Insurer tries to shirk duty

Insurance companies required to defend policyholders regardless if policy limits exhausted

 

BY ALAN SHANOFF, TORONTO SUN

FIRST POSTED SATURDAY, MARCH 30, 2013 06:40 PM EDT

It’s just amazing the extent to which an insurer may go in an attempt to prevent having to fulfill its obligations to policy holders.

Just ask one Vishal Malaviya, who had the misfortune to have been in a collision on October 14, 2005 and was subsequently sued by the occupant of the other car.

As required by law, Malaviya had purchased car insurance, although he had only purchased the minimum liability limit of $200,000. But with that liability coverage also came a promise to defend lawsuits commenced against him arising out of his ownership, use or operation of his car.

At least that’s what any reasonable person who had taken the time to read his car insurance policy would have thought. It’s right in section 3.3.1 of the policy language, language which has been approved by Ontario’s Superintendent of Financial Services.

That section explicitly states: “If someone sues you or other insured persons insured by this Section for losses suffered in an automobile incident, we will provide a defence and cover the costs of that defence, including investigation costs.” But, this clear language is countered by other language in the policy which Justice E.M. Morgan of the Ontario Superior Court described as “muddled and contradictory,” potentially leaving a loophole for an insurance company or its lawyers to take.

Malaviya’s insurer, Jevco Insurance Company, saw that potential loophole and tried to take advantage of it.

Here’s what they did. Even though there hadn’t been a trial or any determination of liability they decided to pay the plaintiff the full amount of the liability coverage, namely $200,000. Having paid out the policy limits, Jevco took the position that they were no longer required to defend Malaviya’s lawsuit. After all, they no longer had a financial stake in the litigation, having already paid out their maximum policy limit of $200,000.

Too bad for Malaviya, who would now have to retain and pay for his own lawyer to defend the lawsuit and so much for the promise to defend any lawsuits.

Brilliant manoeuvre

It seemed like a brilliant manoeuvre. If the plaintiff recovered more than $200,000 then Malaviya would be on the hook for any excess sum, but if the plaintiff recovered less than $200,000 Jevco could claim back the difference between the $200,000 it had paid and the actual amount recovered by the plaintiff. So what if this fancy footwork would render meaningless the insurer’s duty to defend and put Malaviya on the hook for one huge legal bill.

But, earlier this year, Justice Morgan quickly put the kibosh to this tactic. Relying on the unequivocal language of the insurance legislation he pointed out that the obligation to defend a policyholder’s lawsuit is clear and unqualified. An insurance company is required to defend the policyholder regardless of whether the policy limits have been exhausted. Providing a defence and coverage of defence legal costs is mandatory, even if the wording of the policy is muddled and contradictory.

Any other result would have put all policyholders at the mercy of their insurance companies who could tender their policy limits and avoid having to pay the costs of defending lawsuits. It would have destroyed the peace of mind policyholders are entitled to have knowing that if sued they will be defended by their insurers.

Of course, the result does leave Malaviya in an odd situation. He now faces being defended by an insurance company with no real vested interest in the lawsuit. What’s to stop Jevco from instructing its lawyers to settle quickly or not defend vigorously, leaving Malaviya with a large judgment to pay?

If that were to happen then Malaviya could sue Jevco for bad faith conduct or the lawyer it appointed for negligence.

But then I’d have another column to write. 

Empty promise on auto insurance

FIRST POSTED: SATURDAY, MARCH 30, 2013 06:39 PM EDT

You have to marvel at how Ontario’s auto insurance industry has provincial politicians wrapped around its little finger.

Every time the auto insurers blame a new villain for their high rates, politicians fall all over themselves to accommodate the industry. And yet rates continue to skyrocket.

So don’t expect the latest promise by Premier Kathleen Wynne, NDP Leader Andrea Horwath and the insurers to lower premiums by fighting fraud, to do any good.

Horwath’s original demand that rates be cut by 15% within a year as the price for her supporting the Liberal minority government, has now been downsized to gradually reducing rates, mainly in the GTA where they’re highest, in co-operation with the insurers. (Horwath insists this can be done in a year.)

