Jul 28

2012

Toronto Sun – Ontario auto insurance still a vexed issue

Posted by Admin1044 in Blog, In the News

By Jonathan Jenkins ,Queen's Park Bureau

A year into its work and just a few months short of filing a final report, the province’s Auto Insurance Anti-Fraud Task Force is still struggling to define the extent of the problem.

“Estimating the amount of fraud has proven difficult,” a status report issued by the Task Force said, although it added the province saw a “startling and unexplained” spike in accident claims between 2006 and 2010.

Since then, the province has made significant changes to the auto insurance system – capping benefits and streamlining the process – but it’s not yet clear what impact that’s had.

“Comprehensive year-end statistics for 2011 are not yet publicly available, although early figures indicate a reduction in claims,” the report says. “However, a flood of requests for the mediation of claims of undetermined merit… has postponed a final determination of the effectiveness of these policy changes.

“Regardless of any reduction in costs that may result, there is nothing to suggest the changes will permanently reduce the appetite to make unwarranted or illegal claims.”

In light of that, the Task Force said it is considering further measures to combat fraud – including new rules for health clinics and tow-truck operators, new investigative powers for the Financial Services Commission of Ontario – which oversees the auto insurance industry – and a “consumer engagement and education strategy”, and wants to hear from the public about what might work.

“We are now asking you to focus your attention on public policies that would help reduce the extent of organized and premeditated fraud by making it more difficult to commit and hide,” the report says,

Despite the fact the Task Force said it was unable to pin down the scope of fraud in the system, the Insurance Bureau of Canada lauded the report for including estimates ranging from $770 million to $1.6 billion annual cost.

“These are important steps and we thank the government and other stakeholders who are working so hard to fight fraud,” IBC Vice-President (Ontario) Ralph Palumbo said in a news release.

“We all have a role to play in fighting the problem of fraud, raising awareness and lowering tolerance.”

http://www.torontosun.com/2012/07/28/ontario-auto-insurance-still-a-vexed-issue

Jul 25

2012

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Insurers Oppose New York Legislative Changes

Posted by Admin1044 in Blog, In the News

The legislature adopted the New York auto insurance legislation S7787/A10784 on the last day of the past session. This was an amendment to the existing law for supplementary uninsured and underinsured (SUM) coverage, and watered down the choices available to the consumer. The current regulations say that policyholders must now opt out of their increased coverage for SUM, instead of the previous opt in process that was more transparent to consumers.

The impact of this legislation could drive premiums sharply upward, and many drivers may end up forking over more money than necessary for coverage that they didn’t specifically select to be a part of their New York auto insurance policy. This most recent legislation also involves a provision that is related to the no fault system, but that isn’t a part of an effort against fraudulent use of the system. The New York Insurance Association fears that the bill’s negative impact could be worsened by the fact that there was no meaningful reform passed by the legislature to the no fault system.

A similar issue was debated in Ontario in 2010 with the introduction of the most recent reforms. At the time standard coverages for medical and rehabilitation expenses, attendant care and caregiver and housekeeping expenses were being reduced. There were parties suggesting to the government that consumers should be renewed with their existing coverages and offered the option of buying down to the new standard coverages. The government chose to require that consumers have their coverages lower at renewal with the option of buying back up.

It’s time for MPPs to stand up to insurers?

Posted by Admin1044 in Blog, In the News

Saturday, July 14, 2012

It’s time for MPPs to stand up to insurers

By Alan Shanoff, QMI Agency

Last Updated: July 14In 2010 Ontario’s no fault auto insurance medical and rehabilitation benefits were cut in half to $50,000 for non-catastrophic impairment cases.

A new category of injuries labelled minor injuries was created, and for injuries deemed to fall in to that category benefits were cut to $3,500, a figure that experts say won’t provide sufficient services to adequately treat many patients.

Since these amounts include assessment and examination costs the actual amounts available for payment of benefits is even lower. Also, since the majority of accident victims suffer minor injuries, Ontarians now have the worst no fault benefits coverage in Canada. But at least Ontario laws require up to $1 million in medical and rehabilitation benefits for those who have suffered a catastrophic impairment in a motor vehicle accident.

