Ontario is cracking down on auto-insurance fraud

Serious Fraud Office will focus on an ‘industry’ that costs system $1.6B a year

The Ontario government is setting up a task force to tackle systemic fraud in the province’s auto insurance industry.

The Serious Fraud Office, projected to be operating by spring, is one of several sweeping reforms introduced Tuesday under the province’s Fair Auto Insurance Plan, a multipronged program aimed at cracking down on the unscrupulous practices that plague the system when it comes to accident victims.

Investigators and Crown attorneys will work together at the office, with an initial focus on auto insurance fraud and protecting accident victims, according to Ontario Attorney General Yasir Naqvi, who announced the reforms jointly with Finance Minister Charles Sousa.

“Auto insurance fraud has become an industry and it’s time to stop it,” said Sousa, noting that auto insurance fraud is estimated to cost insurers $1.6 billion annually.

Sousa said the reforms follow a report by David Marshall, the province’s adviser on auto insurance and former CEO of the Workplace Safety and Insurance Board, who recommended a full revamp of the system — one that currently allows some bad actors, including lawyers, medical clinics and insurers, to take advantage of victims at the expense of “good drivers who are paying too much to offset the high cost of fraud,” Sousa said.

The reforms are likewise intended to give accident victims faster, easier access to care, Sousa said.

In addition to the fraud office, the province will develop standard treatment plans that focus on getting victims the immediate care they need for common injuries, such as sprains or whiplash, following a collision.

The reforms will also include the creation of “independent examination centres,” according to Sousa, where accident victims of more serious collisions can get neutral assessments of their injuries. These will reduce diagnosis disputes and “reduce system costs and inefficiencies” stemming from those disputes, according to a government press release.

Sousa said the Insurance Act will be given “greater teeth” to protect the consumer and, according to the press release, new measures will make sure insurance companies cannot calculate unfairly high premiums for drivers in certain parts of the province.

All of these measures come just four days after Ontario’s legal regulator voted to introduce its own reforms to another arm of the province’s accident-victim system: the problematic contingency fee system —“you don’t pay unless we win.”

Ontario’s lawyers will have to provide accident victims with a “know your rights guide” and have clients sign a standard form contingency fee agreement.

Lawyers will also have to make public the maximum contingency fee they intend to charge their clients and provide clients with a detailed breakdown of their bill when the case is settled.

A Star investigation found that the province’s personal injury lawyers routinely take more money from their clients than the law allows. As a result, many accident victims who have received a settlement have been overcharged thousands of dollars and probably do not know it.

Attorney General Naqvi said his ministry will monitor the law society reforms to see if they’re working as they should.

But, he said, he believes the law society’s action, combined with the changes introduced Tuesday, provide a “holistic” approach to protecting and supporting consumers. “I am confident that with these measures we will see an impact.”

“Fraud is a series and growing problem, a complex problem that hurts consumers and businesses alike,” Naqvi said.

“As the problem grows and changes we’re adapting our response.”