In October 2024, the Ontario government proposed draft amendments to the Statutory Accident Benefits Schedule (SABS) that would make AB coverage optional, except for medical/rehabilitation and attendant care benefits.
If passed, the amendments would come into effect July 1, 2026. Consumers would need to opt-in and pay more if they want coverage for lost wages, non-earner benefits, housekeeping expenses, caregiver expenses, educational expenses, expenses for damage to personal items, death benefits and funeral benefits.
In Budget 2024, the government also proposed to make auto insurers the first payer for medical and rehab benefits after a motor vehicle accident (MVA). Auto insurers currently are the second payer: if there’s another workplace or extended care policy in place, a motor vehicle accident (MVA) victim must use those benefits first before claiming on their auto policy.
Intact, Canada’s largest insurer, supports the government’s proposal. CEO Charles Brindamour also praised the Ontario government’s proposed amendments. “Good job on the part of the Ontario government, as far as we’re concerned …”
But the proposed change has created a rift within the insurance industry. While insurers support the change, the brokers and other distributors who deal with motorists have concerns.
After Budget 2024, Mitch Insurance CEO Adam Mitchell warned: “Giving people the easy-door option to opt out of a coverage and/or enticing them to not take the coverage could be a pretty slippery slope, because you’re just transferring the coverage from the policy over to their Visa statement. And they may not be able to do that.”
During a panel discussion at the Insurance Brokers Association of Ontario’s IBAOCon’24, brokers pointed out that most consumers will not be insurance-savvy enough to ensure they have adequate coverage; consumers might only see it as a chance to save on premiums.
Consumers will be heavily reliant on insurance brokers to explain what they are opting in or out of to make sure they are making an informed choice, raising the possibility of increased professional negligence or Errors and Omissions (E&O) claims for brokers if the reforms pass. Consumers could claim they were not informed about the benefits they were waiving.
Insurance companies often send annual auto-renewal notices to their existing customers; many people do not speak directly with a broker. Under the new system, there is a risk that the insurers could simply send a renewal with the minimum basic coverage. In this case, the onus could be on consumers to contact their insurers to opt-in to additional coverage options that were automatically covered under the previous SABS regime. Drivers would need to carefully review their renewal notice and reach out to their insurers to make changes or additions to their coverage.
Some personal injury lawyers have pointed out that SABS changes will also require changes to Ontario’s Priority Dispute Scheme. To determine which insurer is responsible for paying benefits to accident victims, priority disputes could become more prevalent, complicated, and expensive.
Insurers could spend money fighting about their responsibility to pay benefits, and the plaintiff bar might see increased Lawyers’ Professional Indemnity Company (LAWPRO) claims against them if clients apply to the “wrong” insurer first. This area is already unclear: private arbitrators have been reluctant to grant equitable relief from forfeiture (under s. 31 of the Arbitration Act, 1991); the Courts have held they do not have jurisdiction to provide relief (under s. 129 of the Insurance Act); and the Licence Appeal Tribunal (LAT) recently held it cannot grant such relief.
This change will also have significant implications for pedestrians, passengers and cyclists who do not have vehicle insurance but are injured in an MVA. They would be at the mercy of the driver’s auto insurance policy to claim no-fault benefits.
