New report a good first step towards a better insurance dispute resolution system

Former Superior Court associate chief justice Douglas Cunningham’s interim report on Ontario’s automobile insurance dispute resolution system this month is a good first step towards a new and better approach.

The interim report does a comprehensive job of identifying the problems with the current dispute resolution system through the Financial Services Commission of Ontario and foreshadows recommendations to overhaul and simplify the process.

In the report, Cunningham reviews how the number of disputes has drastically increased over the years with the most common matters relating to medical and rehabilitation benefits.

The interim report does an excellent job of identifying the main problem of timeliness. But one issue not well recognized in the report is that of mistrust.

Lawyers for accident victims have developed a deep distrust of many insurers. The mistrust is a learned attitude resulting from seeing how previously unrepresented accident victims, despite clear needs and entitlement, received a fraction of the benefits they should have.

Cunningham’s concern about legal representatives who shield claimants from insurers fails to recognize this underlying issue of mistrust, as does the suggestion of an internal insurer review process.

The interim report doesn’t aim to concretely address or recommend any solutions. Rather, the final report due in February will set out the recommendations. However, it does outline many anticipated areas for recommendations such as a process with fixed deadlines and a tiered approach based on the amounts in dispute.

But instead of a tiered process based on the amounts in dispute, perhaps the government should design it to address the category of benefits in dispute. Day-to-day treatment disputes, which are statistically the most common, should involve a simplified and timely telephone or paper-based process. On the other hand, when it comes to the crucial issue of whether a person has suffered a catastrophic impairment, there should be an entirely separate court-like process, one without unnecessary mandatory mediation and with dedicated and experienced arbitrators.

Moreover, given that many of the problems with the current system result from system overload, changes to the dispute resolution process should go hand in hand with sensible legislative changes designed to reduce conflict. For example, the introduction of the new controversial definition of incurred in the post-Sept. 1, 2010, legislation was a blatant and obvious invitation by the government for a significant increase in the number of disputes. It should now remove the new definition of incurred, a change that by itself would significantly reduce unnecessary conflict in the accident benefit context.

Cunningham’s interim report is a step in the right direction. We badly need a new accident benefit dispute system. The new system must be simple and timely and help balance the playing field between David and Goliath by penalizing insurers for inappropriate denials. Hopefully, with further insight gathered during the public consultation process, Cunningham’s final report will revamp a broken dispute resolution process.

Darcy Merkur is a partner at Thomson Rogers in Toronto practising plaintiff’s personal injury litigation. He’s a certified specialist in civil litigation and creator of the Ontario personal injury damages calculator.

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