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This is why you pay so much for your auto insurance
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| ChemEnhanced |
| quote: | Mind-bending fender-benders fuel insurance costs
http://www.thestar.com/news/canada/...ance-costs?bn=1
Call it the $214,929 fender-bender.
As Ontario’s 9 million motorists and the province’s auditor general fret over the highest auto insurance rates in Canada — despite having the lowest death and injury stats per capita of any province — insurers and customers circle each other in a complex dance of profits versus claims.
It determines how much everyone pays in premiums, a hot-button pocketbook issue.
Insurers point to cases like this:
In fall 2009, a four-door Toyota Avalon was rear-ended in the GTA, its right rear bumper scratched. Two occupants were injured in what an insurance source termed a “relatively minor accident.”
Based on similar collisions, refinishing the bumper as well as assessment and whiplash treatments for the driver and passenger might hit $10,000.
But more than 100 accident benefit claims were submitted on their behalf to their insurance company, including 42 applications for medical assessments of injuries and 66 separate plans for treating the injuries.
Among the deluge of documents — known in the insurance business as “papering” and meant to swamp busy claims adjusters — were claims for several medical aids, including a “portable supersonic muscle relief device.”
“It wasn’t just the large number of devices but the amount of money for them. We went online and saw you could buy them for a lot less,” said the industry source. “One was 10 times its retail price.”
Thankfully, the obvious scam — not necessarily attempted by the occupants of the car and more likely by an unscrupulous clinic — was red-flagged and a fraction of the total claims of $214,929 has been paid. The file remains open.
“This is one example of what we see every day,” said the source. “It’s way above average for a relatively minor accident. It’s a ridiculous amount.”
Such is life on the front lines of the insurance wars, a political flashpoint for Finance Minister Dwight Duncan.
The industry is heavily regulated by the government, which approves rates and sets benefit levels, as it balances the needs of motorists with more than 100 companies that lost a total of $1.7 billion last year on their auto business — some profiting, others in the red depending on the claims they faced.
In Toronto alone, there were 46,484 traffic accidents to the end of November, an average of 139 daily, police say.
The average auto accident injury claim in Ontario is $56,000, five times higher than the average in other provinces where accident benefit levels are often lower.
“Most consumers are honest people,” says George Cooke, chief executive of Dominion of Canada General Insurance Company.
“The ones that are costing the system a lot are the minor injuries that people try to make into something more.”
On the flip side are accident victims — particularly ones with serious injuries — who feel their medical professionals’ requests for legitimate treatment are being denied or stalled by insurers under financial pressure.
The rejection rates are hard to pinpoint because an agency called Health Claims for Auto Insurance, an electronic system for transmitting auto insurance health claim forms between insurers and health care facilities, won’t provide a breakdown, says Nick Gurevich of the Alliance of Community Medical & Rehabilitation Providers, representing rehab professionals.
“It’s a very common problem,” says Dr. Donna Ouchterlony, director of the head injury clinic at St. Michael’s Hospital that sees 3,000 patients annually.
“We decide what we need for our patients and write treatment plans. They’re frequently denied, particularly for immigrant, non-powerful people who can’t afford good lawyers.”
It’s been worse since insurance reforms took effect in September 2010 reducing accident benefit levels for various categories of injuries with the goal of keeping premiums down, she says.
“They just deny everything and wait to see what’s going to happen. They wait to see if people fight back,” Ouchterlony adds.
Jennifer Ryan of East York feels caught in that squeeze.
“They’re treating us like they feel we’re fraudulent,” says the physiotherapist at Holland Bloorview Kids Rehabilitation Hospital.
Her husband, Andrew Ryan, 32, was riding his bike to work two years ago when he was hit by a car, careened off the hood and went helmet-first into the ground, suffering a mild brain injury and other bodily damage.
He’s had an estimated $70,000 worth of treatment funded by the insurance company Belairdirect. Part of his claim has already gone to mediation but more is in dispute with further physiotherapy and speech therapy recommended by the family’s medical providers but not by the insurance company’s assessors.