Last month, however, the minister of finance released the report of the superintendent of financial services outlining recommendations that would reduce the already small number of people, about 650 per year, who qualify for catastrophic impairment benefits. While that would no doubt please the insurance lobby it would be a tragedy for the neediest accident victims who would see their benefits reduced by 95%, from $1 million to $50,000.

The impact of restricting the definition of catastrophic impairment was starkly illustrated with the contrast between the outcomes of accident victims Jorg Reichert and Jaisa Sulit, details of which were placed before the Standing Committee on Finance and Economic Affairs during their May 28 hearing.

Jaisa’s injuries included a burst fracture of part of her spinal cord. She was confined to a wheelchair for several months. Her injuries were accepted as catastrophic, entitling her to the benefits she required. With almost two years of physiotherapy, massage therapy, physiatry, occupational therapy and a dietician she can now walk with a pole and requires a wheelchair only for long distances. She is looking forward to returning to her career. Had she not been deemed catastrophic, she’d have exhausted her benefits within nine months of the accident.

As she told the committee, “catastrophic funding is why I’m able to continue to see a multidisciplinary rehab team that has not only helped me regain physical and functional abilities, but has helped me adjust to living a life with a disability.

Contrast Jaisa’s treatment with Jorg’s. Jorg’s accident left him with “serious and permanent” injuries including major depression, personality change and the loss of cognitive skills.

Prior to the accident Jorg was a “brilliant and successful businessman and entrepreneur.” He and his wife started the Movenpick and Marche restaurants in Canada. His insurer denied Jorg’s physicians’ catastrophic designation. The insurer cut off payment for treatment two years after the accident, with the $100,000 limit being reached. Had the accident occurred after September 2010 the limits would have been only $50,000.

More than four years after the accident Jorg has seen little improvement. The accident has wiped out the family’s savings.

Why is there a pressing need to amend the catastrophic impairment eligibility rules?

Only about 1% of all accident victims’ injuries are serious enough to be deemed catastrophic. These are the most vulnerable victims, the ones who require access to a wide variety of medical rehabilitation professionals, the ones for whom the current $50,000 cap is grotesquely inadequate.

Living as we are under a minority government we need to alert out MPPs that it’s time to stand up to the insurance lobby and support our most seriously injured car accident victims.

Clarification: In my May 27 column I mentioned that Nova Scotia has a minor injury cap of $7,956. This amount is a cap on the damages an injured person can recover in a lawsuit for pain, suffering and loss of enjoyment of life for a minor injury, not a cap on minor injury no fault benefits. The cap on no fault medical and rehabilitation benefits for any injury in Nova Scotia is $50,000.

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Jul 13

2012

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With Vid: Windsor victim urges Ontario to protect crash benefits

Posted by Admin1044 in Blog, In the News

Rehab key to recovery: Victim

BY DAVE HALL, THE WINDSOR STAR JULY 12, 2012

WINDSOR, Ont. — Cutting benefits to people who suffer catastrophic injuries in automobile accidents will hinder their ability to return to full and active lives, a brain injury survivor said Wednesday.

Katherine Worotny told a provincial committee hearing in Windsor on ways to reduce the cost of auto insurance that she couldn’t have come as far as she has without the programs she accessed through her coverage.

Worotny suffered a closed head injury and spent six weeks in a coma after a 1993 car accident in Tecumseh.

A teacher before she was hit by a driver who ran a red light at E.C. Row and Lesperance Road, Worotny said she was “never able to return to my career and now I’m a volunteer with a number of agencies, all of which deal with people who have had similar problems.

“I also speak to student groups about drinking, driving and the use of seatbelts, but had it not been for the counselling, medical care and physiotherapy I received, and am still receiving, I wouldn’t be able to do any of that.”

Worotny spent eight years in various rehabilitation programs relearning basic life skills and underwent psychological counselling to deal with anger issues and the loss of her career.

Even 19 years after the accident, Worotny still attends physical therapy sessions designed to build up the strength in one knee and leg which were shattered in the accident.

