The Consumer Challenge

How can the industry make sure consumers are ready to choose?

The Gen Y guy in workout pants and a baseball cap was worried. He had just ordered a meal with friends, but that wasn’t the problem–his concerns centred on changes to his auto insurance. “If I get hurt,” he told his companions in the Burlington, Ontario, restaurant, “the insurance company won’t pay for rehab. They’ll send me to a personal trainer at the gym.”

A personal trainer? Not true. But here’s something that many brokers, insurers and other players are realizing is true: what Ontario consumers don’t know about imminent changes to Ontario’s auto insurance system could hurt them.

While industry stakeholders have seen the system change over the years, this latest round is different.  It’s the first in which coverage has been taken away, notes Randy Carroll, chief executive officer of the Insurance Brokers Association of Ontario (IBAO). It’s also the first time the onus is on consumers to choose their own coverage.

“Consumers have to make a decision they’ve never had to make before,” says Shelagh Paul, assistant vice president,corporate communications, at The Dominion.  And industry players have to take care “to empower them to make that decision.”

Fine-tuning the focus

As September 1 approaches, making that choice could prove difficult if consumers don’t fully understand the implications, says Paul.

Consumers facing the option of $50,000, $100,000 or $1 million in coverage need to know what benefits cost, what the typical auto accident costs and what’s covered, she says. ”How can I make that decision if I don’t know those things? We’re trying to make people understand the choices and their needs,” she says.

Some aspects are clearer than others. Determining what kind of income replacement they might need is “easy,” says Carroll. “But when it comes to your medical and rehab, [a consumer might wonder], ‘Do I need to buy up to $100,000? I’m not too sure. What does that cover?'” he points out. “At least we can have a conversation to let them know what the average is.”

Paul stresses that consumers don’t need to understand every aspect of the reforms–they need to understand insurance basics, their own needs and their choices.

Before choosing their coverage, they should recognize what OHIP does and doesn’t cover, what their employment benefits cover, and try to fill the gaps based on their own situation. A single person, she says, might make difference choices than someone with young children.

Consumer complications

Both brokers and insurers have reached out to consumers in recent months with mailings and online education campaigns. Along with intensive broker education and brochures, visitors to the IBAO’s quoting tool also have access to reform-related articles, frequently asked questions (FAQ), and nine information videos about the changes.

The association has also bolstered the tool with extra reminders that brokers are just a phone call away.

The Dominion has also ramped up its oniine outreach with, which walks consumers through their lifestyle choices.

But those efforts might be complicated by different levels of familiarity with basic auto coverage and the accident benefits side, Carroll points out. “On the AB side, there has probably always been an understanding gap,” he told CITB August 17.

Consumers are also getting information from unreliable sources, notes Toronto adjuster  Steven Del Greco, branch manager at Crawford & Co.’s Toronto West office.  He calls such sources “the infamous neighbour”–an acquaintance or neighbour who thinks they know the score, and makes it their duty to share their knowledge with others.

One area of particular concern: the incoming cap on minor injury benefits. Most Ontario consumers “don’t have a clue,” says consumer advocate Lee Romanow of the reforms’ impact on minor injury benefits. Although insurers are informing policyholders of the upcoming changes, they need to make it clear that while someone buys $100,000 in coverage, they’ll only get $3500 in minor injury benefits, she says.

Countering misinformation

Extending the consumer-industry conversation beyond September 1 will help clear up misconceptions and clarify understanding, according to Carroll. “This is not a 12-month discussion. This is one we’ll have to have regularly [with consumers],” he says. “There has to be a healthier conversation than in the past.”

That conversation will also require redoubled efforts to make sure clients fully understand what’s going on, and that brokers document discussions carefully.

Otherwise, “consumers will knock on their door and say, ‘you didn’t tell me,'” Caroll notes.

Overall, “this is a process change,” he says. “It’s a change in the way they do business from this point forward, and education will have to change with that.”

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