Last week, the Insurance Bureau of Canada (IBC) took out full page ads with a big statement—“Criminals Next Exit”—and titled “Ontario to crack down on The Car Accident Business”.
The gist of the ad, which is similar to campaigns previously run by the IBC, is that the main reason insurance premiums have not decreased is that fraud continues to be a systemic problem.
This is a constant theme in advertising run by the Insurance Bureau. They attempt to use bold language to try and convince the public that fraud is an enormous problem in the Ontario auto insurance system. However, there is little concrete evidence to support this allegation.
Although it is fair to say that there is some degree of fraud in the system, and it should be swiftly dealt with, it is not a problem to the extent that the Insurance Bureau is suggesting. The ads do not refer to any evidence to support their allegations. In previous advertisements and statements, they have referred to a KPMG report dated June 13, 2012 which was commissioned by the Insurance Bureau. However, KPMG stated that this was not an audited report but an estimate of the problem. KPMG had simply relied on information largely provided by or originated by insurance companies and suggested the problem could range between $770 million and $1.6 billion.
Furthermore, the report by KPMG should be considered outdated because it relied on data for claims in 2010, and was done prior to the implementation of the major changes to the accident benefits system including:
- Implementation of Minor Injury Guideline which limited medical/rehabilitation coverage to $3,500 for the vast majority of all accident victims
- Reduction of medical/rehabilitation limit coverage from $100,000 to $50,000
- Elimination of housekeeping benefit
- Implementation of the concept of “economic loss” or “incurred expense” for attendant care benefit
According to the 2011 annual report of the Office of Auditor General of Ontario, approximately 60% of accident victims suffer minor injuries and fall within the MIG which restrict the maximum medical benefits to merely $3,500. More recent data suggests that number is much higher. Despite these major changes, the Insurance Bureau is still asking the government to further restrict benefits and “close loopholes that have allowed the system to be abused”.
The expectation of the government and consumers was that the reduction of benefits coverage would lead to a corresponding reduction of premiums. Instead, the Insurance Bureau is back to its tired old tactics of exaggerating the problem of fraud without concrete evidence, in a bid to have the government limit insurance coverage further. In reality, there is no demonstrable need to restrict benefits at all. Now, more than three years after the September 2010 changes, insurers are still making very healthy returns on their Ontario auto insurance business. In a 2012 report by General Insurance Statistical Agency, it was noted that the insurance industry took $3.78 billion in accident benefit premiums from Ontario drivers, but paid out only $1.67 billion in claims and adjustment expenses.
The Insurance Bureau is distorting the extent of the problem in the system with their advertising campaign in an effort to pressure government to further restrict car accident victims’ rights. Too often, serious auto accident victims are the losers when it comes to this type of distorted campaign. That’s the sad reality of the “Car Accident Business” in Ontario—with no exit in sight.
Frank McNally is an OTLA member and a lawyer practising with McNally Gervan LLP in Ottawa, Ont.