Ryan tried returning to work as a multimedia designer but couldn’t perform to standard and often fell asleep on the subway, missing his stops.
“If he was a single guy living by himself there’d be nobody looking after him and keeping him on track,” says his wife. “The insurance company is like, ‘This has gone on long enough.’ ”
Belairdirect acknowledges the conflict.
“We worked with Mr. Ryan to help him recover,” says spokesman Gilles Gratton. “Mr. Ryan has disagreed with some treatment decisions. We’re participating with him and we want to resolve these issues.”
In his latest report, Ontario Auditor General Jim McCarter looked at insurance premiums, the estimated $1.3 billion in fraud annually (an amount which is disputed) as well as drastic increases in injury treatment costs in recent years. He declared, frustrated: “Somebody’s got to get a handle on this.”
Ontario is not the only jurisdiction in this pickle.
“We are seeing a sharp increase in our bodily injury claims costs. I think that’s a problem for insurers everywhere,” said Adam Grossman of the Insurance Corporation of British Columbia (ICBC).
The government-run auto insurance company just raised its basic premium 11.2 per cent — the first hike in four years after seeing a $200 million rise in claims costs in the last year to $1.7 billion for bodily injuries. That’s an increase of $350 million from five years ago.
“This is not sustainable,” said ICBC chief executive Jon Schubert.
The next frontier in Ontario is taking a deeper look at fraud and how to prevent it, but scam artists are just one of the bugs that must be worked out.
About 33,000 insurance claims — almost half the annual total — are in dispute by motorists and stuck in a one-year backlog awaiting mediation or arbitration by the Financial Services Commission of Ontario (FSCO).
Both insurers and the rehabilitation industry are watching closely, recognizing that the new $3,500 cap on minor injury assessments and claims — the bulk of accidents — depends on how those cases are decided.
“The longer it takes to get these cases through the system, the longer there’s uncertainty and the more difficult it is for insurance companies to budget and price their products appropriately,” says Ralph Palumbo of the Insurance Bureau of Canada.
The $3,500 minor injury guideline will be reviewed in a couple of years with an eye to setting evidence-based treatment protocols.
FSCO, an agency of the finance ministry, is adding resources so cases can be mediated in the legislated 60 days by the end of March providing insurance companies and their clients have lawyers ready, said a spokesman for Duncan.
It all means the debate over insurance rates will continue.
“Premiums follow the money,” notes Palumbo.
Average auto premiums by province in 2010.
BC $1,092
AB $1,087
SK $832
MB $943
ON $1,432
QC $717
NB $813
NS $807
PEI $757
NL $985
Source: Ontario Auditor General
Average total claims costs by province per insured vehicle in 2010
BC $915
AB $768
MB $719
ON $1,328
NB $493
PEI $449
NL $746
(SK and QC unavailable).
Source: Ontario Auditor General
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| Orko |
Because you use a minority of cases to justify increasing the premiums on the majority?
Give everybody lower rates and take the scammers to court. |
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| ChemEnhanced |
| quote: | Originally posted by Orko
Because you use a minority of cases to justify increasing the premiums on the majority?
Give everybody lower rates and take the scammers to court. |
The problem is the courts are still against the insurers and typically even the scammers are going to get something. The cost in legal fees before even reaching court is approximately $40,000.00 because you have to go through mediations and pre-arbitratios before you even see the inside of a court room. If the insurance company is going to take a case all the way through the courts the costs are going to be in excess of $100,000.00 with no guarantee of a win. If you want the insurance companies to fight every fraud claim then guess who is going to pay for it in the end.....everyone. Your insurance premium would double.
