Report invites questions Insurance Anti-Fraud Task Force findings

The Interim Report of the Ontario Auto Insurance Anti-Fraud Task Force released earlier this month is more interesting for what it doesn’t report than what it does.

Naturally, it reports on the apparent increase in claims costs, particularly no-fault accident benefits between 2006 and 2010, with the greatest increase in the GTA.

Naturally, this has led to dramatic premium increases with Ontario having Canada’s highest car insurance premiums.

Certainly there are anomalies which require investigation.

How is it that accident benefits claims frequency has increased while the number of people injured in car accidents has decreased?

Why have accident benefits claims gone up dramatically compared to health care inflation?

Why are costs rising more rapidly in Ontario compared to other provinces?

The possible reasons explaining these anomalies are many, but as illustrated by the very name of the task force, only one reason appears to be on the table: Fraud, with an emphasis on consumer fraud.

That’s where I part company with the task force.

True, it discounted the oft-cited industry estimate of $1.3 billion of fraud per year, stating the “figure cannot be considered a verifiable measure of the extent of fraud at this time.”

But the report is based primarily on facts and figures supplied by the insurance industry.

Clearly, the industry has an incentive to exaggerate claims costs, as well as fraud. That’s not to say there’s no fraud. Certainly, fraud exists. But the extent is debatable.

As stated by the task force, there are several types of insurance fraud: Organized fraud such as staged accidents, premeditated fraud such as fraudulent billings by repair shops and health care providers, and opportunistic fraud.

The first two types are clear cut and require effective steps to stamp them out, but opportunistic fraud is in the eye of the beholder.

As the task force states, “opportunistic fraud occurs when individual claimants inflate the value of their claim.”

That opportunistic fraud exists cannot be denied, but it is surely the most debatable and likely the slowest-growing type of fraud.

Justifies abuses

Sadly, for claimants, it is being used to justify many of the insurance abuses that afflict legitimate accident victims.

Jack Fireman, a personal injury lawyer who represented the insurance industry as defense counsel for many years before switching to the plaintiff side in 2000, argues we need a task force to examine the “rampant abuse by the insurance industry of legitimate claimants.”

Decisions from Financial Services Commission of Ontario (FSCO) arbitrators are replete with examples of the wrongful delay and deny tactics of insurers.

The insurance industry has a penchant for using preferred vendors to provide medical assessments of accident victims.

I recently wrote about a psychiatrist whose prime occupation was conducting psychiatric assessments of accident victims, mainly for insurers.

This psychiatrist conducted up to 50 insurance assessments a month with a projected income from assessments “in the range of some $600,000 per year.”

Often these preferred vendors conduct what are called paper reviews. They don’t even examine the accident victims before rendering their pro-insurer opinions.

And if they don’t render pro-insurer assessments, their lucrative practices may dry up.

Insurers also put forth unqualified experts to deny legitimate claims.

Indeed, arbitration decisions from FSCO arbitrators are replete with examples of unqualified “experts” having been retained to argue against legitimate accident victims. Isn’t that equivalent to opportunistic fraud?

In examining the increasing cost of claims, shouldn’t we be examining the increase in costs attributable to defence or insurer medicals, adjuster’s fees and legal fees paid to insurers’ defence lawyers?

If the task force’s final report is to have any merit, it must obtain independently audited figures and claims costs attributable to both sides, consumers and insurance companies.

Source: By Alan Shanoff ,Toronto Sun
First posted: Friday, December 16, 2011 08:58 PM EST