“I’m an example of a person who can now have a productive life and (recent) changes to the system may make it harder for people to access the benefits, therapy, counselling and rehab services they desperately need,” said Worotny.

The provincial standing committee on finance and economic affairs, which also heard from delegations in Brampton and Toronto this week, is expected to make recommendations later this year.

MPP Teresa Piruzza (L — Windsor West), a member of the committee, said proposals involving catastrophic injuries include setting out definitions of such injuries and the level of benefits people would be entitled to under any changes.

“We don’t want to deny benefits to people who need them but we need to agree on the determining factors for such situations,” said Piruzza. “We have a generous system compared to most other jurisdictions but we have to be able to reconcile those benefits with the level of premiums.”

MPP Taras Natyshak (NDP — Essex), a fellow committee member, said that reductions in benefits are rarely accompanied by an equal reduction in premiums.

“Insurer liability decreases but premiums don’t and that’s troubling,” said Natyshak. “And decreasing benefits for those suffering catastrophic injury would, in many cases, prevent many people from resuming productive lives.”

The committee is also looking at the insurance industry practice of charging different rates based on where a driver lives, rather than solely on their driving record.

“The use of territories to determine rates is discriminatory in the extreme,” said Victoria Cross, a Windsor lawyer who made a presentation to the committee. “No matter how you dress that up, it is redlining by another name and it provides a means by which through geographical or territorial discrimination against neighbourhoods and communities, racial discrimination can be given an unholy ghost life.”

MPP Bob Bailey (PC — Sarnia-Lambton) said setting rates by territory, particularly in the Greater Toronto Area, is a way of addressing the high incidence of auto insurance fraud in that region.

Restricting the use of such measures would shift higher rates onto drivers elsewhere in the province where insurance fraud isn’t as large an issue.

Former Manitoba premier Howard Pawley, who helped establish that province’s public insurance plans 40 years ago, spoke in favour of establishing a similar plan in Ontario, even though that is not part of the committee’s mandate.

“A public plan does not only deliver lower premiums, it also provides every motive for the province to reduce claims and improve driver safety and establish anti-theft and fraud initiatives,” said Pawley. “Last year, the plans paid out a dividend to drivers that amounted to a 6.8 per cent reduction in their premium rates.”

The committee is also studying anti-fraud initiatives as a way of curbing premium increases.

Jul 11

2012

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N.B. proposes minor injury award cap increase

Posted by Admin1044 in Blog, In the News

Thompson's World Insurance News

Insurers and brokers are taking a wait-and-see approach to proposed

enhancements to New Brunswick's auto insurance system that could take effect

as early as this fall.

The provincial government has recommended among other things that the

cap on awards for minor auto accident injuries be increased to $7,500 from

$2,500, raising the New Brunswick level to that of neighbouring Nova Scotia.

The proposals stem from work conducted by the province's auto insurance

working group that began in January, 2011.

“Our recommendation of a $7,500 cap exceeds the working group's

suggested cap,” Justice Minister and Attorney General Marie-Claude Blais

said.

“Actuaries have told us that any increase in the required average

premium with the proposed definition, together with an increase in the cap

amount, could be absorbed by insurers – resulting in no increase in the

average premiums.

“This would allow us to foster a market in which auto insurance remains

affordable and accessible in a stable environment.”

The Insurance Bureau of Canada's Atlantic vp Bill Adams said that

overall it believes the government has taken a reasoned approach that

focuses on stability, affordability and availability for auto insurance in

New Brunswick.

“While it is clear that the announced reforms will push up claims costs,

it will be important to monitor the impact of those pressures over time.”

Mr. Adams said the fact that the working group recommendations went

beyond the official mandate bodes well for other improvements to the

province's auto insurance system, including a focus on consumer awareness, a

discussion on the potential of minor injury diagnostic and treatment

protocols and regular monitoring of how auto insurance is working for New

Brunswickers.