Overall the fraud claims are the minority but in Toronto they are actually the majority. Of the 100 or so injury claims I have on my desk right now over 95% of them have some sort of fraud. This fraud is either from the injured party, the treatment facilities, the assessment facilities, the legal reps., and other service providers. |
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| Orko |
| quote: | Originally posted by ChemEnhanced
Overall the fraud claims are the minority but in Toronto they are actually the majority. Of the 100 or so injury claims I have on my desk right now over 95% of them have some sort of fraud. This fraud is either from the injured party, the treatment facilities, the assessment facilities, the legal reps., and other service providers. |
Is it always fraud or a case of the process being to complex? I feel that quite a bit of the time, people make honest mistakes because they just don't understand the in's and out's, and it gets categorized as "fraud". |
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| ChemEnhanced |
| quote: | Originally posted by Orko
Is it always fraud or a case of the process being to complex? I feel that quite a bit of the time, people make honest mistakes because they just don't understand the in's and out's, and it gets categorized as "fraud". |
It is straight up fraud. People claiming housekeeping when no one is actually coming in and doing the housekeeping. People claiming they need $250.00 a week for caregiving assistance for their 14 year old kid. Treatment facilities submitting treatment plans using doctor's names without the doctor knowing, treatment facilities requesting assessments that are not needed, requesting treatment that is not necessary. The list goes on and on. Not to mention tow truck drivers that get paid referral fees from legal reps. or the legal reps. that own treatment facilities. The list of fraud goes right from the police all the way through to the lawyers. Not to mention the organized crime and the terrorist groups that make tons of money off this fraud. |
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| ChemEnhanced |
Finally, a victory for the insurance industry.
| quote: | Car insurance scam: 37 arrested in Project Whiplash raids
Wendy Gillis and Josh Tapper
Staff Reporters
A lengthy investigation into a multi-million dollar auto-insurance scam led to the arrest of 37 people Thursday, many in the South Asian community, with police cracking down on an escalating problem that’s made the GTA Canada’s phony collision capital.
In early morning raids across the GTA — part of an investigation dubbed Project Whiplash — police arrested dozens, laying a total of 130 charges stemming from 77 collisions police say were staged and have helped send insurance premiums skyrocketing in the province. Additional arrests are expected.
“The victims of this crime are all of us who operate motor vehicles,” said Toronto Police Chief Bill Blair at a news conference to announce the arrests.
Auto insurance fraud costs Ontario drivers as much as $1.3 billion per year, between 10 and 15 per cent of all premiums, according to a recent report by the Auditor General of Ontario.
“There’s no question that the GTA is the staged collision capital of Canada,” said Rick Dubin, vice-president of investigative services for the Insurance Bureau of Canada (IBC), which was a key player in Project Whiplash.
The Toronto police’s traffic services division first probed the scam in 2009, said Insp. Gord Jones. A joint investigation with IBC and Financial Services Commission of Ontario (FISCO) uncovered a sophisticated scam ring operating primarily in the GTA’s Tamil community.
Police say the ring is allegedly headed by 10 people from Markham and Toronto, all facing a slew of charges, including fraud, forgery and falsification of books or documents.
It works like this: scammers orchestrate, or in some cases fabricate, an accident, then file a fraudulent insurance claim for vehicle damage and bodily harm.
If pulled off, the phony accidents can be lucrative, said Sgt. Mike McCulloch — as much as $50,000 per scam.
While exact figures are not known, Jones said the scams accounted for millions of dollars in losses.
State Farm Insurance, one of the first companies to suspect fraud by the accused, said its losses alone amounted to $4 million. A State Farm spokesperson confirmed that some of the accused were named in an affirmative action civil lawsuit launched by the insurance company in December 2010.
Some of the accused worked as paralegals, helping to file false insurance claims. Others operated rehabilitation or medical clinics in Scarborough, Toronto and Markham, and are accused of submitting false invoices to insurers.
Four of the implicated clinics face separate charges, laid by FISCO, under Ontario’s Insurance Act with one count each of knowingly making false or misleading statements to an auto insurer.
The clinics are: McCowan Rehabilitation Clinic, Ontario Rehabilitation Clinic, Physiotherapy Clinic and North York Health & Rehabilitation Centre in Toronto.
Many of the accused hail from the GTA’s South Asian community. Of the 10 alleged ringleaders, who range in age from 32 to 57, most are Tamil, said Det. Const. Kajamuganthan Kathiravelu, who made a separate appeal to the Tamil community at Thursday’s news conference.
