The government’s legislation to speed up arbitration and root out fraud to help insurers reach the 15 per cent premium cut goal is receiving positive reviews from the industry.
“We’re pleased that the government is fulfilling its promise to introduce changes to reduce costs and uncertainty in the auto insurance system,” says Ralph Palumbo, vice president of the Insurance Bureau of Canada for Ontario. “When all of us – industry, government and consumers – work together, we will drive down unnecessary claim costs that do not help claimants recover from injuries. Access to affordable insurance is fundamental to the health and success of Ontarians.”
Finance Minister Charles Sousa unveiled legislation Tuesday designed to speed up arbitration between accident victims and insurance companies, license medical clinics to stop them from double-billing and prevent people from making false claims, and cut the amount of time a vehicle can be stored.
“These actions will reduce fraud; these actions will reduce costs in the system,” says Sousa. “These actions will reduce rates in Ontario.”
The prevalence of fraud in the system can be found just about everywhere, says one broker.
“Sometimes I get the call from the physiotherapy office – not from the client about an accident,” says Domenic Guida, president of Signature Insurance Brokers in Woodbridge, Ont. – a community within the Greater Toronto Area that has been associated with a lot of auto insurance fraud. “It makes you wonder: are they bypassing us?” (continued.)
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Guida points to recent news stories of various clinics that have been identified as participating in insurance fraud.
“When I see those stories,” he told Insurance Business, “I see people who are clearly trying to take advantage of the physiotherapy.”
The Liberal government’s pledge to crack down on fraud was part of a deal with the New Democratic Party to pass last year’s budget. The policy has drawn flak from insurance companies who say it is cutting into their bottom line.
Sousa said he will also consider creating a new ‘fraud squad’ – a special group of investigators and prosecutors to go after fraudsters.
For Guida, although the measures to curb fraud are welcome, a return to the days before no-fault insurance would be better.
“I still love the old system, the ‘fault’ system, where if an
Allstate driver hits a Wawanesa driver, the
Allstate driver is at risk for paying that,” says Guida. “Right now, the companies looking for good drivers are getting selected against. Because the bad driver is hitting us, and we’re accumulating the cost of the repair and the accident benefits.”
If passed, the legislation would:
- Help injured drivers settle disputed claims faster by moving administration of the dispute resolution system from the provincial regulator to the Ministry of the Attorney General's Licence Appeal Tribunal;
- Ensure only licensed health service providers can get paid directly by insurers by establishing a transition strategy for the licensing of providers that bill auto insurers;
- Reduce the amount of time a vehicle can be stored, accruing charges, after an accident without notice to the driver from 60 days to a shorter timeframe; and
- Explore the establishment of a special investigation and prosecution unit on serious fraud, including auto insurance fraud.
