This email was recently circulated in our office and we thought it would be a good idea to upload it to the blog for everyone to take a look at, it's an interesting read for those who are wondering why insurance rates are so high right now.
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
Torstar News Service
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
Torstar News Service
