Canadian Insurance News

Submitted by: FAIR (Fair Association of Victims for Accident Insurance Reform)
August 27, 2012
FAIR
P.O. Box 5021
Penetanguishene, ON
L9M 2G2

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INTRODUCTION
FAIR (Fair Association of Victims for Accident Insurance Reform) is a grassroots not-for-profit
organization of MVA (Motor Vehicle Accident) victims who have been injured in motor vehicle
collisions and who have struggled with the current auto insurance system in Ontario.
Our members lives, as a result of these MVAs, have been turned upside down by brain injury, loss of
limbs, need for surgery and reparative therapy, long-term debilitating injuries, loss of time from work,
loss of jobs and sometimes loss of independence
FAIR wants to see reforms to auto insurance legislation that will improve the way in which all MVA
victims, particularly those with traumatic injury, are treated and cared for under provincial insurance
legislation. Not only are FAIR members faced with the challenges of overcoming and adapting to injury,
we are also faced with an insurance system that does not fairly provide consumers with needed
rehabilitation coverage and benefits. We are faced with sub-standard medical reports and are often
examined by physicians acting outside of their area of expertise. Third Party Reports, prepared by
physicians hired by insurers to perform IME (independent medical assessments or evaluations) are one of
the core reasons for the present backlog of almost 40,000 MVA victims waiting for hearings for treatment
and benefits at FSCO (Financial Services Commission of Ontario) today.
FAIR gives a voice to the thousands of people in Ontario who have become amongst the most vulnerable
people in our province. We welcome the opportunity to be heard by the FSCO Anti-Fraud Task Force.
CONCERNS
There are many elements of the changes proposed by the Steering Committee that will benefit claimants
and insurers. They are discussed at the end of this submission.
FAIR does not agree that lowering accident benefits will result in limiting insurance fraud. The industry
has cast too wide a net that captures legitimate claimants along with those who ‘may’ be fraudulent. This
has created an unfair system with decreased benefits for all. FSCO and the Task Force must deal with
fraud without negatively affecting innocent MVA victims who make legitimate claims.
FAIR believes that the previous levels of benefits prior to the 2003 changes should be restored.
The most recent GISA (General Insurance Statistical Agency) report shows that between 2010 and 2011
the volume of claims is down 15% after the new 2010 regulations. The average cost per claim is almost
cut in half to $28,978 - substantially less than the figures quoted by the insurance industry in the past
year. The incurred claim cost per earned vehicle is $292.60 in 2011, well below the $595.75 in 2010,
before the reduced benefits came into effect. This has created a boom year for insurers in 2011 and profits
for some insurers have doubled while 40,000 claimants line up in the queue at FSCO. Legitimately
injured claimants that may wait up to two years to have their denied claims reviewed before receiving
treatment or income replacement benefits.
As pointed out in the KPMG report, the opportunistic fraud associated with claimants cannot be
accurately verified. The war on fraud and focusing on benefits claimants are entitled to captures

