do and how this legislation could provide benefits is to consider:

(1) One insurance payor for MVA victims to rid the system of this multipayor confusion and to rid the system of different forms, duplicate assessment and mismanagement of claims.

(2) Require insurance companies to provide all automobile insured parties with a step-by-step directory of what to do in case of an accident when they sign up for insurance coverage, not after the accident has occurred. Include a 1-800 phone number for information and perhaps a fax number for prompt claim filing.

(3) Insurance companies should work closely with emergency workers and hospital emergency departments on correct procedure guidelines. Photograph injuries and the car. Give victim an MVA journal and have hospital provide names of practitioners treating victims, nature of injuries and the tests conducted.

(4) The general practitioner should be the pivot point for further diagnostic requirements and treatment monitoring. But doctors paid for by the OIC or the insurance companies directly should not be the sole gatekeepers to acceptable treatment. Primary care, qualified health care practitioners should have a prominent role, particularly in soft-tissue injury victims.

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The other point is that practitioners at the DACs must be independent and objective. I was shocked to be told by the examining physician at my DAC assessment last week that he worked for the insurance company. This doesn't instill much confidence in the integrity of the assessment.

Now, I can't leave here tonight without commenting on the serious flaws to this proposed legislation in terms of dealing with loss of income for the self-employed or small business owners. Despite the fact that small business and therefore self-employed entrepreneurs are the way of the future and definitely part of the 1990s, the tax system has not caught up with us. A lot of new firms, emerging businesses, are knowledge-based and the value of the assets are the people behind them. We, the self-employed and the entrepreneurial small business owner, don't fit into nice income loss formulas.

Statistics also show that the greatest proportion of small business is now female owned and managed. Women have an additional problem, I learned through my own MVA experience. The insurance executive stated: "Are you really a working partner in that firm? Does your absence really represent a significant business revenue loss?" Despite the fact that it's unthinkable any insurance executive would say such things, even if he thought them, he sure as hell didn't question my status when he took my hefty premiums.

Using federal tax guidelines to determine self-employed income status is also problematic. The system is antiquated, badly flawed and could change with any federal budget process. Let me give you one example of a small business owner who forgos personal revenue to build up cash equity in the company. How do current tax laws or this legislation help anyone calculate such a person's lost income potential?

In closing, I urge you to consider the victim's perspective. The MVA is double jeopardy, from where I sit. You survive the crash, but can you survive the MVA process?

Mr Silipo: Thank you for your presentation, first of all, and for giving us I think an important perspective of somebody who's been through this process as a victim of an accident. Can you just perhaps go a little bit further on your last point in terms of how all this relates to self-employed individuals and small business operators and give us a sense of what you think should be done? How would you go about assessing the income or the loss, if not by the use of such things as federal tax guidelines?

Ms Coldham: One of the things that might be useful is just a basic forensic accounting procedure. I know when we were setting up the disability programs for the key partners in the firm, the insurance companies came in and they did what they called a forensic procedure, analysed what each one of us brought into the company in terms of business, equity injections, new business development, that type of thing. Then they assigned a value, a minimum amount to a maximum amount that would be suitable should one of us leave or be forced to leave from an accident. It represented a portion of -- I mean, it wasn't everything that we would lose, but I thought that was a suitable process.

However, now, with the gap from that and the MVA, the company that provides my MVA insurance won't meet the difference. To do so, they said they would have to go in and look at billings and all this stuff for four years. I said to them, "That process has already been completed." They won't accept a forensic accounting procedure by the other company that set the disability. So again, you're caught, and I think that's unnecessary.

Mr Silipo: What criteria were used to determine the premiums you should pay? Was it something similar to that process?

Ms Coldham: For my disability premiums, for two partners in the firm, we pay over $14,000 a year. I think to take out of it $4,000 a month when you've been hit, after paying, I figure, about $140,000 in premiums -- since I've never been hurt, I think questioning $35 for a physio treatment's a bit outrageous.

Mr Sampson: Thank you very much for your presentation. One of the items we indeed struggled with was how to deal properly with the income of the small business owner. We may not have gotten it right, but we tried to take a stab at it in the proposed regulation by saying it seemed to us more appropriate that the small business owner and the insurance company determine the appropriate income loss in the event of an accident before the accident and not after. There's a provision written into the draft regulations that says basically that: that you and the insurance company will sit down and try to determine what the income loss would be in the event of an accident, again prior to the accident as opposed to after, because after it becomes confrontational. Prior it's the basis upon which you're paying premiums.

Ms Coldham: The problem is, though, particularly now, and you're seeing it more in the 1990s -- I see it even with clients -- there isn't a book value for what's up here. There isn't a book value for your ability to be a problem-solver and to fit a need that someone else in the firm can't do, because although people come to your company for service, they're actually contracting for your intellectual capital. It's very difficult to put a price on that, but that too will have to be part of the formula worked out in advance.