But have we all forgotten how many times the auto insurers have done this dance, governments have jumped to attention, and yet rates kept climbing?

At one time, the insurers blamed high rates on high court costs, so the province responded with no-fault insurance, which limited the right of people to sue. Rates kept rising.

Then the industry claimed premiums were high because people were being forced to buy more insurance than they needed.

So the government let them offer policies with less coverage, meaning people had to pay more to retain the coverage they had before the cuts. Rates kept rising.

Ontario’s NDP government from 1990 to 1995 deep-sixed its signature election promise to introduce public auto insurance, at the behest of the auto industry. Rates kept rising.

In all, there have been six rounds of auto insurance reform since 1990. Rates kept rising.

Now the auto industry claims fraud is driving up rates — actually a perennial complaint — and so Wynne and Horwath are promising to reduce fraud.

What won’t be fixed, however, is the fraud auto insurers commit when they deny genuine accident victims the benefits they were promised in the polices they bought, as Sun legal affairs analyst Alan Shanoff has documented in numerous columns.

What won’t be fixed is the huge backlog of cases requiring mediation between accident victims and insurance companies, which the insurers use to delay paying out legitimate claims.

In his 2011 annual report, Auditor General Jim McCarter noted the province still doesn’t have an effective system for combatting fraud.

But he also found other factors contribute to high premiums, such as the province allowing insurers to increase them based on a “reasonable rate of return” of 12% on equity.

Problem is, that hasn’t been changed since 1996, when the long-term Canadian bond rate was 10%, compared to 2%-3% today.

If politicians want to get serious about fixing the system, the first thing they’re going to have to do is to stop listening to the auto insurers.

Based on past experience, don’t hold your breath. 

Don’t go counting your auto insurance savings yet

BY CHRISTINA BLIZZARD ,QMI AGENCY

FIRST POSTED: WEDNESDAY, MARCH 27, 2013 05:43 PM EDT  UPDATED: WEDNESDAY, MARCH 27, 2013 11:24 PM ED

TORONTO – We’re back to let’s-make-a-deal time in provincial politics.

And you should be very afraid.

When you get the Liberals, the NDP and the insurance industry all agreeing on something, it’s a good idea to check the fine print.

New Democratic Leader Andrea Horwath appeared to have pulled off a major coup Wednesday — forcing Premier Kathleen Wynne to cave in to her demand that the government require insurance companies to roll back their rates by 15%.

“It’s something we can work with the NDP on,” Wynne told reporters Wednesday.

Because auto insurance is compulsory, rates are regulated by the Financial Services Commission of Ontario.

So how’s this going to work?

Government is going to tell a private industry how to run their business?

Auto insurance rates are not as much an issue in the rest of the province as they are in the GTA.

According to Insurance Bureau of Canada figures, the average premium Ontario-wide is $1,505.

Here’s the break-down:

In Toronto, Markham, Richmond Hill, Vaughan and Peel, that figure is $2,000. Across the province, the numbers are much lower: Niagara, $1,450; Windsor-Essex, $1,425; Ottawa, $1,141; Brantford, Guelph, Kitchener-Waterloo, Cambridge; $1,374; Halton and Hamilton Wentworth, $1,522; Thunder Bay and North Bay, $1,127; Northwestern Ontario, $1,066.

Why are rates higher in the GTA? Because claims and fraud are higher here.

There are unscrupulous medical providers. There are staged “accidents,” where scam artists fake crashes in order to get big pay-outs from insurers.

Should the rest of the province pay for the GTA’s larceny?

Should bad drivers get a 15% roll-back on premiums?

It’s complex, admitted Finance Minister Charles Sousa.

“I acknowledge that premiums are high,” he told reporters.

“I acknowledge that costs in Ontario are high and we are taking steps to find ways to get it reduced so we can make it more competitive in Ontario, recognizing that the rest of Canada has much lower costs and much lower premiums,” he said.

