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Personal Injury

Scrap the failing no-fault insurance system

Ontario should abandon its two-and-a-half decade experiment with no-fault auto insurance, says Barrie-area personal injury lawyer Steve Rastin

In his recent report on the state of the auto insurance in Ontario, David Marshall, the former CEO of the Workplace Safety and Insurance Board (WSIB), delivered a withering assessment of the province’s regime after he was appointed by the government to study it.

Finding the average Ontario driver paid an annual insurance premium of nearly $1,500 per vehicle, more than 50 per cent higher than the national average of $930, Marshall described provincial auto insurance system as “one of the least effective in the country.”

Rastin, the managing partner of Rastin & Associates, tells AdvocateDaily.com he “wholeheartedly agrees” with that conclusion, but says Marshall has the wrong prescription for fixing it.

“Our system is broken because it’s by far the most complicated, cumbersome, and convoluted one in North America,” he says. “What we should be doing is admitting that no-fault auto insurance in Ontario was a failure. The ideas behind it were valid, but in execution, it hasn't worked.

“Maybe we should go back to the system you have almost everywhere else, where you sue the person who hit you for a fair amount of benefits, including 100 per cent of your lost income instead of 70 per cent, and you can get a pain and suffering award without having to worry about a deductible. On the flip side, it cuts out the slush fund of money being paid out on the no-fault side,” Rastin adds.

He says the status quo has resulted in a proliferation of rehabilitation clinics, some of which are not doing good work. Insurance companies are also incentivized to challenge assessments, all while the total amount available for benefits steadily shrinks over time, he says.   

“Now you have a situation where it has become prohibitively difficult to sue in tort, and innocent victims are losing their right to compensation,” Rastin says. “Ontarians are getting a terrible deal.”

Marshall’s report expresses frustration that while the fatality and accident levels on Ontario’s roads have fallen consistently, the cost of claims has continued to go up. The system “is filled with disputes and inefficiencies, and a very high percentage of premiums are being used to pay experts and lawyers and not going directly to injured persons,” he wrote.

Marshall identified a central flaw in the system that allows its key participants to “work at cross purposes.” 

To fix it, he suggested setting up a new arm's-length, proactive regulator that would overhaul the current rules to make them more straightforward to understand and apply. The body would also be handed responsibility for monitoring the use and cost of legal representation in the system.

Marshall called for a new system for the compensation of catastrophically injured claimants that would move away from cash settlements, which he said were being “drained by having to pay legal fees,” and in any case fail to “adequately meet” their needs.

In addition, he said the new regulator should create programs of care for most common injuries to reduce disputes over treatments, and as part of a broader “care not cash” approach that will shift “the focus to the needs of the patient rather than the amount of the settlement.”

But Rastin says the province has attempted to cut lawyers out of the system in the past, with the ill-fated Designated Assessment Centres (DAC). The DACs were introduced in 1994 in an attempt to provide a neutral venue for the diagnosis and treatment of accident victims, but were phased out in 2005 for adding to the bureaucracy and cost of the auto insurance regime.  

“It was a massive failure,” Rastin says.

Overall, he says Marshall’s solutions sound like an attempt to remake the insurance system in the image of the WSIB.

“That would be a step in the wrong direction,” Rastin says. “If you really want a system that is responsive to the public, cuts out fraud and provides efficient treatment, then the WSIB should not be a role model for any of those things.”  

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