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legitimate claimants all too easily. The IBC assigned a 1.3 billion dollar a year loss figure to fraud for
almost 20 years as ‘fact’ and the insurers simply added this long-unsubstantiated loss estimate into
consumer’s premiums. When finally questioned about this huge loss of approximately 26 billion dollars
over 2 decades, the industry admitted that it doesn't know where the figure came from. By then consumers
had seen premiums go up and benefits slashed. The lesson here is that statistical "research" advanced by
the IBC should be viewed with caution and stakeholders should agree on what the ‘facts’ are before
making changes to accident benefits.
FAIR believes that the FSCO Anti-Fraud Task Force has initiated a wholly one-sided investigation into
fraud. Insurers must also be under the microscope and their actions examined with the same dedication
applied to other stakeholders. It is here, in this Task Force forum, that all stakeholders meet and where
treatment of all the parties must be fair and equitable. It is glaringly obvious that insurer doctors are not
on the Anti-Fraud Task Force’s radar for their fraudulent acts when producing substandard or biased
reports. While this Task Force discusses laying criminal charges against claimants, rehabilitation workers
and tow truck operators, insurer assessment physicians are exempted from any examination of their
actions and are excluded from the Task Force research mandate. The 40,000 injured Ontarians currently
waiting for FSCO compulsory mediation regarding denied benefits and treatment hearings would not
agree that those "preferred" IME/IE vendors, who act in the best interest of insurers and whose
reports endlessly accuse legitimate claimants as fraudsters or malingerers, should be given a free pass by
the Task Force.
To fully examine fraud one must look critically at what is happening to tens of thousands of vulnerable
and injured claimants who are routinely labelled as fraudsters. The Task Force needs to question how
over half of all claimants are being denied benefits. The Task force needs to scrutinize insurer tactics by
way of biased, substandard and unqualified ‘expert’ reports. The Consumer Bill of Rights posted on the
FSCO website states that claimants should have the right to fair claims handling. FAIR is questioning the
‘fairness’ of biased and unqualified insurer assessments.
Ignoring the fact that tainted or false assessments are a regular part of Ontario auto insurance industry
claims handling practices will only lead to greater numbers of claimants lining up for hearings at FSCO.
The CSME (Canadian Society of Medical Evaluators), an organization whose members routinely perform
IMEs on many thousands of Ontario’s injured auto accident victims had the following to say: CSME
President (Dec. 2011) Message to Members: "...We have all to realize that times are changing -
amateurism, bias and fraud in the domain of IMEs will be tolerated less and less in the future. For
those of you doing IMEs for years, it is time to notice this approaching shift: the cost of litigation, cost
of automobile insurance and lack of quality control of IMES, leading to public scandals, might soon
lead the parties requesting IMES to be more critical when the appraising medicolegal credentials of an
expert before hiring his/her services...."
The Fraud Task Force must look at this acknowledgement of poor quality, biased and fraudulent IMEs by
the assessors themselves and explain why these physicians are not being scrutinized. Why the free pass?
Looking the other way isn't good enough and in fact displays a biased approach by the Task Force itself.
Consumers cannot look to CPSO’s Third Party Report policy position as a means to police these insurer
"hired guns"/physicians. A stated mandate that: “Physicians must be honest, objective and impartial.
They must ensure that the opinions they provide are reasonable, fair, balanced, and substantiated by
fact.” does not guarantee compliance. Unfortunately there has been a long history at CPSO of ignoring

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those IME physicians who prepare substandard and biased reports as well as physicians who opine
outside their area of expertise or engage in ‘practice drift’. CPSO’s failure to report patient complaints
about IME physicians to the public has created an unsafe environment for Ontario’s most vulnerable
injured MVA victims. This lack of transparency enables a group of pro-insurer physicians to carry on
their business with impunity and calls into question whether CPSO’s self-regulation is effective.
Greater accountability and disclosure of the costs that the insurance industry attributes to fraud should be
examined by this Committee. Insurers must disclose the breakdown of the numbers and what is included
in their estimation of the cost of fraud. The cost of fighting legitimate claims is often more than the claim
itself. Industry practices that lead to higher costs when the insurer classifies legitimate claimants as
fraudsters should be examined; over-assessing claimants, staged assessments, unqualified or biased
assessments, substandard reports, ‘stacking’ of reports, blocking legitimate claims and denying timely
treatment contribute to higher costs.
Insurers are paying more to deny cases than they would have to pay out by just paying benefits they
legitimately owe. Ontario’s court system has recognised this in the case of McQueen v. Echelon General
Insurance Company, (2011 ONCA 649). The court found that the plaintiff had suffered mental stress
after her insurer had made 21 denials for treatment in just over 3 years. The claimant was awarded
$25,000 for aggravated damages.
This insurer paid out $175,000 to deny $20,000 in treatment costs and the court found that it contributed
to the claimant’s mental distress when the insurer engaged in bad faith conduct. Rubber-stamped denials
are more than just a deceptive business practice; they are part of an established system of denying
legitimate claims by way of fraudulent acts carried out by doctors in fee for service relationships with
insurers.
In Fidler v. Sun Life Assurance Co. Ltd., 2006 SCC 30 (CanLII), 2006 SCC 30, [2006] the Supreme
Court found that an insurer owes a common law duty to act in good faith in all its dealings with an
insured:
“The bargain was that in return for the payment of premiums, the insurer would pay the plaintiff
benefits in the case of disability. This is not a mere commercial contract. It is rather a contract for
benefits that are both tangible, such as payments, and intangible, such as knowledge of income
security in the event of disability. If disability occurs and the insurer does not pay when it ought to
have done so in accordance with the terms of the policy, the insurer has breached this reasonable
expectation of security.
Mental distress is an effect which parties to a disability insurance contract may reasonably contemplate
may flow from a failure to pay the required benefits. The intangible benefit provided by such a contract
is the prospect of continued financial security when a person’s disability makes working, and therefore
receiving an income, no longer possible. If benefits are unfairly denied, it may not be possible to meet
ordinary living expenses. This financial pressure, on top of the loss of work and the existence of a
disability, is likely to heighten an insured’s anxiety and stress. Moreover, once disabled, an insured
faces the difficulty of finding an economic substitute for the loss of income caused by the denial of
benefits.”
FAIR believes that providing insurers with broader civil immunity will create an unfair advantage to the
insurer and likely lead to even worse abuse of accident victims. If one reviews the McQueen v. Echelon

