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(Illustration by Neal Cresswell for The Globe and Mail/Illustration by Neal Cresswell for The Globe and Mail)
(Illustration by Neal Cresswell for The Globe and Mail/Illustration by Neal Cresswell for The Globe and Mail)

Ontario task force to tackle auto insurance fraud Add to ...

The Ontario government is setting up a task force to advise it on how to deal with auto insurance fraud.

The task force, announced in Tuesday's provincial budget, will be charged with determining the scope of the problem and finding ways to bolster investigative and enforcement efforts.

A Globe and Mail investigation published in December looked at the issue of auto fraud and fake accidents, in which perpetrators stage car accidents to make phony insurance claims. It's a problem that has existed for years, and one that the insurance industry and investigators say is becoming more serious. The Globe investigation showed governments and insurance companies weren't doing enough to combat the problem.

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"The government is committed to fully investigating the problem of auto insurance fraud and will establish appropriate working groups of stakeholders to develop collaborative approaches and solutions," the budget stated.

The government also said it is introducing new rules to ensure that treatments for injuries sustained in vehicular accidents are actually provided according to the invoices submitted for insurance claims. In addition, the government suggested that it will place more onus on insurance companies to ensure they are dealing with the issue but also treating legitimate accident victims fairly. It will require auto insurers to attest annually that they have established effective compliance controls to satisfy the rules that protect policy holders and accident victims.

Ontario's nine million drivers pay about $9-billion worth of insurance premiums each year. But selling auto insurance in the province has been a money-losing proposition in recent years, a problem that insurers say relates to fraud and abuse of the system.

The government, which regulates auto insurance to ensure it's affordable because it's a mandatory product, made a large number of reforms to the rules effective Sept. 1, 2010. These included reducing the minimum amount of basic medical and rehabilitation benefits that all drivers must hold to $50,000 from $100,000 and capping minor injury benefits at $3,500. But those moves were not expected to reduce premiums.

Ontario also announced in the budget that it will carry out a "long overdue" renewal of other parts of the provincial Insurance Act, dealing with areas such as life insurance and accident and sickness insurance. It will be the first major review of those parts of the legislation since 1962.

"In addition, regulatory effectiveness will be enhanced by considering additional enforcement tools for the regulator, such as administrative monetary penalties," the government said.

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