Auto insurance needs overhaul

By Alan Shanoff ,Toronto Sun

Saturday, September 29, 2012

 Over a period of five days in May and July, Ontario’s Standing Committee on Finance and Economic Affairs held public hearings reviewing the auto insurance industry. Transcripts are available online. A summary of these hearings was released last month.

From that, it seems there are deceptive practices, if not fraud, at every level of the auto insurance system, including medical and rehabilitation clinics, doctors, lawyers, paralegals, tow truck operators, repair shops, insurance company employees, and of course, accident victims who fake or exaggerate injuries.

Some clinic owners pay “large referral fees to family doctors, lawyers, paralegals, body shops and other participants in the auto insurance system who can direct patients their way.” These clinics then contact accident victims claiming to be their “insurer-preferred providers” of accident benefits services, and set up expensive, unwarranted treatment plans.

Tow truck drivers get kickbacks from repair shops. Repair shops inflate their fees.

Insurers charge a “commission” of up to 10% of the price of a repair for sending work to a particular shop.

Of course not everyone in the auto insurance system is dishonest, but the impression left is certainly one of rampant dishonesty.

Experts retained by insurers to provide independent medical exams of accident victims don’t seem shy in hiding their pro-insurer disposition.

One doctor referred to a “culture of entitlement” and said this of accident benefits, “You want aromatherapy? You want to have a colon enema? If you’ve got somebody signing it, you’re a go; it’s good to go.” He sure sounded sympathetic to accident victims.

So who suffers in this quagmire? Legitimate accident victims, for one.

As of 1996, accident benefits covered up to $100,000 in reasonable and necessary medical/rehab expenses. Instead of increasing that cap for inflation, it was reduced to $50,000 in 2010.

A cap of $3,500 was also placed on what are termed “minor injuries” in 2010, not subject to adjustment for inflation. This covers a wide range of injuries from slight neck pain to multiple sprains, contusions, abrasions, lacerations and whiplash soft tissue injuries.

There’s little help for victims who develop complications and require additional treatment once the cap is reached.

Insurers now have a “greater discretion to deny claims for Accident Benefits without medical examinations” to support the denials.

Insurers deny claims without “discussion or explanation,” sometimes simply ignoring claims inquiries.

Adjusters without medical expertise make decisions about entitlement to benefits, without seeking medical exams. Some abuse the right to require victims to undergo independent medical exams.

And, of course, we have the inherent conflict of interest where insurers choose medical examiners from a pool of insurer-friendly experts, paid generously by the insurance companies.

Many accident victims appeared before the committee.

Nadira Kanhai, a registered nurse, explained how she had been labelled as a malingerer by insurer-chosen experts with impressive sounding CVs, some of whom are professors and associate professors at top universities.

It’s hard to see how this woman could be a malingerer with fractures to three ribs, a fractured pelvis and an injured knee.

The same day she was being treated by a physiotherapist for these substantial injuries, an insurer-appointed occupational therapist declared there were no substantial injuries requiring treatment.

She told the committee insurers pay exorbitant fees for excessive assessments to produce bogus reports. It’s a lucrative business for many so-called experts.

This brave woman coined a phrase that made it into the summary of the hearings issued by the Legislative Research Service.

She referred to insurer-friendly assessments as “staged assessments”, comparing them to staged accidents where fraudsters stage an accident to enable car loads of fake victims to defraud insurers.

It’s obvious the auto insurance industry needs a significant overhaul. We need to reduce rampant fraud but in so doing so we must never lose sight of the point of car insurance, which is to protect legitimate accident victims.  

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