Mr Sampson: But you do that when you buy disability insurance. In fact, I think I just heard you -- what? -- you go through this process with your disability insurer to determine what would happen to the business if you weren't there to be able to go to work on a regular basis.

I guess what we're saying is that what people do for disability insurance in general they should do for the income component of auto insurance. It would seem to be consistent. In fact, one might use the same type of information and the same database that's collected by the disability insurer for the auto insurer, because essentially what you're trying to do is insure the same risk.

Ms Coldham: I'd agree.

Mr Crozier: I think we need to hear from those who have had actual experience with the system, and I can tell by your discomfort that you're rather courageous to come up to this big place and come in here and address us and we appreciate that very much.

I think we should also use these committee hearings to point out sometimes some of the faults in the system that go beyond the actual legislation. I was interested that you should comment and say that we should require insurance companies to provide all automobile insured parties with a step-by-step directory. I suggest, and you may want to comment on this, that there are probably a number of things you found out after the fact that you had no idea of with respect to your automobile insurance coverage, or lack of it. Is there any particular area there that you'd like to tell us about?

Ms Coldham: I think a lot of the problem revolves around this multipayor function, that one assessment or one determination for what you're worth doesn't apply. I didn't realize I'd have to deal with the three companies. I thought the MVA kicked in and dealt with the whole realm of things.

For example, when the forms first arrived from the automobile insurance people, they mentioned a whole range of areas which they now tell me they have no intention of ever dealing with, because I'm very frustrated and active, wanting to get back to the company. The doctor and the physios and the whole team have recommended a number of aids that would help.

For example, I have developed a tremor in my right hand that I can't do anything about, and my left hand can't keep the phone in my ear. Since I do a lot of work on the phone, they were recommending a headset that could actually snap on that I could walk anywhere, because I can't sit for too long, a special chair, a wedge for my feet. Anyway, the whole thing wasn't very expensive, but they said, "No way." So I've begun to source and I'm going to have to pay for it myself. But if you look at the form, they say that's not true. So they're pushing you one way but not helping you get there in the other.

I didn't realize. I thought, as a valued customer, someone who, through no fault of their own, would get into a situation like this, they would work with you. But as I said earlier, the biggest shock has been this division, that the moment you're hit and the moment you need that service you've contracted for in good faith, the hostility comes from out of the blue. That's very hard to deal with. I think the biggest challenge has been the ongoing victimization by the insurance companies towards me. They just continue to make me a victim of the system.

Mr Crozier: So a lesson in pubic relations would help as well.

Ms Coldham: Big time. Also, I was glad I took pictures and kept a journal, because my lawyer hadn't told me that. A lot of people don't do that and then you get into a situation after the fact, "How big was that bruise?"

Mr Crozier: Thanks for your deputation today.

The Chair: Ms Coldham, thank you very much for appearing in front of the committee today.

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JIM METZLER
GLENDA METZLER

The Chair: Our next deputee is Jim Metzler.

Mr Jim Metzler: And also my wife, please. We're the second in a row. Good afternoon, or evening now, I guess. I'm Jim Metzler. This is my wife, Glenda, and we only represent ourselves.

Approximately five years and three months ago, we were involved in a head-on collision on Highway 69, which I'm sure none of you have ever heard of as being anything less than death run. Again, we ran through a similar situation where we were sort of fortunate because Glen was taken down to St Mike's. She spent four months in the hospital, and during that four months --

Mrs Glenda Metzler: I was in a coma too.

Mr Metzler: You were in a coma for 10 days. As a result, when we were looking over this legislation, I'll explain what happened. I couldn't find her definition in here, unless it came under (f), because "any other impairment or combination of impairments similar in severity to the impairments described in clauses (a) to (e)."

Mrs Metzler: I'm one of the 2%.

Mr Metzler: You're one of the 2%, right. She had a crushed ankle, a leg that was broken in about four spots, her pelvis was broken in five spots, she had brain damage and was left with cranial nerves 3 and 6 that were impaired. As a result, she had otosis, which of course had to be repaired.

Within the structure of this catastrophic -- I couldn't see it when I read the legislation. Where does she actually fit in? Under the no-fault, or Bill 68 of 1990 -- the accident, by the way, was November 24, 1990, and therefore we crossed the threshold.

I guess I'm a little worried about the lack of definition here. I would like to see something along the lines of "any other permanent and/or severe impairment," as opposed to this comparable to all the above, because there are people like Glen -- and there's quite a few people like Glen. You meet them when you're hanging around therapy and rehabilitation centres over five years.