He also said he would address what he called, “regional and zoning impacts,” across the province.

“What we don’t want to do is find ourselves providing much better rates for those that are creating bigger risks for the province,” he said.

Did I mention he represents Mississauga — where premiums are skyrocketing?

The motion the NDP brought to the legislature and which the government supported, talked about a “gradual” reduction in auto insurance rates — a change from Horwath’s demands that rates be slashed within a year.

Sousa said he’d have more details before the upcoming budget.

Horwath is sticking to her one-year timeline for a 15% cut.

“We’ve indicated from day one that we expect within a year for these rates to come down,” Horwath told reporters.

She’s adamant without that cut, she won’t support the budget.

Tory critic Jeff Yurek called it “bumper sticker politics.

“The PC party agrees auto insurance rates are way too high in this province and they need to come down,” he said.

The Tories would tackle big bureaucracy in the insurance industry, which Yurek said is inhibiting competition.

He said the government sat on the anti-fraud task force recommendations that came out last November.

“The main thing we need to do is look at the dispute resolution mechanism. There’s too much backlog in the mediation-arbitration system and that’s keeping rates high,” he said.

The Insurance Bureau of Canada applauded the move.

“We support any move that links key reforms to meaningful premium reductions,” Vice President Ralph Palumbo said in a statement.

The last time the industry applauded the government it was because they’d been allowed to slash benefits to accident victims.

I’m not breaking out the bubbly yet.

I want to see precisely how the industry will reduce costs.

Crack down on fraudsters, sure.

But good drivers are tired of paying for the bad ones. And honest folk are tired of having their benefits slashed — and their pockets gouged

Liberals to back NDP’s call for 15% auto insurance cut

Published March 27, 2013

Premier Kathleen Wynne’s minority Liberals will back NDP Leader Andrea Horwath’s bid to lower auto rates, the Star has learned.

In a move that could well avert a spring election, Liberal MPPs are set to support New Democrat MPP Jagmeet Singh’s motion Wednesday calling on Wynne’s government “to gradually reduce average, industry-wide, private passenger auto insurance premiums by 15 per cent.”

While Singh’s opposition-day pitch in the legislature is largely symbolic, the Liberals’ endorsement of it will carry much political significance ahead of next month’s budget.

The New Democrats have given Wynne a shopping list of demands in exchange for support, the highest profile of which is to slash insurance rates that are especially onerous for Greater Toronto motorists.

Finance Minister Charles Sousa, who will table his first budget in mid- to late April, confirmed Tuesday that “it’s in the interest of the public” to make rates fairer.

“I’m looking at options as to how to make this work. I’m deliberating over how to do it,” Sousa said in an interview.

“We will work towards finding ways to make the premiums come down. I welcome the opportunity to work with the (NDP) on this,” he said, noting it requires “cooperation with the industry.”

Almost a decade ago, the Liberals instructed the insurance regulator, Financial Services Commission of Ontario (FSCO) to cut rates by 10 per cent and, in 2004, premiums declined slightly more than that.

Under questioning from Singh in the house on Tuesday, the treasurer agreed that 905 residents are bearing the brunt of the skyrocketing costs.

“We also recognize on this side of the house, as I’m sure you do, that the cost of insurance has gone up even more dramatically than it should. We need to get at those root causes and address the fraud,” said Sousa.

Singh noted the Liberals also made changes to the industry in 2010, halving the cap on payouts for routine claims by accident victims, which saved the insurance industry $2 billion a year.

“Yet in the past two years the premiums that auto insurance drivers pay have gone up 5 per cent,” the Bramalea—Gore—Malton MPP said.

“I’m asking the government today . . . to be on the side of drivers in Ontario by reducing auto insurance premiums by 15 per cent,” said Singh.

“Tomorrow, they have a chance to vote in favour of a motion, which would direct FSCO to encourage 15 per cent reductions in a gradual manner, to reduce rates for insurance for drivers of Ontario.”

The minority Liberals need help from opposition MPPs to survive a confidence vote on Sousa’s budget.

