Auto insurance reform doesn’t offer much change: Paciocco
By Tony Poland, AdvocateDaily.com Associate Editor
“The plan is a facelift for the problems facing Ontarians and their insurance companies, but does not do much to change the underlying systematic issues,” says Paciocco, a founding partner with Paciocco & Mellow.
Earlier this year, Premier Doug Ford’s Conservative government announced reforms aimed at increasing the range of auto insurance plans available to drivers, including à la carte-style coverage, creating more competition among insurance providers and making the claim process easier.
According to a CBC News report, Ontario drivers pay among the highest auto insurance premiums in Canada.
By loosening existing regulations, the provincial government believes providers will be able to offer consumers more choice, which in turn will give drivers more power to reduce their premiums through customized plans, the CBC reports.
However, Paciocco tells AdvocateDaily.com that “it does not make a lot of sense” to offer à la carte services.
“We already offer three different type of coverage for consumers — property damage, liability coverage for other drivers and accident benefits,” he says.
“Consumers can already opt out of having their car covered if they get in an accident, but if an accident occurs, both liability coverage and accident benefits are essential. Allowing consumers to opt out of their own accident benefits would leave people injured in an accident with nowhere to turn for treatment.”
Paciocco explains the problem with such a system is that “Everyone believes themselves to be a good driver, and no one ever plans on getting into an accident.
“So, people are likely to opt out of as much coverage as possible in order to pay lower monthly premiums,” he says.
“If à la carte-style coverage is going to be offered, insurance companies will have to spend a great deal of time explaining what each type of coverage is and how it could be used,” Paciocco says. “Often, people do not realize all of the types of benefits they have through their insurance until they receive them or are denied coverage.”
He says there is an increased risk to see more uninsured drivers on the road, which can have “serious consequences if you are involved in an accident, even if you were not the one at fault.”
“When you don’t have insurance, you are barred from starting a lawsuit for any of the pain or suffering or damages that may have occurred, even when you didn’t cause the accident,” Paciocco says. “If you were at fault and you are sued you could be personally liable for paying damages. If the new system leads people to believe they can opt out of insurance altogether, that could be a serious problem.”
He says being underinsured can have similar consequences if you are at fault in an accident because “You could be personally liable for the remaining damages.”
Paciocco says he doesn’t believe drivers will see a significant change in their premiums in the long run.
“There is an economic incentive to attracting new customers through discounts,” he says. “But after all of the initial shuffling, consumers will find the cost of insurance coverage is similar regardless of the provider because they will all offer some version of the same discounts.”
This is the first instalment of a two-part series on provincial government efforts to improve the auto insurance industry.
Stay tuned for part two where Paciocco will examine at the Driver Care Card, insurance discounts and increased coverage for catastrophically injured people.