Therefore, I honestly think you need to address that, because as soon as you don't address something like that, the comments that were made about two minutes ago kick into place. The insurance company will grab a word, and they not only extrapolate, they pontificate, and they speak ex cathedra. Immediately, their word is law. They carry a very big stick, and they will drive you to the wall and they will frustrate people. What they really do, as was well pointed out, is they victimize the victims. They are totally unscrupulous in their approach, and their bottom line is cost-efficiency. If I hear that term once more, I think I'll scream.

What happened to the human beings in this whole scenario? Where are they? They don't seem to even be part of the legislation. They're reduced to examples, and they're very real people, as has been pointed out, with psychological, emotional and all sorts of other traumatized states existing as a result of these accidents.

The next thing is, we were lucky in that we went -- and St Mike's has closed this down, which is unfortunate -- but we went from intensive care upstairs to the neuro wing and then downstairs to a rehabilitation centre, which has subsequently been closed out. Now, that was very fortunate because there was an in-house team of at least five, six, seven people who were constantly, every day, looking after Glenda and all her needs and trying to set the rehabilitation and the plan into play. I was there too and we would have these meetings and so on, and it worked out very well from that point of view.

Unfortunately, as you said earlier, and I agree with you, you don't know until you're there. I don't think anybody in this room has probably read their insurance policy except to swear at the bottom line saying, "Oh, raised again, eh?" Half of us don't know what we're covered for until we lose it, and then we find out we're not. The unfortunate part is, it's a lot more serious when you have people physically damaged and permanently impaired.

The next thing that bothered me was the treatment plan. I'm all for plans. We were in teaching for 30 years together and had plans: daily plans, long-range plans, every kind of plan you could imagine. But you can't give the insurance companies any leeway. You can't put down "estimate the duration of disability." You've just crucified them. Also, the duration of services: Again, they'll fall on that and they'll fall on it like a ton of bricks and they'll hold you to it. If anybody blinks the wrong way, they'll be on you. But as the lady beforehand said, they'll fight you over a $35 service. Okay?

The next thing is, the $75,000 for rehabilitation? Again, I'd like to introduce you to 2%, because this is where it comes into play.

Mrs Metzler: We've already gone to $135,000.

Mr Metzler: We've gone to $152,000 over five years and three months. Again, Bill 68, I believe, was set up; there was half a million dollars for rehab and there was half a million dollars for caregiving services, and within the structure of the rehab were also the expenses and so on and so forth. Well, the expenses and everything over five years -- and Glenda goes four days a week to therapy -- have been $152,000 approximately.

So if you cut a person off at five years or at $75,000, what are they going to do after that point? Go broke more? They're already impaired. What are they supposed to do with themselves? Problem. I think that ceiling is artificial; not with everyone, but in this type of situation, it's a major, major concern. That half a million dollars will never be used up because there's a 10-year basis, and if you take the five years and three months and you've got $152,000, well, max it's going to be $300,000. Right?

That's, by the way, being very frugal, because part of the problem within the cost structure is the fact that if you are fortunate enough -- I mean, when we first got out of the hospital, we were handed two names: cognitive therapist, physiotherapist. Thank you very much. I've got this person, you know, with a cast up to her knee and we're walking out the door and I'm saying, "Oh, thanks for the numbers; what do I do now?" "Well, you go see these people." So within a week and a half, I'm into these places and she's getting rehabilitation on both counts. Great stuff.

After you graduate from that, you graduate from $75 for a 40-minute session or a 45-minute session to approximately $45 to $27 to -- what do you pay for the other one with Terry?

Mrs Metzler: Thirty-five, I think.

Mr Metzler: -- to $35 for these types of services. I'm all for rehabilitation, but maybe there has to be a cap or something put on their fee structure. Who knows? Just a point. Nothing more than that, except we have tried to be very, very frugal for five years and it's come down to that particular thing.

The one thing I don't understand, I see the $75,000, but they don't intend to cut it off after two years for the caregiving services, do they? It's 10 years still, isn't it? Sorry, Mr Sampson? It's still 10 years?

Mr Sampson: Yes.

Mr Metzler: Okay. As far as the declaration, we had two years. Most people don't come round. The brain, from what I understood -- you know, it's like Saturn; we got some great pictures, but nobody's landed. Even the neurosurgeons and all these people, they can only guess.

Mrs Metzler: I also had traumas in my arm that came up about a year later.

Mr Metzler: The frustration that the previous lady had, we've had it a different way. Our insurance company is very good in a lot of ways. The branch offices, they pay the mileage, they pay for the therapy, they don't argue about that, but do not get into a big-ticket item. Glenda's right leg is three quarters of an inch shorter than it was before and she has double vision permanently, so it's very difficult to walk, and especially to exercise, given the winter conditions too. Everything was fine until I said, "We need a walker in the basement because she's atrophying." It's just that simple. I can't keep her moving fast enough and I can't get her out all the time. Eighteen months later, the money came down -- 18 months.

