TORONTO, April 1 /CNW/ - Auto insurers welcome Ontario's latest moves to
fight fraud, abuse and over-utilization that drive up costs for their
"The government has clearly signaled it will support insurers that stand
up to those who would exploit the system," says Ralph Palumbo, Ontario
vice-president of the Insurance Bureau of Canada.
"The vast majority of Ontarians are honest, truthful and determined to
return to normal activities after a vehicle collision," says Palumbo.
"They should not have to pay more for those who are not."
The IBC and executives at member companies are applauding the
announcements in both the provincial budget, and an earlier bulletin
from the superintendent of financial services:
The formation of an anti-fraud task force to examine all aspects of
detecting, combating and vigorously prosecuting those who profit from
The recognition that a new electronic billing system that became
mandatory Feb. 1 will permit insurers and regulators to monitor the
performance - both the best and the worst - among injury treatment
providers, and to screen for signs of excess or inappropriate treatment
and for outright fraud.
The superintendent's check-list for ways insurers can, and must, respond
to attempts to circumvent the province's regulations and price-cap for
treatment of minor injuries.
The recognition by Finance Minister Dwight Duncan in his budget that
insurers need more tools to combat fraud and excess billing, and his
intention to ensure those tools are put in place.
"The government is clearly engaged in rooting out fraud, abuse and
overutilization of benefits that are intended to treat those who have
been injured in motor vehicle collisions," said Palumbo.
"Every dollar inappropriately diverted from treating injured claimants
is a dollar that is unavailable for honest victims and policyholders."
Insurers welcome the clear directions Philip Howell, superintendent of
financial services, gave in a bulletin about the policing of abusive
billing practices by certain treatment and assessment clinics.
"We haven't seen that kind of clarity and direction…ever," says Rocco
Neglia, vice-president of claims at The Economical Insurance Group in
Howell warned insurers to treat injured persons fairly, and in a timely
manner, but to ensure treatment clinics respect the government's rules.
Regulation changes Ontario implemented Sept. 1, 2010 were intended to
improve affordability for drivers, Howell points out. So he urged
insurers to confront abuse in the form of excess treatment, improper
billing and multiple assessment requests.
"The majority of people injured in car accidents in Ontario sustain
minor injuries (as defined in regulations) for which the goods and
services provided under the minor injury guideline are appropriate,"
Howell said the $3,500 spending cap for minor injuries was intended to
cover the cost of any treatment for psychological or emotional issues
that may arise after the injury.
It's reasonable, Howell pointed out, for an insurer to require proof
that a treatment has been provided, to set conditions before paying a
treatment provider directly, to enlist the help of injured persons to
confirm their clinics' billings and to interview claimants once under
The cost of assessing and treating what are mainly minor injuries has
been the prime source of inflation in insurance premiums, which are
higher in Ontario than anywhere in the world.
"What (the bulletin) says to us is you have got to push back," said Nora
Hohman, vice-president of claims at The Dominion of Canada General
Insurance Co. "It gave us some comfort that …the regulator is
She added: "They are saying you have the rights, but you also have the
responsibility to push back when warranted, so go for it: We're behind
"I think (regulator) is attempting to remind insurance carriers that the
changes…gave us a better ability to fight claim fraud," said Gregory
Jones, claims manager at State Farm Mutual Automobile Insurance Co.
"We want to commend him for putting out such a bold bulletin," said
State Farm is the largest insurer of Ontario automobiles. Like
Economical before it, and Dominion after it, State Farm has sued
certain clinics for millions of dollars, accusing them of using
identity theft to submit bills for services.
Jones said his company has dramatically increased its staff of special
investigators to confront fraudulent practices within clinics,
particularly in the Toronto area. State Farm lost a record $1.06
billion on $1.4 billion of auto premiums last year.
The one reservation insurers said they have about Howell's bulletin was
that the arbitrators employed by the Financial Services Commission of
Ontario to hear appeals from injured persons could later chastise them
for being too reluctant to pay for treatments.
"A lot of companies, very understandably, have not been as assertive as
we might otherwise have been because of concerns about things like
arbitrator decisions," says Hohman of The Dominion. "Now we have to
use the legislation the way it is written or it doesn't have a chance
Jones said he is looking forward to seeing an industry-wide analysis of
those clinics and professionals that submit extraordinarily high claims
for assessing and treating injured persons.
Such an analysis of data will soon be possible, while protecting the
privacy of injured persons, now that all treatment providers must
transmit bills to insurers using a new Health Claims for Auto Insurance
billing system, said Barbara Sulzenko-Laurie, the IBC's vice-president
"We still lack some teeth to fight organized claim fraud that is led by
treatment providers," said Jones. "But the bulletin says there is an
expectation the industry is fighting claim fraud."
Palumbo said the announcements in the budgets, coming days after
Howell's bulletin, "have clearly signaled the government's strong
intention to arm insurers with the tools to better defend against
fraudulent and abusive claims."
SOURCE INSURANCE BUREAU OF CANADA
For further information:
Mark Klein at 416-362-2031 ext. 4387