Anti-fraud bill a mirage Ontario government’s latest auto insurance legislation doesn’t do what it’s supposed to do



Ontario’s Bill 15 has a strange title.

The title, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, is strange because this proposed legislation doesn’t refer to fraud anywhere in the body of the bill save in references to the title of the proposed legislation.

Then again why pass up the opportunity to propagandize?

Upon introduction of the bill earlier this month the Ministry of Finance announced, “Ontario is moving forward with its plan to help reduce auto insurance rates, by introducing legislation that would, if passed, protect the province’s nine million drivers and fight fraud in the auto insurance system.”

But there’s nothing in the bill that fights fraud in the insurance system.

Worse, there’s little in the bill that would protect drivers.

Indeed, there’s much in the bill that would harm drivers, especially those injured in auto accidents.

Let’s start with the manner in which no-fault accident benefits disputes are handled.

Currently such disputes may be dealt with via arbitration or through court action.

Bill 171 will remove the option of court action.

It’s hard to see how removing the right to pursue claims before a judge will help drivers.

Paradoxically, this move will cause legal costs to increase as claimants are forced to pursue two separate claims.

Ontario drivers are subject to a hybrid or dual auto insurance system.

Those injured in auto accidents may pursue a tort or negligence claim (although that right has been curtailed as a result of previous legislation), as well as a claim for no-fault accident benefits.

Currently, lawyers often combine both in one lawsuit.

But following passage of Bill 15 lawyers will be forced to pursue two different proceedings, a court proceeding for the negligence claim and an arbitration proceeding for the accident benefits claim, thereby resulting in higher costs.

At the same time accident benefits claim disputes will no longer be handled by the expert arbitration staff at the Financial Services Commission Ontario.

Bill 15 would see the elimination of all mediators and arbitrators employed by FSCO.

Disputes will be handled by Ontario’s Licence Appeal Tribunal, a body that currently decides cases with no relation to the complex accident benefits issues seen daily by FSCO arbitrators.

FSCO arbitrators have many years of experience handling accident benefit disputes.

They are full-time, unionized public sector employees who are seen to be independent and are highly respected.

LAT members are part-time (other than the Associate Chair), appointed for temporary terms, receive per diem rates (other than the Associate Chair), and are government appointees.

Reappointment is at the pleasure of the Ontario cabinet, so they cannot be seen as independent.

While there’s nothing to stop cabinet from appointing some former FSCO arbitrators to the LAT roster, there’s also nothing to stop cabinet from cherry-picking from among the FSCO arbitrators to eliminate arbitrators whose decisions have displeased the insurance lobby.


Bill 15 contains two other provisions that will prejudice those injured in auto accidents.

Currently arbitrators have the power to penalize insurers who act unreasonably in withholding or delaying benefits.

They can award a lump sum of up to 50% of the amount withheld or delayed along with interest at the rate of 2% compounded monthly.

Bill 15 eliminates that power.

In addition, Bill 15 would reduce the amount of interest insurers are required to pay on money owed to accident victims.

That surely won’t serve to speed up settlements, with insurers given an incentive to delay payments.

Let’s not kid anybody.

Bill 15 is mainly about saving money for insurance companies to help them reduce premiums, so as to assist them in achieving the government’s promised 15% rate reduction.

But even if we achieve this 15% savings in auto insurance rates there’s nothing to stop insurers from increasing premiums on their other products, including property insurance, which is not subject to government regulation.

If you don’t believe me, just take a look at your next property insurance bill

CBC News: Staged collisions a ‘catalyst’ for larger insurance fraud

By Amber Hildebrandt, CBC News Posted: Jul 17, 2014 5:00 AM ET Last Updated: Jul 17, 2014 7:28 AM ET

Car crash scams are becoming increasingly sophisticated, investigators say, with the latest wrinkle involving organized groups gaining access to medical clinics to cash in on lucrative payouts for phoney insurance treatments.

“We've seen a definite increase in identity theft within the medical clinics with regard to claiming accident benefits,” said Rick Dubin, vice-president of the Insurance Bureau of Canada's investigative services.

Dubin leads a group of 50 investigators who focus on probing organized auto-insurance crime for private insurers across the country. At any time, they are working on dozens of alleged staged collisions.

Oftentimes, the phoney crash is just the “catalyst” for a larger scam that gets the so-called victims into the doors of compromised rehab centres and medical clinics.