The orthopaedic damage as a result of accidents of the severity that the previous lady had and that Glenda had leaves you with a lot of residual orthopaedic pain, so for two and a half years we attempted to get a massage therapy tub in the house so that Glenda could access it because again, and a very relevant point, you don't want to become a junkie. It's very easy to get in the pain killers and so on and so forth. You try to do it through therapy and keep as holistic as possible.

That's two and a half years, and we went to mediation. We got right to the door of mediation and that's exactly how you have to deal.

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Now what happens to an individual if they aren't protected? And case workers don't protect them. What happens if an individual doesn't have some gorilla like me sitting around that will fight for her? You know what I'm saying? I've met lots of them. They don't even know where they are. Or they're in such extreme pain. I've met people where they've had cheques, they say, "Read this for me, will you?" I said: "Sure. Cash that cheque. You've got $2,000 for your car. No more therapy. You just sign over your rights." "Really?" "That's what it says, ma'am. But I'm not a lawyer. See a lawyer." That's the type of stuff that goes on day in and day out, and they are pushy.

I don't know if that makes any sense. Glenda, take over and go for it.

Mrs Metzler: I'd like to propose -- I think this has been dealt with before in that the man from Columbia rehab centre said this as well -- that the practitioners should be very well qualified. They should also have certain standards to meet. Don't let just anybody into this rehab profession. There should also be continuing education for those who are involved with victims.

As far as the DAC goes, I also agree that that person should be impartial. They shouldn't be intimidated or under the guise of the insurance company at all. They should be totally out there, impartial.

I also think it's very good that you've added that reimbursement should be within 14 to 30 days, not two years as we had experienced.

Also, I think those extra people, the 2%, there should be some kind of a group of them up there, and then the people who are up to $75,000 -- two sectors, I believe -- and perhaps the ones up there should be for life or $1 million. Thank you.

Mr Metzler: I don't agree with one thing. I think the family doctor is integral, to tell you the truth, because they know the patient. They've known them for 15, 20, 30 years, whatever, and to start introducing all these strangers into your life, that's another traumatic shock. All of a sudden you've lost your vocation, you've lost your sense of dignity, you've lost your sense of pride, and reduced even more. So therefore, that's it.

Mr Sampson: Thank you for coming and making the presentation. I know it's difficult. I met with quite a few accident victims in various categories of severity of injury and we tried as much as possible to customize this product to suit what the claimant is deserving of. One of the things we attempted to do was to get a better handle on the catastrophic category and we tried to add kind of a catch-all phrase, which is the one that you identified in your opening comments, to deal with individuals who didn't quite get into the categories of (a) to (g). We may have missed the mark in that and I appreciate any help we can get from people like you and other claimants, injured people and practitioners, as we go through this process to try to get a better definition of what catastrophic is and isn't.

We've also returned a bit to the system under which you're making claims to allow access to the court system for the not-at-fault victim, and I take it, since you referred to a threshold, that you were indeed not at fault or deemed at least not at fault in the accident?

Mr Metzler: No, we were not at fault. Again, I think you have to rely on the integrity of the consumer when it comes to crossing the threshold. I was bashed up. I was in the car too and I guess because Glenda was in a coma, and you have a personal sense of dignity and pride, I'm not taking anything I'm not deserving of. I got up and walked around. You get a couple of dozen stitches in your face, which is not uncommon when you play hockey for 30 years, and you just keep moving. Your body seizes up and you keep moving. You keep moving because you have a greater objective in this particular case. I don't think we give the consumer enough credit for being ethical and honest, you know; I really don't. I think if you have to look at some of the dishonesty that goes on, you might look at the industry as opposed to the consumer.

Mr Sampson: I would agree with you. I said in my opening comments today that I think the industry needs to improve its claim-handling procedures, and we'll certainly take a look at that and make sure that happens.

The other comment that I want to speak to was raised actually by the person who spoke ahead of you. I, like her, was not aware of the fact that if I were walking across on a green light down at the corner here and a car hit me, it was my insurance company that would pay. I didn't know that when I started this review. I think that's the shocking situation that we all come to realize, unfortunately when it's too late.

Mr Metzler: Yes, and if you don't have an SEF 44, you're covered by whom? The person who hit you, so you could be out in left field anyway if your coverage isn't appropriate and so on. It's an interesting world.

Mr Sampson: I would've thought, though, that the tort component we've added will help the innocent accident victim.