If the spending plan is defeated, Ontario would be plunged into an election costing $92 million and coming less than two years after the October 2011 vote.

While Progressive Conservative Leader Tim Hudak has said his party cannot back Wynne’s Liberals, Horwath is willing to deal as she did last year when the NDP propped up then premier Dalton McGuinty.

Beyond auto insurance changes, Horwath wants the Liberals to guarantee home-care services within a maximum five-day waiting period, subsidize job training for youth, and closed corporate tax loopholes.

Liberals will back cut to car insurance

Robert Benzie

Wed Mar 27 2013 08:45:07

Support for NDP motion to reduce rates by 15% could help avert election

Premier Kathleen Wynne’s minority Liberals will back NDP Leader Andrea Horwath’s bid to lower auto rates, the Toronto Star has learned.

In a move that could well avert a spring election, Liberal MPPs are set to support New Democrat MPP Jagmeet Singh’s motion Wednesday calling on Wynne’s government “to gradually reduce average, industry-wide, private passenger auto insurance premiums by 15 per cent.”

While Singh’s opposition-day pitch in the legislature is largely symbolic, the Liberals’ endorsement of it will carry much political significance ahead of next month’s budget.

The New Democrats have given Wynne a shopping list of demands in exchange for support, the highest profile of which is to slash insurance rates that are especially onerous for Greater Toronto motorists.

Finance Minister Charles Sousa, who will table his first budget in mid- to late April, confirmed Tuesday that “it’s in the interest of the public” to make rates fairer.

“I’m looking at options as to how to make this work. I’m deliberating over how to do it,” Sousa said in an interview.

“We will work towards finding ways to make the premiums come down. I welcome the opportunity to work with the (NDP) on this,” he said, noting it requires “cooperation with the industry.”

Almost a decade ago, the Liberals instructed the insurance regulator, Financial Services Commission of Ontario (FSCO) to cut rates by 10 per cent and, in 2004, premiums declined slightly more than that.

Under questioning from Singh in the house on Tuesday, the treasurer agreed that 905 residents are bearing the brunt of the skyrocketing costs.

“We also recognize on this side of the house, as I’m sure you do, that the cost of insurance has gone up even more dramatically than it should. We need to get at those root causes and address the fraud,” said Sousa.

Singh noted the Liberals also made changes to the industry in 2010, halving the cap on payouts for routine claims by accident victims, which saved the insurance industry $2 billion a year.

“Yet in the past two years the premiums that auto insurance drivers pay have gone up 5 per cent,” the Bramalea—Gore—Malton MPP said.

“I’m asking the government today . . . to be on the side of drivers in Ontario by reducing auto insurance premiums by 15 per cent,” said Singh.

“Tomorrow, they have a chance to vote in favour of a motion, which would direct FSCO to encourage 15 per cent reductions in a gradual manner, to reduce rates for insurance for drivers of Ontario.”

The minority Liberals need help from opposition MPPs to survive a confidence vote on Sousa’s budget.

If the spending plan is defeated, Ontario would be plunged into an election costing $92 million and coming less than two years after the October 2011 vote.

While Progressive Conservative Leader Tim Hudak has said his party cannot back Wynne’s Liberals, Horwath is willing to deal as she did last year when the NDP propped up then premier Dalton McGuinty.

Beyond auto insurance changes, Horwath wants the Liberals to guarantee home-care services within a maximum five-day waiting period, subsidize job training for youth, and closed corporate tax loopholes.

Torstar News

When The Government Sells Car Insurance

By CarInsurance.com

 03/25/13 02:52 PM EDT

 Wouldn't it be sweet if your local congressman threatened to overthrow the government unless your car insurance bill came down?

This is exactly what's happening right now in Canada, where almost half the country buys auto coverage directly through the government and the rest have politicians willing to put the squeeze on private insurance companies.

Turn on the news in Ontario — Canada's largest province, with 38.4 percent of the population — and see for yourself: One party is threatening to topple government if the provincial premier doesn't demand that auto insurers cut their rates by 15 percent, about $220 U.S. on average.