“This is where the real money is,” said Dubin. “And this is where it's had a very serious impact in terms of the payouts by insurers, which again is passed on to the innocent customer.”

In some cases, he says, owners or employees of medical clinics or rehab facilities are becoming involved in these fraud rings.

They forge the signatures of real doctors or chiropractors, without their knowledge, to cash in on the resulting treatments for the faked whiplash and soft-tissue claims that result from the staged collisions.

Ontario experiences the largest number of what are called induced crashes, particularly in the Greater Toronto Area, which Dubin calls the “staged collision capital of Canada.”

The insurance bureau says British Columbia also experiences a number of these fraudulent crashes, though not nearly as many.

Manitoba's public auto insurer says it's a known problem there as well, but not one they track.

“It's very difficult for us to put a number on it. Is there a hundred a year, is there 200 a year? We don't know,” said media relations coordinator Brian Smiley of Manitoba Public Insurance.

“We do know they exist because we have had occasion where people have been charged and convicted.”

Little data on fake crashes

Last month, one of Britain's biggest auto insurers, Aviva, revealed that the number of “induced accidents” rose by 51 per cent in 2013 and called for harsher penalties on perpetrators.

However, here in Canada, none of the top private auto insurers were willing or able to provide figures on staged crashes.

Aviva and State Farm's Canadian companies said they don't monitor the problem here. TD Insurance doesn't publish the data, while Intact was reluctant to provide figures because it doesn't represent the whole industry.

'Hopefully, as the courts get more educated in this type of illegal activity, they'll get tougher to create a stronger deterrent.'– IBC's Rick Dubin

However, a 2012 report by KPMG estimated that auto insurance fraud in Ontario costs insurers up to $1.6 billion a year, and accounts as much as 18 per cent of total claims.

In the past five years, there have been several large staged-crash rings uncovered in Canada, groups that racked up millions of dollars in fraudulent insurance claims.

The largest auto insurance fraud in Manitoba involved nearly 40 suspects bilking the public insurer for almost $1 million.

The scammers bought used luxury vehicles cheaply, then rolled back their odometers to increase the value. Then they orchestrated thefts of the vehicles or used them in fake accidents.

At least three massive rings have been unearthed in the Toronto area in the past few years, with each involving dozens of people.

Sophisticated fraud, light sentences

In the past, punishment for the crime was often light, with judges doling out community service and house arrest, but the courts appear to have increased sentencing in recent years.

Signs of a scam include vehicles filled to capacity and all occupants claiming whiplash or other soft-tissue injuries. (Shutterstock)

The ringleader of a Toronto scam received 3.5 years in prison after a 2010 probe, while the Manitoba mastermind netted a four-year sentence last year.

“Hopefully, as the courts get more educated in this type of illegal activity, they'll get tougher, to create a stronger deterrent for these types of individuals,” said Dubin.

Organized crime is often involved in these types of insurance fraud, some of which are getting more and more sophisticated.

One $4-million scam in the Toronto area resulted in hundreds of thousands of dollars in fines for four clinics that created false invoices.

Another recent auto-insurance fraud operation in York Region involved those working in the medical and legal professions. That case involves suspected identity theft at rehab centres across the greater Toronto area, says Dubin.

In the U.S., staged accident rings cost insurers billions of dollars for phantom injuries, according to the Coalition Against Insurance Fraud.

Two years ago, the FBI arrested 36 people in New York – including 10 doctors and three lawyers — for their alleged involvement in a $279-million auto insurance fraud, believed to be the largest ever of its kind for the state.

The U.S. Attorney Preet Bharara called it a “colossal criminal trifecta” with tentacles reaching into the medical, legal and insurance systems.

The alleged ring even operated its own chain of medical clinics and had ambulance chasers convincing real car-crash victims to seek unnecessary care at corrupt clinics in exchange for kickbacks.

Dubin says his investigative unit believes certain individuals involved in that New York state ring have entered Ontario and are now involved in Toronto-area clinics.

Innocent drivers put in danger

One of the dangers of crash scams, in which fraudsters stage accidents for the insurance benefits, is that innocent drivers can get caught up in the scheme.

Scammers want the crash to look legitimate, so they will make it appear that other drivers are at fault.

There are numerous types of scams, all colourfully named but simple in their deception.