The Insurance Brokers Association of New Brunswick said the proposed

increase in the cap is important. At the auto insurance working group

hearings, insurance brokers spoke in favor of improvements that would

increase awards and maintain stable rates for consumers,” said IBANB

president Terry Gaudet of Beausejour Gaudet Insurance in Dieppe.

“Not only is the new $7,500 cap better for the consumers but it being

indexed to the cost of living is an incredible way to ensure that it keeps

up with the times.”

Much more in our July 9 2012 edition. If you are not a regular reader,

click on subscribe on the left hand side of the main page for typical

details.

Jul 09

2012

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Home insurer Wawanesa blasted by judge for hard-ball tactics

Posted by Admin1044 in Blog, In the News

BY ALAN SHANOFF ,TORONTO SUN

FIRST POSTED: SATURDAY, JULY 07, 2012 06:36 PM EDT

It’s taken 12 years of aggravation and litigation but in late June, Woodbridge, Ontario homeowners, Salvatore and Linda Brandiferri, finally received justice from their home insurer, The Wawanesa Mutual Insurance Company.

Unfortunately, it took a hard-fought lawsuit, including 12 days of trial, to achieve justice.

The saga began with a fire in the attached garage at the front of the Brandiferri home.

The garage and its contents were destroyed and the interior of the home suffered extensive smoke damage.

The Brandiferris were out of their home for 4½ years, resulting in extensive living expenses, in addition to the costs of restoring their house and compensation for damage to personal property.

Wawanesa paid out $479,000 under the insurance policy but this wasn’t sufficient to cover the actual losses, hence the lawsuit.

As insurance companies sometimes do, Wawanesa used hardball tactics in the litigation.

They asserted a defence of fraud. They didn’t claim the fire was intentionally caused by the Brandiferris, but that the proofs of loss submitted were fraudulently completed.

To up the pressure even further, they asserted a counterclaim for $600,000. This was abandoned on the eve of trial but the fraud defence was vigorously pursued throughout the trial.

The fraud defence was peculiar to say the least.

As the trial judge pointed out, “the schedules of loss were prepared in circumstances of complete transparency. By this I mean that apart from the items that were destroyed in the garage, the items that were removed from the building were available for inspection.

This was not like a typical and paradigmatic fire loss case in which the plaintiff claims recovery for items that were not actually in the fire, where the insurer has no way of knowing the truth because everything was destroyed.”

Worse, for Wawanesa, the judge called the allegation of fraud “opportunistic” and “more a product of legal strategy than factual reality.” Wawanesa also took the strange position the lawsuit could not succeed because the Brandiferris had failed to participate in an appraisal process — where each side appoints an appraiser who then appoint an umpire — to determine the amounts in issue.

But when the Brandiferris’ lawyer proposed an appraisal process, Wawanesa’s lawyer rejected it, stating “your client is not entitled (to) an appraisal.” The trial judge ordered Wawanesa to pay an additional $108,257 for extra work required for the proper restoration of the home.

As the judge put it, “I see, however, no compelling reason to require the Brandiferris to settle for less than adequate reconstruction.” The court also ordered Wawanesa to pay for an additional six months of alternate living arrangements, as well as an added sum for personal property damaged in the fire.

The special significance of the case is the judge’s award of $100,000 in punitive damages for violation of the insurer’s duty to act in the utmost of good faith in investigating, assessing and attempting to resolve the claim.

The judge made the punitive damages award to admonish Wawanesa for having engaged in a “high stakes litigation strategy designed to intimidate the Brandiferris.” Co-counsel for the Brandiferris, Jason D. Singer of Singer, Kwinter, referred to the insurer’s tactics as “scorched earth”. Co-counsel Alfred M. Kwinter believes the Brandiferris were bullied by Wawanesa.

The judge set the punitive damages award at $100,000 to take into account Wawanesa’s status as a repeat offender, as a result of a previous case where Wawanesa defended another fire claim.

In that one, the judge noted, the company asserted the property owners committed arson when they ought to have known the case for arson “did not pass much beyond suspicion” and succeeding in its defence “was a very long shot.”