“It's a hot-button issue,” says Sean Graham, an executive of Kanetix, an online insurance shopping site in Canada. “They're threatening to call an election on it and overthrow the government based on auto insurance.”

What may be even more surprising to Americans: This isn't the first time the price of car insurance has taken center stage in Canadian politics.

Government-run car insurance

As rates have jumped sharply in recent years, consumer groups and liberal politicians have repeatedly asked whether it wouldn't be cheaper and more equitable to remove private profits from the mix altogether. Four of Canada's 10 provinces have already done just this.

In British Columbia, Manitoba and Saskatchewan, there's no such thing as shopping for a car insurance company. Drivers enjoy one-stop shopping at their provincial government. (For example, here's the Saskatchewan Government Insurance site.) In Quebec, drivers get all their bodily injury coverage through the government; private insurers take care of property damage and the rest.

The public systems have been in place since the 1970s in three of the provinces and since 1945 in Saskatchewan, a midwestern province that's home to just 3 percent of the population.

Despite four decades of experience, it's just about impossible to say which setup best serves consumers. Because each province regulates insurance to its own liking — as each state does in the United States — what's being sold in each province differs. So, too, do the drivers being covered.

Andrea Horwath, leader of Ontario's left-leaning New Democratic Party, has argued that 20 percent to 30 percent profits by private auto insurance companies are untenable. She has demanded that Ontario make auto insurers slash their rates by 15 percent, or her party will trigger an election.

The red flags of fraud Sometimes insurance investigators find indicators that show fraud lurking where it doesn?t exist

 

 BY ALAN SHANOFF, TORONTO SUN

FIRST POSTED: SATURDAY, MARCH 16, 2013 06:22 PM EDT

March is fraud prevention month. And while we must be vigilant to protect ourselves from fraud, it’s also important to be cognizant of wrongful allegations of fraud. With the heightened publicity surrounding insurance fraud, it’s all too easy for innocent victims to be accused of fraud.

On August 27, 2009, police responded to a report of a collision between a 1998 Honda Civic and a van at a Markham intersection. Nelson Gnanam was the driver of the car. With him were his wife, a niece and her husband. The van had been driven by Jeunelle Humphrey with an unrelated passenger.

At the scene no one claimed to have been injured in the accident, and aside from Gnanam, none of his passengers seemed upset. Indeed they appeared to be rather relaxed. Both vehicles had damage not related to the accident. Gnanam had purchased comprehensive insurance coverage on the Honda shortly before the accident.

Following the accident, Gnanam appeared at the police station with a legal representative and advised the police officer, who had attended the accident scene, to change his report to indicate that in fact he and his passengers had suffered injuries as a result of the accident.

Anyone could see the obvious red flags. Surely the accident deserved further investigation to determine if it had been staged. Gnanam’s insurer, Economical Mutual Insurance Company, hired an engineering firm to investigate the accident. The engineer concluded that “the damage sustained by the vehicles was inconsistent with the reported sequence of events.”

Hence Economical concluded the accident had been staged and Economical denied all claims for accident benefits submitted by Gnanam and his passengers. But further investigation would have revealed that the occupants of the two vehicles were unknown to each other and it was Humphrey who had innocently provided the information that created the inconsistency reported by the engineer. Also, neither Humphrey nor her passenger had applied for accident benefits.

So this couldn’t have been an accident staged by the two vehicles. Undeterred, Economical argued the accident must have been staged by Gnanam alone. But in his decision released last month, Arbitrator Jeffrey Rogers rejected Economical’s argument pointing out the obvious; “he (Gnanam) risked serious injury, or worse, by driving his car into the path of an oncoming, unknown vehicle, appearing from over a hill, at unknown speed, and allowing it to plow into his vehicle, close to where he sat, for the chance of economic gain. He also put his wife and family members in the same position. He, and all of his co-conspirators, then neglected to mention to the police officer, the most important aspect of their plan; the fact that they were injured. That sequence of events seems most unlikely.”