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decision in the light of the Fidler v. Sunlife decision (above) it is easy to see why the insurance industry
wants broader civil immunity. A more likely motive is that the insurers find themselves exposed
financially when claimant abuse gets out of control and this is resulting in court awards. The introduction
of such a change will boldly state that Ontarians are not all equal under the law, once injured in an MVA,
your rights are diminished.
The establishment of a dedicated fraud investigation unit has been attempted in the past with the IBC
(Insurance Bureau of Canada) and the ICPB (Insurance Crime Prevention Bureau). Such a program led to
widespread abuse and intimidation of legitimate claimants and was extensively covered by the media.
FAIR believes that this is invasive and abusive and will create even greater discord between the policy-
holder and the insurer. The coupling of a greater ability to share claimant’s personal information with
broader civil immunity in the realm of a revamped quasi-police investigatory body without oversight and
beyond the reach of the law would create intolerable circumstances for claimants. Claimants who could
be abused by their insurer with absolute impunity.
The proposed changes to consent and disclosure of the personal information of claimants by imbedding
consent in applications for benefits and a system of sharing that information with unspecified individuals
or companies is an infringement of a person’s right to privacy. Consent should be obtained separately
from the benefit application as these are two separate acts despite one being dependent on the other.
Claimants can be approached on a per use basis, by consent form. Under past regulation insurers would
disclose whom they were going to share the information with and consent was for a limited time and
limited use. Consumers have a right to be concerned about how any large corporation handles their
personal information for security reasons.
The proposed penalty of $500.00 for failure to attend an insurer examination appears to be a double-dip
penalty as claimants are already responsible to pay for a doctor’s examination if they fail to properly
cancel an appointment. Appointments are cancelled for a variety of reasons including cancellations by
legal representatives when they become aware of previous assessor bias. One could ask where does a
seriously injured claimant, waiting in line at FSCO for mediation for denied income replacement benefits
get $500?
The requirement that CEO’s of auto insurance companies are to attest that legitimate claimants are treated
fairly will be largely ineffective. CEO’s cannot reasonably be expected to be aware of the actions of their
employees who deal with claims on the ground.
FAIR supports those changes that promote more transparency in the system and greater regulation for
rehabilitation clinics and service providers. FAIR agrees that claimants should sign for goods or services
that they receive and the feedback on HCAI is that claimants are now better aware of those goods and
services.
The proposal that claimants be examined under oath introduces an additional burden to the claimant as
well as costs to the insurer and appears to offer little value. Claimants are already challenged with
recovery and should not be expected to track purchases by their therapists. HCAI does keep the claimant
in the loop of expenses applied for and approved but claimants should not be asked to verify whether one
brand or another at one cost or another is correct. There is no issue with an insurer asking whether
services or equipment has been received, in fact they should do so, but to do it under oath is unnecessary.
FAIR members agree that the public remains unaware of the amount of coverage their automobile

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insurance company offers. Most consumers do not know the limits of their coverage and have not
purchased those extras that include enhanced income replacement or attendant care coverage. In large part
this is because the insurers have told the public that the basic package is all they will ever need. This is
conveyed in the word ‘basic’ which leaves consumers to believe that they have ‘enough’ coverage.
Most policy holders have no concept of the costs of rehabilitation and are not able to link the cost of
recovery to the severity of injuries. $50,000 sounds like a lot of money, so how seriously does one have to
be hurt to need more than this? More information must be given to consumers; statistics about the costs of
recovery set beside the cost of enhanced coverage may be one way to bring awareness. This could be
included with consumer’s renewal policies. The IBC’s use of cartoon frog characters to portray injured
Ontarians in their recent PR campaign does not assist consumers with taking auto accident injuries
seriously and is demeaning to those who struggle every day to overcome injuries.
FAIR supports the creation of a new regulatory body to oversee healthcare and assessment facilities as
proposed by Mr. Willie Handler. FAIR members believe that the Ministry of Health should be part of this
oversight and that public members should be included in a multi-stakeholder alliance. Front line health
professionals with experience on the ground level should also be part of the proposed oversight.
FAIR appreciates the opportunity to contribute to and assist the Task Force in creating a more open and
honest system for Ontario’s auto accident victims.

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