Canada's Condominium Magazine
Ontario is set to overhaul the auto insurance industry, making changes that it says will combat fraud and reduce insurance rates. Some of these changes include addressing the province’s insurance system’s structural problems, according to Finance Minister Charles Sousa and Attorney General Yasir Naqvi.
Standard treatment will be provided for common injuries resulting from collisions. However, more severe injuries will require further medical assessments, which will be provided at independent and neutral examination centres. Furthermore, a Serious Fraud Office will be established in an effort to investigate and reduce instances of fraud, which are estimated to reach upwards of $1.6 billion per year.
Sousa stated that “auto insurance fraud has become an industry” in and of itself. “It’s time to stop it,” he said.
“If you know someone who has been engaged in this crime, let the Serious Fraud Office know. They will pursue and investigate these fraudsters and bring them to justice.” He also stated that the emphasis must shift away from “cash for bogus payouts and ensure appropriate care for victims.”
In addition to requesting that fraudsters be reported, Sousa also urged insurance firms to take action, “stop settling fraud cases, and let’s start attacking the fraud and prosecuting the crime.”
Opposing Progressive Conservatives, however, remain skeptical of the Liberal government’s attempts, insisting that these actions are only being announced because an election is on the horizon. “Auto insurance premiums are still 55 per cent higher than other Canadian jurisdictions,” stated PC finance critic Vic Fedeli. “Four years ago, this government promised a 15 per cent cut. They have completely bungled this file.”
Aviva Canada, however, defended the measures, stating that the changes would help lower rates. The company alone estimates an annual expense of $2 billion as a result of fraudulent claims. The company’s vice-president, Gord Rasbach, stated, “If you address the fraud piece, you will make an impact on rates.” Someone has to pay for it, after all, and those costs typically trickle down to the customers. “It really comes down to the people who are milking the system,” and the honest customers are the ones who end up paying for it.
Serious Fraud Office and Examination Centres
The plan, known as the Fair Auto Insurance Plan, is based on recommendations by Ontario’s auto insurance advisor David Marshall. Highlights of the plan include:
- Implementing treatment plans for common collision injuries
- Reducing diagnosis and treatment disputes by instituting independent centres to examine more serious injuries
- Combatting fraud through the Serious Fraud Office, which will launch in spring of 2018
- Directing the Financial Services Commission of Ontario to review risk factors used to calculate premiums and ensuring drivers in certain areas are not subject to unfair rates
Another aspect of the Fair Auto Insurance Plan includes ensuring that contingency fees are fair, reasonable, and transparent. This will also ensure that people who require the services of lawyers, especially those who are vulnerable such as accident victims, are protected and that they understand the agreements that they are signing. The following changes have been approved by the Law Society:
- Introduce a mandatory standard contingency fee agreement
- Create a public “Know Your Rights” guide that contains information on consumer rights in relation to contingency fee agreements
- Require legal professionals to publicly disclose the maximum contingency fee percentage they charge by practice area
- Require lawyers and paralegals to report annually on their contingency fee practices
The plan also includes modernizing the auto insurance rate approval process, reducing red tape, and strengthening consumer protection through amendments to the Insurance Act. A panel of five experts will also be established for the purpose of providing the government with guidance on enacting the plan’s reforms. The panel will also engage with drivers, insurers, health service providers, and legal service providers.