I’m not saying staged accidents never occur. Certainly, insurance companies must use red flags or indicia of fraud to inform their investigations. But at some point common sense must win the day.

Of course, with all of the emphasis on insurance fraud it’s very easy to find fraud lurking where it doesn’t exist. It’s called false positives.

Insurers use modelling systems to provide points for various red flags. Some of the red flags include three or more occupants in a vehicle, an older vehicle being in a collision, subjective injuries, minor impact, an unemployed claimant, whether the claimants use the same doctor, lawyer or medical facility. Add up the red flags and you reach a finding of fraud.

But how many are false positives and how many of these cases wind up with a criminal conviction, let alone a civil finding of fraud?

Very few if you go by the reported cases. Making an allegation of fraud is easy; proving it isn’t so easy.

That’s a major reason why I have trouble accepting the industry’s claim of up to $1.6 billion of car insurance fraud per year. 

 

P&C industry profit up, but declining investment income a concern: Fitch

DAILY NEWS Mar 15, 2013 2:07 PM

 2013-03-15

 Operating profits for the property and casualty industry generally improved last year, although several individual companies’ performances were “below par,” says Fitch Ratings.

 The company’s analysis of full year earnings from 48 publicly traded insurers and reinsurers suggests a 75% improvement in operating earnings and operating return on equity of 7.3% versus 4.4% in 2011. The underwriting combined ratio for those companies was 98.6%, compared to 103.4% in 2011, the ratings company also noted. 

That improvement is mainly because of reduced natural catastrophe losses and “core loss ratio improvements from recent underwriting and pricing actions,” Fitch said in a statement. Natural catastrophe losses were, however, higher than historical norms, it added. Such losses represented 7% of earned premium last year, versus 11% in 2011.

“Declining investment income in the prolonged low interest rate environment and a reduced benefit from favorable loss reserve development modestly dampened the group's 2012 financial performance,” Fitch added in a statement. 

Additionally, only a third of the companies Fitch looks at generated an underwriting profit on an accident-year basis last year, it said, and only a quarter of those companies reported an operating return on equity of 10% or higher for the year. 

“Continued momentum in premium rate increases and a reversion towards historical insured catastrophe loss levels would promote further profitability improvement in 2013,” Fitch said, noting that it will release a more comprehensive report on U.S. companies’ performance on March 18.

Loss ratio improves for Desjardins General, Ontario auto still a concern

DAILY NEWS Mar 14, 2013 10:59 AM

2013-03-14

 Desjardins General Insurance Group announced Thursday its direct written premiums increased 8.2% year-over-year from 2011 to 2012, but suggested Ontario auto continues to be a concern.

 

In a press release, the Levis, Que.-based carrier said in 2012, it recorded net income of $185.9 million on direct written premiums of $1.98 billion.

Its net income was $128.2 million in 2011. The company said “all business areas” contributed to its 8.2% growth in direct written premiums.

“The combined ratio improved by 4.3 percentage points to 94.3%, compared to 98.6% in 2011,” Desjardins General stated. “This was largely due to the 4.0 percentage point improvement in loss ratio.”

President and chief operating officer Sylvie Paquette stated in the release that she “sees some challenges on the horizon with the continuing low interest rate environment, the uncertainties in the Ontario auto insurance market, and the consolidation trend in the industry.”

The press release did not go into specifics on auto results but the company did say changes to regulations governing auto insurance in 2010 resulted in improvement at Desjardins.

In September 2010, the Ontario Liberal government introduced a $3,500 cap on payments for accident benefits classified under the minor injury guideline. It also reduced medical, rehabilitation and attendant care benefits in the standard auto policy (SAP) for non catastrophic injuries, meaning policyholders could purchase additional coverage.

Until the reforms took effect, Ontario's standard auto policy required carriers to cover up to $100,000 in medical and rehabilitation expenses and up to $72,000 for attendant care. Now the standard auto policy requires only $50,000 coverage for medical and rehab and $36,000 for attendant care. The income replacement under a policy with the minimum mandatory coverage was reduced, from 80% to 70% of income, with the maximum remaining at $400 a week.

