The Ontario Trial Lawyers Association, of which Natalie Clarke has been a long-standing member, recently issued a report card on the “three Ps” of auto insurance: Profits, protection and premiums.
The insurance industry should be proud of its A+ grade in profits, not so proud of its D mark for protection and C- for premiums, in the opinion of the trial lawyers.
The insurance industry A+ grade for profits is based on the OTLA’s report of insurance profits of $3 billion in 2011 and 2012, with continued high rates of profitability for 2013.
It estimates the insurers’ return on equity in the range of 16% to 20%. How is that possible? Premiums are higher and payouts are lower.
But don’t insurers deserve to achieve high rates of return now to compensate for their lost billions in the years prior to 2010? According to the OTLA, recently restated industry figures show the losses never occurred.
The industry showed a profit in the three years prior to 2010. But weren’t these huge losses used to justify the slashing of no-fault accident benefits in 2010? Yes, and that leads to the D grade in protection.
The OTLA estimates benefits have been reduced by 96.5%. That’s due in large part to the reduction of medical and rehabilitation benefits from a maximum of $100,000 to $3,500 for most accident victims.
The $100,000 limit for medical/rehabilitation expenses for non-minor injuries was reduced to $50,000.
Worse, these limits include the cost of medical reports and insurers often send accident victims to their preferred sources of so-called independent medical examinations in an attempt to delay and deny benefits.
Too many of the experts who conduct these independent exams earn substantial portions of their income from insurance companies and are beholden to them.
The insurance industry continues to push for “reform” of the definition of catastrophic impairment so as to reduce the coverage for those in most serious need of aid.
But, haven’t premiums dropped?
Sorry, the C- grade for premiums is based on an increase in premiums of 20% since 2009.
While rates are supposed to drop by 15% over the next two years, insurers continue to push for further “reforms” as a quid pro quo for premium cuts.
Some insurers started to reduce their rates last year. Why haven’t more? After all, every insurance company sells the same motor vehicle insurance policy.
In my view, the OTLA report card is missing two important subjects in which the insurance industry deserves an A+.
Those are public relations and delay and deny tactics.
The industry continues to do an excellent PR job convincing the public and politicians that fraud is the major issue facing the industry and that further reforms, meaning reductions in benefits, are necessary.
While fraud is a big problem, it shouldn’t be used to justify maltreatment of accident victims.
As part of the PR efforts of the insurance industry, its money continues to be shuffled to politicians.
Last year, the insurance industry’s lobby group gave $27,900 to the Liberal Party. So far this year they’ve given $20,950.
Those figures don’t include donations made by individual companies.
(The Insurance Bureau of Canada also gives money to the Progressive Conservative Party, $10,050 in 2012 and $18,960 so far this year.)
The industry also continues to do an excellent job in the delay and denial of claims.
Insurance companies deserve top marks in forcing victims to participate in the lengthy mediation/arbitration or mediation/litigation process.
Adjusters and insurer experts continue to do an excellent job denying claims and providing opinions to justify the denial of claims.
All in all, an excellent report card for insurers. But not so good for the public.