Mr Metzler: But how do you get the person to that point, though? You see, they starve to death. You should be looking at incorporating maybe -- I'm not telling you what to do here -- some assistance through banks whereby these people can get some sort of guarantee, because a lot of these people settle because they're going broke. Their house is probably on the line, their cottage, whatever, and their lifestyle has changed dramatically anyway. But the insurance company knows it can outwait them, and it'll stonewall them as much as conceivably possible.

Mr Sampson: That's why I believed it was important to have a relatively strong base of no-fault benefits, to avoid that. That was not available to you under the OMPP situation that you're claiming under.

Mr Metzler: Well, half a million dollars was and that was pretty good.

Mr Crozier: You mentioned playing hockey for 30 years. I knew I recognized you. You're Turk Broda. Right?

Mr Metzler: That's right.

Mr Crozier: You look like Turk Broda.

Mr Metzler: Just forgot my goal net.

Mr Crozier: Some of these younger folks around here wouldn't remember Turk Broda.

Mr Metzler: Harry Lumley?

Mr Crozier: Yes. I just wanted to clarify one thing. I think you asked whether the attendant care was limited for two years.

Mr Metzler: Yes, I thought I read somewhere --

Mr Crozier: I believe it is; it's not 10 years.

Mr Sampson: With the exception under the category of being fully disabled, and then it continues. I'm sorry, are you talking attendant care?

Mr Crozier: That's catastrophic, I guess.

Mr Sampson: Right. Well, totally disabled is the definition.

Mr Crozier: I just wanted to make sure you got your appropriate answer.

Mr Metzler: We have occasion to see Dr Guy Proulx who is, I believe, a neuropsychologist, and his leaning is that family should take care of family, which is fair. But if you're going to cut off those caregiving benefits after two years, you've just eliminated family looking after family. It's still got to be 10 years, because within that structure, we're five years and three months right now, and we've got a year and a half before our case is heard. So it's at least six to seven, eight years before you're ever through. If you cut it to two, you're already going broke anyway, because you've lost an awful lot of stuff.

Mr Crozier: We're okay on that?

Mr Sampson: Yes. I think it hinges on that definitional word.

Mr Crozier: Over this period of time, have you suffered a great deal of economic loss?

Mr Metzler: Yes.

Mr Crozier: Were either or both of you working at the time of the accident?

Mr Metzler: We were both vice-principals in the school system. I took a leave of absence without pay and Glenda went on LTD, plus the supplement; you know, all the good supplements that come along with it. The unfortunate part is the accident immediately eliminates -- you've got to buy a new vehicle. They're only going to give you X number of dollars for your vehicle and even then you've got to fight them for that because they're going to give you $1.95 when it's worth $5.95. That's the first try they pull.

So, yes, we suffered a lot of economic loss. They cut us off for three months. You know, I get a caretaking benefit every month. Arbitrarily, about two years into it, they cut us off for three months. Well, the bank starts screaming for money. Right?

Mrs Metzler: While he was being reassessed, I really needed him at home, but they didn't give us any --

Mr Metzler: No warning.

Mrs Metzler: No, "There you go. You're cut off for four months. Thank you very much." Then you're supposed to pick up your financial pieces from that point of view.

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Mr Crozier: I assume, since you were teachers, you had a certain amount of time built up that had to be used before you accessed your insurance benefits.

Mr Metzler: That's correct, 90 days.

Mr Crozier: I wondered whether you were aware of that, or was that something you learned?

Mr Metzler: Unfortunately, I was the first no-fault in our board and nobody knew what to do with me. I became sort of a strange animal.

Mr Crozier: Thanks for bringing us your story.

Ms Lankin: I truly appreciate your presentation and I wish some of the folks from the insurance bureau and some of the companies were here to listen to it, because I'd like to ask them some questions at this point in time instead of you. But let me try.

What the government seems to be responding to is the fact that the companies say the benefit structure is too rich and there's too much fraud going on, particularly in the medical rehab side of things, and therefore we have to put premiums up because we're losing money. Yet, when you listen to your presentation and to the woman who was here before you, it's hard to imagine how anyone could defraud the system unless there was absolute collusion between the pretend accident victim perhaps and the health professionals. Other than that, it's hard to understand, with all the reassessments, assessments, cutting people off, pushing them to the limit, you know, taking them right to the end before they settle, pushing court dates out. So I'd like your comment on that.

Also, I am a doubter on the issue of tort. I have a problem with everything going through the courts and the involvement of lawyers and how things get dragged out, and I can't see the insurance company acting any differently. In fact, if anything, the stakes get higher for them in what might happen in a court situation, litigation, than through the benefits structure. Can you just comment on that? You must have met a lot of other people in similar circumstances in your travels through the last five years.

