On September 30, 2014, Ontario’s government proposed a new amendment to the accident benefit regulation that governs the no-fault benefits available to car accident injury victims.
The regulation can be found here: http://www.ontariocanada.com/registry/view.do?postingId=15542&language=en
The regulation would further reduce the interest rate payable by insurance companies if they deny a benefit to a car accident injury victim and a later judgement/ruling finds that they made an error in refusing to pay the benefit(s). It would also delay the start date for the interest to run – from the date of the denial, to the date that a financial services commission mediation proceeding is commenced.
It is submitted that this would not serve the interests of justice. If an insurer denies a person’s benefits and that decision is eventually proven wrong (by judgement/ruling) then interest should run from the date of the denial, not a mediation proceeding that could take quite some time to start.
As a practical example – If an insurer denies a physiotherapy treatment plan expense and the injured person undertakes it because they need it, the person may well be charged interest by the treatment facility (that would be from the date of the treatment of course – not mediation). The interest rate may well be higher than the prescribed rate. The insured person would then be out of pocket for the additional interest through the insurer’s wrong-doing.
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As another example, if an insured person is denied income replacement benefits to compensate them for loss of their wages from car accident injury and takes a high interest loan because of that fact, then the interest will of course run from the date of the loan and not the mediation. The insured person could be out significant amounts of money through the insurer’s error if they are limited in how much they can claim from the insurer and the time-period that they can claim for.
If the new proposed regulation is passed, the government should also protect the injured person by making it law that no-one may charge an insured person any higher level of interest than the mandated amount that they can recover from the insurer and should also say that no-one may start interest running until after a mediation is commenced. That way the insured is not out of pocket if the insurer’s decision is proven wrong at a later date.
Of course, that would be extremely artificial and it would make a lot more sense to simply amend this regulation to say that an injured person is entitled to claim for reasonable interest actually incurred. That would be the fair, just and reasonable result.
People pay into their car insurance for years and when they need it they expect that the insurer will treat them fairly. This proposed new law would say that when insurers are proven to have made an error in denying benefits, the insured person is still required to bear a significant amount of the loss despite the fact that they were entirely innocent and relied on their insurer to make the right decision. In my respectful opinion that is ludicrous and completely unjust.