A “swoop and squat” involves the scammer quickly pulling his vehicle in front of an innocent motorist, then slamming on his brakes, ensuring the following driver doesn't have time to stop.

A “drive down” takes place in a parking lot. The fraudster waves an innocent driver to back out of a parking spot, then intentionally drives into them. Then the innocent driver is blamed for backing into on-coming traffic.

In a “left-turn bullet,” an innocent driver is waiting to make a left-hand turn. The scammer approaches, waves at the driver to go, then intentionally drives into the vehicle.

While those are the most common scams, “organized crime, unfortunately, is very creative,” says Dubin. “They keep changing their approach over time.”

The big problem, though, is that “innocent drivers are put in very dangerous positions,” said Dubin.

One fake crash in a Toronto-area organized ring went horribly wrong, with a teenage participant suffering permanent, severe brain injuries.

In the U.S., there have also been fatalities, including a grandmother who died in a Massachusetts setup crash.

'Red flags' of a scam

There are a few telltale signs of a scam-in-progress that drivers can look for, says the auto fraud investigator.

'There's kickbacks in this whole service supplier chain.'– IBC's Rick Dubin

The crashes almost always happen at low speeds and result in minor or no damage to the innocent motorist's car. The suspected fraudster's vehicle is old or a rental car. A tow-truck operator just happens to drive by the accident, then suggest a specific body-shop for your car's repairs.

Tow-truck drivers can be part of the scheme; so, too, can the body shop. “There's kickbacks in this whole service supplier chain,” said Dubin.

Often scammers will call an ambulance to the crash site to make it seem as legitimate as possible.

An inconsistent explanation by the car's occupants about where they are coming from and how the accident took place can also be a sign.

A full vehicle is also a giveaway, especially if all four occupants claim soft-tissue injuries that are difficult to medically disprove. Fraudsters often load up the vehicle to maximize the medical benefits reaped down the road.


Dubin recommends calling the police and insisting they come to the scene of the collision if a driver suspects a fraudulent crash. Also, the driver should call their insurance company and ask for a recommended body shop.

Toronto Sun: Ontario moves to lower insurance rates


Ontario is restarting auto insurance and tow truck legislation to control costs as some motorists see their insurance rates climb.

Ontario Finance Minister Charles Sousa Government and Consumer Services Minister David Orazietti brought back bills Tuesday that would address auto insurance rates by cutting dispute resolution and vehicle storage costs following an accident.

The Financial Services Commission of Ontario (FSCO) reported that auto insurance rates went up an average of 0.22% in the second quarter of the year, mostly due to a 4.19% increase allowed to the Security National Insurance Company which represents just over 7% of the market.

Sousa said his government remains committed to its goal of reducing auto insurance rates on average by 15% by next summer, and rates are already 5.4% lower as a result of Liberal actions.

Consumers whose rates are going up should “shop around” for a better deal, Sousa said.

“You can find better rates because it’s a competitive system,” he said.

Progressive Conservative MPP Vic Fedeli said a major insurer has left the market and more drivers have lost their coverage since the Liberals first unveiled their plan to bring down rates.

“We really want to get in and tackle the issue of (auto insurance) fraud,” Fedeli said.

NDP MPP Jagmeet Singh said fraudulent activities are a problem but are not the driving factor behind increased costs for motorists.

Insurance companies are making record profits thanks to changes in victim benefits and other measures but are not passing on those savings to their customers, he said.

Drivers are required by law to obtain auto insurance, yet the government is not taking concrete action through FSCO to force rates down, he said.

“Why can’t they legally also make it something that is affordable,” Singh said. “And why don’t they also use their tools of fiscal regulation to make it something that people can actually afford to purchase?”

Singh doubted the government could reach its goal of a 15% reduction on average in rates.

“We’ll try our best to achieve that,” Sousa said.

Federal legislation does not permit the province to take steps that would make insurance companies unprofitable, he said.

The two pieces of legislation proposed by the government would address costs faced by insurers.

Currently, vehicle storage companies are allowed a 60-day period to notify drivers if a vehicle is taken into storage after a collision, allowing expenses to rise for either the driver or insurer.

Orazietti said new legislation would allow for a shorter notification requirement.

The bill would also mandate the posting of prices where customers could see them before their vehicle is hoisted onto a tow truck.

Sousa’s auto insurance bill would streamline the accident dispute resolution system which he argued would reduce administrative costs.