Mrs Metzler: I agree that if you go through a tort there can be a lot of costs. This is one example I'll give you: I have a friend whose brother was in a very severe car accident too, and the lawyers, after their tort, took 27% of their ultimate settlement. Please. You know? It amounted to almost $400,000 because they got $2.2 million. So figure it out; 27% of that. Then on top of that, they charged every phone call, all that kind of thing; that came out of the settlement too. That, I think, is very unfair from the victim's point of view too. I know that lawyers are very well paid, but please.

Ms Lankin: Do you have any other comments on the whole issue of, is there fraud in the system and where does the fraud rest in the system?

Mr Metzler: I would suggest there's about 40% fraud on smaller things. When you're in a major car accident, the spouse or the family is so concerned about staying in this world that you haven't got time, and the person, especially when you have brain trauma -- you don't know where you are. So how in the world could you think about fraud? As the lady from CARP said earlier, you've got to be out of your mind to want to go to therapy every day of the week. You can think of better things you're going to do with your life. Well, Disraeli said there are lies, damn lies and statistics, and I think the insurance company is guilty of all three. Honest to God, really.

The Chair: Thank you for coming down and presenting to us today. We appreciate it very much.

Mr Metzler: I hope it helps. I don't know. Thanks very much for hearing us. We appreciate it.

GEORGE ROTA

The Chair: Our final presenter today is Mr George Rota. We welcome you to the standing committee.

Mr George Rota: Good evening, ladies and gentlemen. To all members of the panel, I thank you for allowing me to speak to you today to express my views on the subject of car and house insurance.

My name is George Rota. I was born in Toronto, raised in Toronto, living in Toronto except for three and a half years when I volunteered my services to my country of Canada during the Second World War for active duty.

I've been paying insurance for 59 years to the insurance industry, during which time I had never had a car accident until 1994, and I had one car accident also in 1995.

When you have an accident you are assessed two points. If you're unfortunate enough to have two accidents within five years, you're assessed two more points, for a total of four points from your insurance company or any other insurance company. You are then turned over to one of three companies that specializes in people who have four points against them, and their insurance premiums are anywhere from $3,800 to approximately $4,500 each year for the next five years, which I think is very, very excessive.

I am nearly 75 years old. If I could afford to pay that premium for five years, I would then be 80 years old, if I live that long.

My wife drives an 11-year-old car and her premium is just under $600 per annum. My insurance will come to approximately $4,500. This is totally unacceptable and extremely high. Insurance companies keep increasing their insurance rates every year -- I think this year it was just under 12% -- and they've been doing this for the last five years. When and where is this going to stop? Seniors in their twilight years cannot afford this. They are forcing us to sell our cars and get off the road if we cannot afford to pay the rates that they automatically come up with every year.

As I mentioned earlier, I was born, raised and lived in Toronto. I volunteered my life to my country in wartime and I cannot offer more than my life for my country, and to think that when I became 75 years of age and my wife becomes 77 years of age, we must give up the privilege and the necessity after enduring the Depression years and volunteering for active service. Now insurance companies do as they please regardless of seniors and war veterans. It is not right, and the matter should be addressed at once.

Premier Mike Harris was elected on the platform of common sense. Where and when is the Premier going to act with common sense regarding the combine that the insurance companies have enjoyed for years and years with all the previous governments? I am not saying this government; I'm talking about the previous ones.

One other thing that I object to is that the insurance companies can call the Ontario licence bureau and find out if a driver has an infraction such as driving without a seatbelt, making a wrong turn or speeding. Naturally, you lose points, and so you should, but I disagree when private industry can call government offices and get privileged information so that they can raise one's premiums. I know of no other company that enjoys that privilege to increase their rates and profit for personal gain. This must stop immediately. Consider those in their twilight years who cannot afford the high rates of insurance.

For your perusal, I have brought along with me today my wife's income tax return and my income tax return. Excuse me for not being able to turn because I've only got one arm. As you can see, both my wife and I exist well below the poverty line. If you want to see the tax, I have it here. Our total income last year grossed $19,200, both of us together. These are supposed to be our golden years. They may be, but not according to the insurance companies.

I was a commercial traveller, and to think of the thousands and thousands of dollars that I've paid into the insurance company over the past 59 years, less the war years; it amounts to quite a lot of money for a man who has had only two accidents in the last 59 years. The insurance combine must be broken up, because all insurance rates are unreasonable. They all agree on "Two accidents and you're out," so they must have all got together and come up with this four-points system, that all drivers have to be turned over to companies that specialize in drivers that have four points.

In closing, I thank you for allowing me to address this panel. I sincerely hope that I've been able to shed some light on what it is like trying to be a good citizen and live in the province of Ontario.

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Not only did I volunteer my life for my country, but I continued to serve my community. For 14 years, morning, noon and night, I was a service officer for the Royal Canadian Legion, and any veteran who was in trouble, I was the man they called. I'm also a director of the Last Post Fund of Ontario. These are all voluntary positions. We all pay our own expenses. I tried for 14 years until my health gave out and I couldn't do it any more.

