Actuarial Notes

Reform Costing: Accident Benefits Regulations

By Rajesh Sahasrabuddhe and Felix Chan · Oliver Wyman · 2025

Oliver Wyman's costing of Ontario's proposed amendments to Ontario Regulation 34/10, the Statutory Accident Benefits Schedule, for FSRA, dated May 7, 2025. The amendments make every accident benefit other than medical, rehabilitation and attendant care optional to buy, make auto insurers pay medical and rehabilitation expenses before supplementary health plans, and let insureds buy higher disability income limits and housekeeping cover at any impairment level. The report estimates the change in the industry's required average premium for private passenger vehicles, and the premiums for the optional coverages, effective July 1, 2026.

1 Executive Summary

  • 1.1 Purpose and Scope
  • 1.2 Findings
    • At a July 1, 2026 cost level the current weighted average required premium is 2,488.68; after the reforms it is estimated at 2,494.59 to $2,497.48 — a change of +0.24% to +0.35% — across optional accident benefits take-up rates of 55%, 70%, 80% and 100% (Table 1).
    • Making auto insurers first payer for medical and rehabilitation adds 2.3% to current loss costs for all medical and rehabilitation benefits.
    • An 87% factor is estimated for the share of loss costs that shifts to bodily injury from policyholders who do not buy the optional coverages.
  • 1.3 Relevant Comments
    • The range of estimates is ±1.5 percentage points around the central estimate, except at 100% take-up, where the low end is no change.
    • Renewals default to keeping current coverage, so take-up is expected to be high at first and to fall as consumers learn of the options; one take-up rate is assumed for all subcoverages.
    • The total change is small because disability income — the optional subcoverage with the highest premium — is mostly bought by people with collateral disability income who do not claim it now, and because savings from those who opt out are offset by higher bodily injury costs; long-run disability income take-up is assumed to approach about 55% of insured drivers.
    • Sensitivity tests vary the share of supplementary health plans not covering auto injuries (Table 2) and the post-pandemic frequency level (Table 3); the change stays between +0.34% and +0.36% across the frequency scenarios.
    • The estimates were developed under the Canadian Institute of Actuaries' Standards of Practice.

2 Proposed Amendments

  • 2.1 Optional Benefits
  • 2.2 Priority of Payment
  • 2.3 Housekeeping & Caregiver Eligibility

3 Actuarial Methodology: Calculation of Required Average Premium

  • The current required average premium is built from the benchmarks of FSRA's Ontario Private Passenger Vehicles Annual Review as of December 31, 2023.
  • Ultimate claim costs and claim counts by accident half-year come from applying loss and claim count development factors to the industry data reported to GISA; frequency, severity and loss costs follow from them and earned vehicles.
  • Accident years 2014–2023 are projected to July 1, 2026 with the Annual Review's benchmark loss trend rates, with a ULAE allowance from GISA factors and a Health Levy provision of $18.70 per vehicle.

4 Actuarial Methodology: Reform Adjustments

  • 4.1 Priority of Payment
  • 4.2 Optional Accident Benefits Premiums
  • 4.3 Transfer of Costs from Accident Benefits to Bodily Injury
    • Consumers who decline optional accident benefits may seek those amounts through the bodily injury tort system, raising bodily injury required premiums.
  • 4.4 Optional Coverage Premiums
  • 4.5 Options for Additional Coverage

5 Distribution and Use

6 Considerations and Limitations

7 Exhibits

  • Exhibits 1.1–1.13, 2.1–2.11, 3.1–3.3 and 4.1–4.4
  • Exhibits 4.5, 4.6, 5.1, 5.2, 6.1, 6.2 and 6.3, each at take-up rates of 55%, 70%, 80% and 100%

Sources