FSAT: SABS Interest on Overdue Amounts

Posted on March 10, 2015 by djb | Posted in General Business Articles

Effective January 1, 2015, there has been an amendment to the Statutory Accident Benefits Schedule (SABS) regarding interest payable by the auto insurance company on overdue payments of accident benefits (Income Replacement Benefits, medical and rehabilitation benefits, attendant care, housekeeping, etc.) payable on or after January 1, 2015.
For motor vehicle accidents occurring on or after September 1, 2010, interest on overdue payments is payable by the insurer at 1% per month, compounded monthly.  For accidents prior to September 1, 2010 the rate was 2% per month, compounded monthly.  The amendment is only applicable to accidents that occurred on or after September 1, 2010.  For benefits that became payable on or after January 1, 2015, the 1% per month compounded interest rate will apply only until a mediation proceeding is commenced.  The interest rate will then change to the prejudgment interest rate described in the Courts of Justice Act for past pecuniary loss (which is currently set at 1.3% per annum).  For benefits that were overdue on December 31, 2014, interest will continue to be payable on the overdue amount at the rate of 1% per month, compounded monthly, until paid.
For more information, please consult the Financial Services Commission of Ontario, Property & Casualty – Auto Bulletins, number A-14/14.  In addition, we would be pleased to discuss this matter further with you at any time.

Article by the Economic Loss Quantification Group, previously included in the FSAT newsletter – Spring 2015 (Brent M. Pyper, CPA, CA, CFF, CFP)