What remaining years I do have, I'd like to enjoy with my wife and family. I have seven grandchildren and four great-granddaughters. But we live in the suburbs, we can't do without a car, and I can't afford $5,000 worth of insurance, 25%. My God, the government doesn't take that much off me, and here's an industry that's had its own way for years and years and years. Previous governments have promised to do something about the insurance, but after they get elected somehow the promises get lost in the shuffle.

But I honestly believe in my member of Parliament, and he asked me to come down here to speak to you. I honestly believe that this government will sincerely do something soon, and I hope it's done well before May because my insurance is up in May and I haven't got the $5,000. If I'm forced off the road, then I won't be able to do my voluntary services to my community. In fact I was really honoured to be doing this service. I was made a life member of the Royal Canadian Legion, which is the second-highest award that one can receive, and I'm proud of my record to my community and I'm proud of my country.

But I sure as hell hate these insurance companies when they have their own way and they can send you an invoice. There's no dickering, no bartering, that's it, pay it or you're cut off, no insurance. But God forbid, if you ever have a claim, you'd be surprised how many hats and how many dirty tricks these insurance companies come up with. And don't tell me it's not a combine because it's amazing how they all say, no matter which one you're with, "Two points, four points, out." Every one of them, and a combine is supposed to be illegal. I thank you.

Mr Kwinter: Mr Rota, thank you --

Mr Rota: Excuse me, I've only got one ear. I'm only half a man. Would you speak up, please.

Mr Kwinter: I just want to thank you for your presentation. You've raised an issue that has been raised by many people, and that's affordability. The unfortunate fact is that, even with this plan, the industry is proposing that there be increases over the next five years of at least 7% plus each year. That gets to the basic problem that I think is unfortunate, that a lot of people don't understand how insurance works.

Insurance works on a pool of money and it is based on actuarial figures that try to determine what the requirements are going to be against that pool and everybody has to pay. The only way they can determine what is fair is based on history. As I say, it certainly is not going to make you any happier, but the fact that your two accidents happened in the near past as opposed to the long past puts you in that situation.

I'll tell you, that is the challenge this government is going to have to face and we're all going to have to face, and that is, how do we allow people like yourself, people who cannot afford insurance but who are dependent on their automobile for the kind of quality of life that most of us take for granted? I wish I had an answer for you, but I'm just telling you it is a very, very difficult, if not unsolvable, problem.

Mr Rota: I'm quite familiar with the insurance industry because I was one of the first persons to introduce RRSPs in Ontario, one of the first persons to introduce mutual funds, and I also had a licence to sell insurance. They wanted to cut me off, but they didn't dare because I challenged them. They wanted me to sell their policies, and I knew if I sold the policies they wanted me to sell, 30 years later the person I sold it to would say: "George, what did you do to me? You knew what you were selling me." I'll give you an example.

Let's use simple figures. Let's say we're going to insure someone for $25,000 and along the way the insurance agent will say, "Do you want dividends?" "Oh, yes, I'd like the dividends. Let them accumulate. Sure." That policy, if you had no dividends, let's use a figure of $300 a year. If you wanted dividends, same policy, same amount of payout, $325 a year. So you're really getting mugged. It takes 18 years to break even.

I was only selling term. That's all I believed in. Not only reducing term, I wanted level term and then I wanted increasing term, because as we get older you need more money, but at least not reduce it down to nothing. They tried their damnedest to get rid of me, but after five years I was way ahead of my time and I gave up. I even had investment booths at the Canadian National Exhibition for investments, but they didn't catch on until about five years after me. I was way ahead of my time.

Now today, look at the paper, thousands and thousands and thousands of mutual funds, which are good, and each one is supposed to have a professional manager. There's not that many professional managers available. Anybody who asks you today, "What do you buy in insurance?" I tell them one thing and one thing only, "You buy Canadian resources: gas, oil and hydro." That's all you have to worry about because you don't move, the building doesn't light up, nobody goes to work, and there's a mutual fund that specializes in gas, oil and hydro. That was the one I started, and it has done extremely well and is still doing well.

Ms Lankin: Mr Rota, I'm just interested. You said that your member of provincial Parliament recommended that you come here. Who is that? Who's your MPP?

Mr Rota: Steve Gilchrist.

Ms Lankin: Okay. I just wanted to make sure, because when the final bill comes in, if it doesn't address your concerns, I want to be able to remind Mr Gilchrist in the Legislature --

Mr Rota: Well, they spelt my name wrong. They put me down as Mr Roper, and that's not it, it's Rota. It was corrected.

Ms Lankin: We have it here. Thank you.

