IBC: Auto insurers welcome Ontario’s latest move to fight fraud

TORONTO, April 1 2011 – Auto insurers welcome Ontario’s latest moves to fight fraud, abuse and over-utilization that drive up costs for their law-abiding policyholders.

“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 fraud.
  • 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 Waterloo.

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,” said Howell.

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 oath.

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 supportive.”

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 you.”

“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 Neglia.

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 to work.”

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 of policy.

“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.”

About Insurance Bureau of Canada

Insurance Bureau of Canada is the national industry association representing Canada’s private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 114,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $40 billion. To view media releases and information, visit the media section of IBC�s website at www.ibc.ca.