Industry-wide, the changes were attributed by Ontario’s New Democratic Party (which is demanding a 15% reduction in auto premiums) to a $2-billion reduction in annual Ontario auto accident benefit payments.

The Insurance Bureau of Canada has said carriers lost a combined total, per year, on average, of nearly $1 billion per year between 2008 and 2010 on auto in Ontario, and the combined loss of all carriers on auto was $1.7 billion in 2010. The following year, carriers earned a combined total of $233.2 million in profits on auto in Ontario.

In its 2010 financial review, Desjardins General stated the effects that year of Ontario auto benefits reductions were “positive so far” but additional steps would be needed to address fraud and abuse. In November of 2012, the Auto Insurance Anti-Fraud Task Force released its report, which contained 38 recommendations, including giving the Financial Services Commission of Ontario the power to regulate health clinics that treat and assess auto insurance claimants.

In the meantime, Desjardin is using computer software to detect possible indications of fraud. At a meeting March 6 of the Canadian Insurance Claims Managers' Association (CICMA) Ontario chapter, a Desjardins claims and investigations executive said the company uses data from Health Claims for Auto Insurance (HCAI) to identify patterns in services proposed and billed by clinics and health professionals.

Elizabeth Kepes, Desjardins' section manager for claims and investigations, said at the meeting the software lets Desjardins determine which clinics a chiropractor is working for and to view which health professionals are registered to one clinic.

Desjardins General has 3,700 employees across Canada, more than 2.1 million policies and assets of more than $4.3 billion.

Ontario auditor general will revisit auto insurance watchdog this summer regarding high premiums

 

Auditor General Jim McCarter will take another look at the Financial Services Commission of Ontario to see what it is doing to protect consumers from high auto insurance premiums.

RBy: Richard J. Brennan Provincial Politics, Toronto Star, Published on Mon Mar 11 2013

Ontario’s auditor general says the province’s auto insurance industry watchdog has some explaining to do.

Jim McCarter told the Star Monday his office will do a follow-up audit of the Financial Services Commission of Ontario in June or July to determine what it is doing to protect consumers against high premiums.

“We want to know what Financial Services Commission of Ontario is doing (regarding) overseeing insurance companies,” McCarter said, including looking at whether they are “making money hand over foot.”

His 2011 annual report noted that motorists in the GTA were paying the highest premiums in the country and recommended that FSCO implement more frequent reviews of the auto insurance industry and increase requests.

“Being suspicious characters, we always want to go in and sniff around,” said McCarter, who has previously stated that an overhaul of the formula that decides premiums is “long overdue.”

Among other things, FSCO offers a mediation service for people who disagree with settlement offers from insurers. The audit stated the service is so backlogged that dispute resolution takes 10 to 12 months rather than the legislated 60 days.

Critics say the auto industry has seen an annual $2 billion windfall since the Liberal government introduced reforms in 2010 that sharply reduced accident benefits.

Meanwhile, the minority Liberal government is still awaiting a report almost a year later from FSCO analyzing auto insurance industry profit. The New Democrats on Monday mistakenly accused the government of sitting on the report.

“It should be out soon,” said a finance ministry official.

The New Democrats are demanding the minority Liberal government move to cut auto insurance premium by 15 per cent in this year’s budget or face a possible election.

The New Democrats on Monday cited an independent actuarial analysis done for the Ontario Trial Lawyers Association that shows government changes to auto insurance rules have said the saved the industry $2 billion annually in drastically lower benefit payouts.

“If we are losing the benefits that we receive as consumers, why wasn’t that tied into a guaranteed that the premiums would come down?” MPP Jagmeet Singh told reporters.

According to a Forum Research poll carried in the Star last week, 58 per cent of respondents agreed an election should be triggered over auto insurance premiums.

“I think people are quite upset with the fact we are paying the highest rates in the country,” Singh said. “We want to see immediate relief for families.”