The proposal that is before us is draft legislation. Mr Sampson has indicated that if it needs fixing, they'll look at fixing it. In the existing proposal, however, the insurance industry says, "Rates are still going to go up, and if anybody's rates go down, they'll be the good drivers." I asked them what do they mean by good driver. It's really hard to get definitions out of anyone, but it's real clear that they didn't mean anyone who had a speeding ticket or who had any other kind of infraction and, particularly, they didn't mean anyone who had had an accident. So it really makes me believe that the changes we see here aren't going to do anything to address the concern you've raised.

The government did indicate they'd like to look at the issue of whether or not there should be differential rates for seniors, for retirees, but again only if you meet the insurance industry's definition of good driver. I'm wondering if you can address that, because you must have had some conversations with the insurance companies when they explained to you the four points you're out. What was it about the 59 years of a good driving record that they couldn't understand before you had the two accidents?

Mr Rota: And I drove everything, tanks, Bren gun carriers, lorries, you name it. Never had an accident with a tank either. But look, I'm an old man and I'll match my driving skills with anyone. It's unfortunate that somebody nicked me in the back bumper, and it's unfortunate I ran into the back of a big beer truck -- I admit that's my fault. But to penalize a man in the next five years -- I may not even be around. We live in a suburb where we can't walk a mile out and wait in the cold weather for a bus. People don't shovel their sidewalks, and how am I going to get my groceries? I've only got one arm, from here it's all artificial. I got this. This is my arm. I can't do that. And I'll match my driving skills with anyone.

Ms Lankin: Did they explain to you why the two accidents that happened wiped out 59 years of a good record?

Mr Rota: Yes, they did. They said: "We're not interested in 59 years. We're only interested in the last five years and you had them in the last five."

Ms Lankin: I'll tell you, just very briefly, a story. I was, as you know, in the previous government, and during that period of time had to re-establish an insurance policy for driving, because prior to that I'd been at a place where there was a company car and fleet insurance and I didn't have my own insurance. Because I could only get records going back for four and a half years, even though I didn't have any accidents prior to that and I didn't have any accidents during the period of time that I was trying to re-establish my insurance for, because there was only four and a half years of it and it wasn't five and I couldn't get anyone to find what happened before that, I couldn't get rating, so I had to go to a higher rate. So you're right, five years, that's the rule, and it doesn't make a lot of sense.

Mr Rota: Now it's payback time.

Mr Sampson: You mentioned that you were concerned about insurance companies having access to the licence bureau to get the driving habits and the driving records of insurers. You don't particularly like that system, but you believe it's appropriate that somehow one's driving habit be used in assessing one's risk. How do you get access to that driving habit? How do you get access to the records as to whether or not somebody has had one, two, three, four accidents and what the nature of those has been unless you get it through the driving record?

Mr Rota: First of all, I don't know their methods of operating, but I do know they wear many hats, believe me. You have to fill out an application and you sign it, and if you put anything false on that application, you're liable. Furthermore, when they sell you this insurance, if your car is under two years old and you have an accident, they'll replace a new part for that car; if your car is over two years old, the parts come from the junkyard. I've never had an agent explain that to me. They just say, "Here's the premium," blah, blah, blah; they don't tell you the pitfalls of what you're getting into.

Mr Sampson: I would agree with you that the industry has to do a much better job in informing the insured what it is they're buying before the accident and also what it is they're likely to get after the accident. I would agree with you that there needs to be a better information exchange there. But in order to facilitate that, I would say to you that it's also important to have a product that's a little bit simpler to explain than the current one we have.

Mr Rota: I appreciate your concern. I sincerely appreciate the concern, but my concern is this: Am I off the road and is my wife off the road come May 5? That's the point; something has got to be addressed. I don't care what the solution is, but they've got to have some compassion.

Mr Sampson: I agree with you that we need to reassess and take a look at the rules that are applied to get into this thing called the Facility Association, which is where you are now as far as an insured driver is concerned. We need to clarify those rules -- that was the statement I made this morning -- and somehow take a look at what the Facility Association is and how it operates. But in order to do that, we need to understand what it is the underlying insurance product is first, and that's what we're doing here. I certainly appreciate your coming and speaking to us on your dilemma.

The Chair: Thank you very much, Mr Rota, for joining us this evening.

Mr Rota: Again I thank this panel for allowing me to appear and I sincerely hope that something can be done for people that are in our predicament, because if you don't, there are many, many seniors and many, many veterans that are going to be in a terrible bind.

The Chair: Thank you very much. I would remind the committee that tomorrow morning we're commencing at 9:20, a little earlier than usual. I look forward to seeing you all at that time, bright-eyed and bushy-tailed.

Ms Lankin: Is that a condition of us showing up?

The Chair: Yes. The committee stands adjourned until that time.

The committee adjourned at 1844.