New Ontario prosecution office to focus on auto insurance fraud

The Ontario government announced Thursday it plans to develop an office dedicated to investigating and prosecuting "serious fraud," including fraudulent auto insurance claims, to prohibit credit unions from promoting auto and home insurance online and to raise wages for some personal support workers.

Finance Minister Charles Sousa presented the 2014-15 budget in the legislature Thursday. The government says it is "building on the steps it has taken" to reduce auto insurance claims costs "by developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud."
Government officials told Canadian Underwriter the office is not up and running yet.
The early assignment and continuity of crown attorneys in large complex auto insurance fraud prosecutions was one of 38 recommendations made by the Auto Insurance Anti-Fraud Task Force in its final report, released in 2012.
Then in its budget document Thursday, the government stated that developing an office dedicated to serious fraud "would be based on the Task Force's principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants."
Sousa did not release further details on such a dedicated office during a press conference, but officials suggested the office is intended to prosecute fraud in general and especially auto insurance fraud.
The Liberals are also proposing some changes in financial services regulation.
"It is important to ensure that Ontario's policies regarding the online insurance activities of credit unions keep customers' best interests in mind," the government stated in the budget document. "The Province is proposing to prohibit credit unions from online promotion of insurance products such as home and auto insurance, which they are not permitted to promote in their branches."
 This measure was praised by the Insurance Brokers Association of Ontario.
"There are important consumer protection reasons for this policy," IBAO stated in a press release. "It protects consumers who are vulnerable at the point of lending from an obligation to purchase an important insurance product under duress.  Credit Unions and Banks provide wealth management services. Insurance products are risk management services that require different competencies. The prohibition also protects consumers from cross-selling tactics from persons not properly trained to provide insurance advice."
Last August, the Ontario government mandated "an industry-wide target reduction," by 15%, of the "average of the authorized rates that may be charged by insurers" for private passenger auto, with a two-year target. The law requires carriers, when filing an application, "to propose rates and a risk classification system that contribute adequately to the achievement of" the 15% target.
In Ontario, auto insurers must submit proposed rate changes — along with supporting actuarial data — to the Financial Services Commission of Ontario (FSCO) for approval. FSCO and its actuaries then review the data and insurers' assumptions regarding claims costs, expenses and investment income to ensure that the proposed rates are not excessive but are also not going to impair a company's long-term solvency.
In the 2014-15 budget documents, the government noted that as of April 15, 2014 there had a total rate reduction of more than 5.6%, industry-wide, since August, 2013.
"While the progress has been achieved to date, further actions will be required to meet the average rate reduction targets," according to the document. "It is critical that industry play its part and take concrete steps to lower costs, control overhead and manage claims effectively and fairly. The government will continue to review industry's efforts as the strategy progresses."
But MADD Canada has criticized the mandated reduction in the past.
When that reduction is applied, "there is no distinction between good drivers and bad or high-risk drivers," MADD Canada claimed in a press release last December.
"Rewarding good drivers with lower insurance rates is a great idea, but an across-the-board reduction means the biggest benefit, in terms of dollars saved, is going to the dangerous and unsafe drivers, including impaired drivers," MADD Canada chief executive officer Andrew Murie stated in the release at the time.
In the 2014-15 budget document, the government is also proposing to give personal support workers "in the publicly funded home and community care sector a $1.50 per hour wage increase in 2014-15, an additional $1.50 per hour increase in 2015-16 and a further $1 per hour increase in 2016-17."
That increase would "bring the base wage up to $16.50 per hour by 2017" for those personal support workers.

Source:  http://www.canadianunderwriter.ca/news/new-ontario-prosecution-office-to-focus-on-auto-insurance-fraud/1003042611/?&er=NA