Unfortunately, with assets of about $7 billion and 2011 profits of about $108 million, it’s doubtful a punitive damage award of $100,000 will create ripples in the Wawanesa boardrooms.

Jul 09

2012

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Insurance coverage called ‘a joke’

Posted by Admin1044 in Blog, In the News

‎

Chatham Daily News

News Local

By Ellwood Shreve, QMI Agency

Friday, July 6, 2012 Mention the topic of auto insurance reform and you'll quickly get personal injury lawyer Jim Allin's blood boiling.

What the Chatham lawyer finds particularly galling about the reforms that went into place on Sept. 1, 2010, is the creation of a Minor Injury Guideline (MIG) that puts a cap of $3,500 in medical and rehabilitation benefits for those injured, at no fault of their own, in a motor vehicle crash.

“What I'm finding is unless my clients are obviously, extremely seriously injured . . . all my clients are being placed into this (minor injury) guideline by all these insurance companies,” Allin said.

He has clients who have gone through the $3,500 benefit in one month for physiotherapy and other treatments.

“Do you have any idea how fast that goes these days?” he said.

“Auto insurance in the province of Ontario, right now, is a train wreck,” he added. “It is so unfair to innocent accident victims . . . it's just plain wrong.”

Chatham lawyer, Jerry O'Brien, said insurance industry statistics show around 70% of people injured in a crash are being put in the $3,500 benefit cap category.

He said $3,500 doesn't go far when a lot of services are being de-listed from OHIP coverage, such as chiropractic services, physiotherapy and massage therapy.

He said, statistically speaking, 15-20% of neck or back injuries are permanent.

The $3,500 minor injury benefit “just simply doesn't go far enough to allow people to get better,” O'Brien said, adding the coverage being provided for what people are paying in premiums “is a joke.”

As a result of the reforms, the standard limits for medical rehabilitation has been reduced to $50,000 from $100,000 for non-catastrophic injuries, including broken bones. Other reductions in standard coverage include 70% of gross weekly income down from 80%, but the maximum of $400 per week remains the same. As well, benefits for attendant care were cut in half to $36,000, from $72,000.

However, there are options to pay more for extra coverage, one example being $100,000 for medical and rehabilitation services, once the standard limit.

Peter Karageorgos, manager of consumer and industry relations for Ontario with the Insurance Bureau of Canada, told The Chatham Daily News the minor injury guideline was set up for sprains, strains and whiplash.

When asked how much money the lower limits have saved the auto insurance industry, he said: “It takes a little bit of time for those changes to work through the system.

Karageorgos believes the reforms have helped put some stability into the insurance system.

He noted the Financial Services Commission, which regulates the auto industry, showed in the fourth quarter of 2011 and the first quarter of 2012, that the general trend is that rate requests from insurance companies are going down.

O'Brien figures the average person has had their coverage reduced by 50-60%, noting, “they certainly didn't see that drop in their premiums.”

Karageorgos freely states: “Premiums are still way too high in Ontario.”

He said auto insurance is like any product, “it's your cost that drives your premiums or your price.”

Insurers in Ontario have seen costs far outpace what the premiums are, resulting in insurers losing about $2.8 billion from 2008-10, Karageorgos said.

“So what you need to do is get some stability in the system where costs are inline with premiums and, hopefully, the balance shifts so insurers can continue to reduce premiums,” he said.

Karageorgos said it's a competitive market so no insurance company wants to raise premiums and risk losing market share.

Allin said to him the most shocking example of why the auto insurance system is wrong is the $30,000 deductible applied to every pain and suffering award less than $100,000.

He said he has been unable to explain to his clients why the law says $30,000 of what a jury has awarded them fair and square, goes to the insurance company of the at-fault driver.

Karageorgos said the deductible is in place to show the value of the claim and to safeguard against clogging the court system with claims that may not have merit.

Allin said the deductible, which has been in place for years, started at $10,000, rose to $15,000, before doubling to the current $30,000.

“The insurance companies have progressively increased the amount of money they get to keep each time one of their bad drivers causes a crash,” Allin said.

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Jul 09

2012

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Insurance coverage called ‘a joke’?