Why Are We Paying Higher Auto-Insurance Premiums?

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In another article, a registered Massage Therapist in Ontario complained that her patient’s insurance company had denied her $500 treatment-plan and had asked for a review by a Toronto surgeon who, without ever seeing the patient, determined that they were not in need of the treatment the therapist had recommended. They were paid $1500 for their work.

Mr. Ralph Palumbo, a spokesperson for the IBC, doesn’t believe that as much as 40% of claims are being denied. He believes that in fact, “people are trying to milk the system,” as he told the CBC, in order to make personal profits. He has cited that since 2005 to 2010, there has been 150% increase in claims-payouts while there has only been a 30% increase in injury reports, with the average claim running up to $56,000, about five times higher than in other jurisdictions.

However, the 40% figure is actually a little conservative according to the findings of a survey led by the Alliance of Community of Medical and Rehabilitation Providers, which represents 80 companies and 3500 health care providers. After the Health Claims for Auto Insurance Office, which is responsible for transferring claim forms between insurers and the health facilitators, refused to provide the Alliance information regarding the health claims being denied, the Alliance led a survey of 1143 rehabilitation providers and found that 42% of them had rejected claims, compared to 11% the previous year.

On top of this, it seems that the process for legitimate victims who dispute their insurer’s decisions is demonizing, to say the least. Firstly, it may be a year long for a mediation process. Then it may take another year until arbitration happens. This is one of the reasons there is a backlog of over 10,000 cases, as Adam Wagman, member of the Ontario Trial Lawyers Association, told the CBC. Meanwhile, as you wait all this time just to beg the FSCO’s to ask the insurer to review its decision, they investigate every action and word you or your physicians or therapists make, reinforcing thereby the sentiments of Mr. Philip Howell, CEO and superintendent of the FSCO: that there is a “zero tolerance for those who abuse the system and drive up premiums”. Yet this institution, which is funded by our tax dollars, has stayed hushed on the subject of unqualified insurer-commissioned assessments.

[pullquote]All this is due to those bad apples who decide to cheat the honourable insurance industry….right?[/pullquote]The reality is that we continue to pay higher and higher premiums for what seem like lesser and lesser benefits every year. Now we are being told that it is because of the high-crime area in which we are unfortunate enough to live. We need steps taken against this; we cannot throw everybody under the same bus just because some apples are simply rotten.

Rick Dubin, vice-president of the Investigative Services Department of the IBC, believes that by getting fraud offenders to pay restitution and by putting pressure on prosecutors to push for tougher sentences, premiums may stop going up. But why should responsible drivers incur the cost of offenders in the first place, to the point where even legitimate claims are denied and people are left without treatment owed? And why is the provincial government allowing benefits to be cut down so drastically for what is considered minor injuries? Why are institutions like the FSCO and IBC not scrutinizing insurers and their adjusters as they are doing consumers?

To aid those consumers that are going through the lengthy processes of appeals, arbitration and mediation, many plaintiff-side personal injury lawyers are bypassing the mediation process “by commencing lawsuits or arbitration once 60 days have passed since the date[…]” of filing, according to an article in the Law Times Newspaper, a timeline referenced in the FSCO’s dispute resolution practice code. The decision has been validated by the Ontario Superior Court.

Mr. Mario Sergio, a private MPP in the York West riding has also introduced Bill 43 to the House of Commons, which deals with insurers rating premiums based on driving records rather than on postal codes. On March 7, 2012, it went through its first reading. Though Private Member bills rarely become law, let’s hope for all our sakes that many of those voting on it have to pay sky-high premiums because of the crime-prone neighbourhood they live in…..Ha!

What do you think can be done on our part as citizens and consumers to put pressure on both insurance companies and provincial governments in order to regulate insurance premium prices?

ARB Team
Arbitrage Magazine
Business News with BITE.

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