Entitlement to optional benefits under Ontario auto reforms could expose weakness in communication between consumers-brokers

If an auto insurance consumer in Ontario purchases optional benefits under the province's new auto insurance regime, that doesn't mean the policyholder is entitled to such benefits if they suffer a minor injury arising out of a motor vehicle accident.
A misunderstanding around this point may lead to prickly communications in the future between brokers and consumers, a panel of speakers told the 2011 CIP Society Symposium in Toronto on Apr. 6.
Panelist Jim Cameron, president of Cameron & Associates Insurance Consultants Ltd., noted in his presentation that caregiving and housekeeping benefits are no longer mandatory auto insurance benefits, but optional benefits. This is one of the changes made in the auto insurance reforms Ontario introduced on Sept. 1, 2010.
"The problem being that people buy it as an optional benefit, that doesn't mean you are entitled to it," said Cameron. "You have to have a [more serious] injury than a minor injury in order to qualify, even though you purchased the product. It could be a tough sell. We haven't really seen that come out yet."
Kadey Schultz, partner at Hughes Amys LLP, flagged this as an issue for broker-client communications.
"This is going to be an issue for conflict resolution between brokers and clients down the road," Schultz predicted. "Because someone is going to speak with their broker, find out what optional benefits they want or need, purchase those optional benefits.
"And [then], one year or two years down the road, they [might] get in an accident, they will think they are automatically entitled to these coverages, but they will have to meet the medical test for entitlement. So then there's going to be a big fight with the broker about the level of communication -
"You never told me," chimed in panelist Hugh Fardy, senior vice president of the CG&B Group Inc., mimicking what a consumer might say to the broker in that situation.
"It is going to create a conflict and probably within a year we'll start to see that emerge," Schultz continued.
The issue prompted subsequent discussion between the panelists and the audience about the public's take-up of optional benefits.
Joel Baker, president of MSA Research, made an observation as an audience member. He said he had spoken recently with two insurers, one operating in the direct channel and the other operating in the broker channel.
According to Baker, the insurer representatives told him the take-up on the optional benefits at their companies was only 3-5%.
Fardy said the take-up depends on the area and upon how aggressively the options are sold. He said in some areas, the take-up percentage on optional benefits is more in the territory of between 9% and 10%