Ontario Liberals renew bill to reduce auto insurance rates

Maria Babbage, The Canadian Press

Published Tuesday, July 15, 2014  

TORONTO — Ontario's governing Liberals insist they can still reach their target of cutting auto insurance rates by an average of 15 per cent across the province, even though they're only a third of the way there with just a year to go.

Rates have dropped an average of 5.44 per cent since the government started to take measures aimed at combating insurance fraud last year, Finance Minister Charles Sousa said Tuesday.

He acknowledged that recent filings showed the provincial regulator approved rate changes over the past three months that resulted in an overall 0.22 per increase, with one company receiving approval for a 4.19 per cent hike.

“There are some companies that have already priced themselves below market and now they're trying to figure out how to best compete,” Sousa said.

About a dozen companies have reduced their rates by over 10 per cent since the government started addressing the issue, he said. More should follow once a bill aimed at tackling insurance fraud and inflated towing costs passes in the legislature, helping the government reach its goal by August 2015.

“We're taking every action necessary to try to meet that target and we recognize that in order to do so, we have to pass the legislation as soon as possible,” Sousa said.

His advice for drivers who keep seeing their premiums go up? Shop around.

“It's up to consumers to choose the best possible rate that they can get,” he said.

The Liberals introduced two bills in the spring dealing with auto insurance and towing rules, but they were scrapped when the June 12 election was called.

Sousa's merging them into a single bill that's all but certain to pass since the Liberals now have a majority of seats in the legislature.

Among other measures, it would move the dispute resolution system for injured drivers from Ontario's insurance regulator to an existing tribunal run by the Ministry of the Attorney General, which he says will help resolve disputes more quickly.

It also proposes more oversight of the billing practices of health clinics and allow only licensed service providers to be paid directly by insurers. Insurance agents or adjusters who abuse the system could also see their licences suspended immediately.

There are measures to cut down on the amount of time vehicles can be stored after an accident, so owners and insurers won't be squeezed for more money.

The proposed law would also force tow truck operators to register their vehicles, get permission from a driver before charging for towing and storage services, post their prices and provide itemized invoices detailing all charges.

Sousa may claim that fraud is at the root of high premiums, but insurers are still racking up record profits, said NDP critic Jagmeet Singh.

The Liberals are “bending over backwards” to cut costs for insurance companies, rather than pressing ahead to reduce insurance rates for consumers, he said.

“This is a gift to the insurance companies, this is a way of reducing their costs once again but there's absolutely no guarantee that this will result in a reduction in rates for drivers,” he said.

Sousa said rates would have gone down further if the opposition parties, who collectively had a majority of seats in the legislature, had allowed the legislation to pass before the election was called.

The Progressive Conservatives say they're cautiously supportive of the measures, but that Sousa is looking for a scapegoat.

“Look, they have nobody to blame but themselves,” said Tory finance critic Vic Fedeli.

“Quite frankly, these guys look for any excuse to pass blame on every single issue … it's always somebody else's fault.”

The Globe and Mail: Why Ontario drivers pay the highest car insurance rates in the country

Peter Cheney

The Globe and Mail

Published Wednesday, Jul. 09 2014

Nick Dasko bought his first car when he was 22 – a seven-year-old Mazda Protege that cost him $10,000. Then came the insurance bill: more than $6,000, even though he had no tickets or at-fault accidents.

Some of his friends were paying even more – $10,000 was not unheard of.

Ontario has the highest auto insurance rates in Canada, with the average annual premium at $1,544.86 in 2012– 45 per cent more than in Alberta, the second-most costly. For young men like Dasko in the 16-to-24 age group, the hit is the worst – classified by the industry as high risk, they are charged stratospheric rates.

Auto insurance is the wild west of compulsory services. If you want to drive, you have no choice but to buy it – but what you pay varies wildly. According to quotes obtained Tuesday from, a 20-year-old male in Winnipeg with a clean driving record would pay $1,396 driving a 2008 Honda Civic DX two-door coupe for pleasure (not to commute to school or work) and compiling 15,000 km/year. In Calgary, that same driver would pay between $2,973 and  $3,789. In Toronto, the bill would range from $4,239 to $9,270  – an increase of 664 per cent.

The obvious question – why?

