Canadian Insurance News

December 20, 2014

Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, has now been passed and many people sing its praises because they've been told its good but don't really understand why, other than it fights fraud and will save the insurance industry a lot of money, The true implications of this bill on accident victims is anything but good.

People like Bob Verwey President of the Trillium Automobile Dealers Association (TADA) is exuberant in his praise for this new legislation. This bill is quite comprehensive and only in small part - the part Mr. Verwey talks about -i.e. reforms to the towing industry - actually helps fight insurance fraud. He is correct that the towing industry needed to be regulated and he may be right when he says that "many consumers have been taken advantage of by unscrupulous tow truck drivers and owners. Some tow truck drivers have coerced motorists into signing waivers or consent forms at the accident scene, allowing vehicles to be towed to a repair facility where the tow operator has a vested interest.

In some cases, tow operators will sell a collision repair job to the highest bidder, earning large commissions or kickbacks. All too often, consumers wind up paying expensive towing and storage fees because they didn't understand their options". I find it odd though when he points out that: "There are roughly 1,200 tow truck operators and 3,000 tow truck drivers in Ontario, ..... and most of them operate with honesty and integrity. But a few bad apples have given the industry a bad name". This begs the question as to why we needed the Ontario government to step in and bring about legislation for just a "few bad apples". We will find a "few bad apples" in every industry, and also among individual claimants. However, Mr. Verwey doesn't see the forest for the trees in his exuberant praise of the Ontario government for throwing its might behind a "few bad apples". He talks about Bill 15 as if it only addressed the tow truck operators and owners and doesn't appear cognizant of what is behind the rest of the bill which is far from praiseworthy. He seemingly has little understanding about how much of the bill will not fight fraud but will rather serve as a gift of hundreds of thousands of dollars to the insurance industry and this at the expense of motor vehicle accident victims who have been seriously injured. And the reason for this is that one of the aspects of the bill reduces the interest rate that insurers had to pay on settlement amounts when they were less than expedient in paying their clients owed income replacement benefits. The rate for income replacement used to be 2% compounded monthly with interest rates for dragged out tort settlements set at 5% annually not compounded. This was to force insurers to expedite legitimate settlements. The government felt this rate was necessary so that insurers would pay what they owed more quickly as there was a tendency for insurers to use funds that were owed claimants as part of their "float" for investment purposes. Insurers knew they could earn much more to bolster their bottom line even with these high interest rates so it was not uncommon for legitimate claimants who didn't give up their fight to receive benefits to only have their cases settled in the eight to ten year range. Meanwhile, claimants received nothing and had to live off their savings or go broke. The interest rate is now set at the market rate which at present represents penalty payments at a lowly not compounded annual rate of 1.3%. This rate reduction is the gift. Bill 15 has made it even more financially expedient for insurers to delay payment to legitimate claimants. But the legislation doesn't address insurance denials of legitimate claimants, the years of delays with claimants having to hire a lawyer if they want to stand a chance of getting their benefits, the frequent ineptitude of the IME (insurance medical examination) process which uses for hire medical experts to write reports that more often then not favour the insurer, if not in some instances outright change to a diagnosis written by a claimants medical doctor to downplay the injury (see my Dec 9/14 blog). And then, let us not forget the massively reduced benefits since September 2010 and the introduction of the MIG (minor injury guideline) category which ties most seriously injured claimants to $3,500 for rehabilitation, with the insurer being able to take up to $2,200 of that to cover their assessments. Heck, the 15% premium reduction could easily have been made just on what insurers saved in 2010.

Bill 15 also revamps the dispute resolution system for accident benefits to the detriment of accident victims by eliminating the right to sue insurance companies for the denial of benefits. Insurers rarely pay benefits unless the claimant hires a lawyer. The question I ask is why one even needs to hire a lawyer when you pay for insurance coverage for benefits you will need when seriously injured in a car accident? Your case is medically valid and all your medical ducks are in a row. Yet, not only will you usually not get those benefits on the merit of your medical condition but you will have to hire a lawyer, and probably have to go to court to get what you paid for. Well, if you can no longer sue which is what most of us had to do to get paid, and can only go through yet another insurance mediation process which will rarely rule in your favour, how is it that Bill 15 is being touted as the next best thing to sliced bread for insurance claimants. It is, however, the next best thing to sliced bread for the insurance industry.

Steven Polak, a personal injury lawyer with Lerners LLP says that if this legislation goes through (which it now has) "It would be a victory for multi-national behemoth insurers, at the expense of the most vulnerable injured members of our Province. The publicity of cases when the learned Judges of our Courts have slapped insurers with punitive and bad faith awards for wrongful conduct are one of the only means of defence that we have to keep insurers in check. We should not give that away. We should protect it at all costs". He goes on to say, "I have had more than a few cases where insurers have denied benefits (including a recent car accident injury lawsuit in Oshawa/Whitby) for what I considered to be completely outrageous reasons, and we started a lawsuit claiming for punitives, which then met with a reversal of the position by the insurer. Relegating these disputes to some back-room licensing tribunal that just deals with one benefit is far different than the spot-light that a lawsuit with a punitive damages award shines on an insurer. We should not leave ourselves defenseless".

The biggest insurance coup is having people believe that fraud against insurers is the name of the game so any one who is denied must be scamming because otherwise they would be paid. Go to FAIRAssociation.ca a not-for profit association that represents motor vehicle accident victims and ask Chair, Rhona Desroches how often legitimate claimants dealing with a serious injury and/or brain impairments are denied, intimidated, harassed and belittled with many going broke while fighting their insurer with all the emotional implications of having to fight their insurer and deal with a dramatically-changed lifestyle. Google Alan Shanoff of the SUN or Ellen Roseman of the Toronto Star and inform yourself about the other side of the equation - the side that most of us can't even phantom or read "So You Think You're Covered! The Insurance Industry Rip-Off". Can it be that insurers also deal in fraudulent behavior!? - and let's not even talk about extended health carriers or WSIB. Keep your fingers crossed that you are never in a serious accident that requires rehabilitation and income replacement benefits because you can't consistently work at anything that will pay you a living wage. This is when your insurer and all the premiums you have paid will fail you.

Our legislators have rubber stamped a bill of which they know little and are patting themselves on the back for a job well done. They certainly didn't give much time (15 minutes) for the likes of FAIR to present their case on why Bill 15 isn't a good bill. That lack of input didn't apply to the car insurance industry, IBC and all its insurance cohorts.

Source: http://www.deniedbenefitclaims.com/blog.html