Investigators contend the accused recruited largely from within their community, preying on new immigrants with few English-language skills.
“This gives a bad reputation to the community,” said Markham Councillor Logan Kanapathi, who is Tamil. “These people have let down their families and their community.”
It remains unclear if the alleged ringleaders previously knew their recruits, Kathiravelu said.
False claims have escalated in the province over the last five years. In a report released in December, the Ontario Auto Insurance Anti-Fraud Task Force said auto insurance fraud “is extensive, increasing and having a substantial impact on auto insurance premiums.”
From 2006 to 2010, overall auto insurance claims costs in Ontario rose by $3 billion — about $450 per registered vehicle.
Of that total increase, $2.4 billion, or 80 per cent, came from accident benefit costs, an increase that “cannot be explained by factors that would normally be expected to lead to increased costs,” such as a higher number, or a greater severity, of accidents.
Police named nine of the accused in Project Whiplash: Pirapaharan Nadesu, 33, of Toronto; Sipaskaran Sabaratnam, 32, of Markham; Nishanthan Ponnuthurai, 32, of Markham; Jeyakanthan Theivendran, 43, of Markham; Baskaran Tharmakulasingam, 35, of Toronto; Mahaletchumy Pathmanathan, 57, of Markham; Sujeegah Kanagalingam, 32, of Markham; Ravigunathas Gunasingam, 40, of Toronto; and Vishnukanthan Sabapathy, 35, of Toronto.
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| patpicos |
| quote: | Originally posted by ChemEnhanced
Finally, a victory for the insurance industry. |
They'll get a slap on the wrist, mark my words.
tbh those are the cases that should get 10+yrs |
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| ChemEnhanced |
| quote: | Originally posted by devnull
They'll get a slap on the wrist, mark my words.
tbh those are the cases that should get 10+yrs |
You are probably right but they are less likely to continue with the insurance fraud which is going to save us all money. |
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| 1dawoman |
I'm very happy that operation whiplash was a success. These fraudulent operations are obviously driving up rates and ruining the reputation of legitimate clinics whose employees and doctors work hard to ensure effective rehabilitation of their patients.
The only thing that bothers me is that despite such drastic cutbacks in benfits for ensured drivers since September 2010, including a huuuuuuge cutback in available physio/chiro treatment post accident, auto insurance rates continue to increase!!!....even for people who have never submitted a claim! Isn't this in and of itself a form of fraud too???
I wish insurance companies would reduce rates for drivers who have never been involved in an accident and reward their good drivers. Instead, they are increasing profits by changing legislation to implement significant reductions to drivers' accident benefits. |
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| ChemEnhanced |
| quote: | Originally posted by 1dawoman
I'm very happy that operation whiplash was a success. These fraudulent operations are obviously driving up rates and ruining the reputation of legitimate clinics whose employees and doctors work hard to ensure effective rehabilitation of their patients.
The only thing that bothers me is that despite such drastic cutbacks in benfits for ensured drivers since September 2010, including a huuuuuuge cutback in available physio/chiro treatment post accident, auto insurance rates continue to increase!!!....even for people who have never submitted a claim! Isn't this in and of itself a form of fraud too???
I wish insurance companies would reduce rates for drivers who have never been involved in an accident and reward their good drivers. Instead, they are increasing profits by changing legislation to implement significant reductions to drivers' accident benefits. |
The funny thing is even with the change from $100,000.00 for med to $50,000.00 for med coverage (unless your injuries are determined to be within the Minor Injury Guideline then you only have $3,500.00 for med coverage)the overall costs of claims are not going down significantly. The money is just being paid out is assessment fees to determine if someone's injuries fall within the Minor Injury. Also, things like housekeeping costs and caregiving costs that were being claimed for under Accident Benefits from your own insurance are now just being claims in Tort claims against the at fault insurer.
In the GTA about 20% of your premium goes to paying for insurance fraud. |
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