While it costs more to cover claims in Ontario (the province is plagued by insurance fraud) private insurers claim that the actuarial evidence used to rate drivers shows that males under 25 have the worst statistical record as a group. Consequently, individuals in the 16-to-24 group pay more, even if they’ve never been involved in an accident or received a ticket for a traffic violation. Essentially, young men are deemed guilty until proven innocent – at age 25.

“You are being prejudged,” says Dasko. “It’s the last legal form of discrimination.”

Public auto insurance programs, such as those in Manitoba and Saskatchewan, take a different approach. Standard rates apply to every driver, regardless of age or gender. Auto insurance is much less expensive for a 20-year-old full-time student in Winnipeg driving the same car as his counterparts in Toronto, Montreal and Calgary.

The private insurance industry defends the actuarial approach. “It’s not discriminatory,” says Pete Karageorgos, manager of consumer and industry relations for the Insurance Bureau of Canada. “It’s based purely on statistical analysis. It’s like charging more for house insurance in a high-risk neighbourhood. I think people have accepted this. In a public auto insurance system, young drivers are subsidized. In Ontario, young drivers pay rates that reflect their actual risk.”

Statistics show that young drivers do cause a disproportionate amount of damage. Drivers aged 16 to 24 represent 13 per cent of the driving population, but account for 24 per cent of fatalities and 26 per cent of serious injuries. The question is whether Ontario’s steep insurance charges for young drivers accurately reflect actuarial data.

State Farm Insurance spokesman John Bordignon says Toronto is a “special case”: “It’s got the highest population density, the worst roads, and a high rate of theft. The costs reflect those risks.”

Contrary to the public system, in Ontario, Alberta and other provinces, every driver must help bear layers of extra costs. Ontario’s industry is made up of more than 100 private companies that are overseen by a government agency called the Financial Services Commission of Ontario. Revenue comes from two sources – insurance premiums, and the money insurers make by investing the money consumers give them.

Private insurers say that their system has the built-in advantage of competition: “If you’re not satisfied with your insurer, you can go shop around,” says Karageorgos. “With government insurance, there’s no choice. Private insurance gives you better service.”

Not everyone agrees. The Consumers Association of Canada (CAC) deems private auto insurance to be one of the biggest rip-offs that Canadians face. After studying the industry for years, CAC concluded that a properly run public insurance system was the best choice, but found itself locked into a debilitating public relations battle with the private industry.

“There are some things that should be run by private industry,” says CAC president Bruce Cran. “And there are others that should be in the hands of government. Auto insurance is one of them.”

Cran says that excessive insurance charges affect everyone, not just drivers: “The costs run through the entire economy,” he says. “Everything you buy, every last piece of bread you eat, is carried in a vehicle that has to be insured. So we all pay, whether we have a car or not.”

The CAC’s investigation of the insurance industry yielded interesting insights into the way it operates, and why costs are so high. In 2004, for example, CAC learned that private insurers had paid $290-million in secret commissions to insurance brokers who steered business their way. This practice had a direct impact on consumers – instead of hunting for the best price for their customers, brokers sold the policy that offered them the highest commission.

A public auto insurance system can offer fundamental business advantages. Most important, a public system reduces overhead costs – instead of multiple companies, each with its own head office, computer systems, etc., there is just one, which cuts duplication and creates efficiencies of scale.

Other significant savings include profit margin (public insurance systems don’t have to pay dividends to shareholders) and advertising – public systems don’t have to budget for TV spots and a talking gecko. Public insurance plans can also control costs more effectively – body shops, medical clinics and towing companies must comply with rates set by the public plan, which wields monopoly power over suppliers. Ontario’s private insurers, on the other hand, face ongoing problems with gouging and fraud.

As with U.S. health care, the debate over private and public auto insurance has been cast along ideological lines that obscure underlying economic realities. Ontario’s private insurance firms admit that rates here are the highest, yet insist that theirs is the superior business model.


Using the website on Tuesday, we obtained quotes for a 20-year-old full-time male student, in the 16-to-24 age group. We listed him as principal driver, clean record, living at home, using a 2008 Honda Civic DX two-door coupe for pleasure (not to commute to school or work) and compiling 15,000 km/year. Deductible was $500 for collision and comprehensive, with $1-million liability. The site harvests quotes from different companies, but those companies do not necessarily quote for all cities; the Canadian Automobile Association does not sell service in Montreal. The Manitoba rate was obtained directly from a dedicated website. *Kanetix provides a “lowest rate” but does not identify it until the consumer calls for a quote.






Manitoba Public