Legislation Puts Florida's No-Fault Auto Insurance Fraud on Ropes
Legislation championed by Rep. Jim Boyd of Bradenton gained momentum over the past week -- and deservedly so. With Florida serving as ground zero for staged vehicle accidents, bogus injuries and auto insurance fraud for several years now, the Legislature has tried but failed to adopt remedies. This session looks like the game-changer.
read more...
More Auto Insurance Victims Being Denied in Ontario
Insurance companies in Ontario are turning down an increasing percentage of requests for the assessment and treatment of serious injuries sustained by motor vehicle crash victims, according to a new survey.
The survey, spearheaded by the Alliance of Community Medical and Rehabilitation Providers, found that 42 per cent of requests of treatment are now being rejected, up from 11 per cent prior to the government’s changes to the insurance system in September 2010, a jump of 282 per cent. The survey looked at 1,143 rehabilitation providers, including 889 sole practitioners and 254 company/practice owners.
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Ontario Court Prevents Property Transfers by Convicted Auto Insurance Fraudster
The Ontario Superior Court of Justice has upheld a summary judgment that set aside two property transfers by a convicted auto insurance fraudster over to his wife, ruling that the conveyances represented an attempt to put his assets out of "past and future victims of his fraudulent activities."
read more...
CBS Report: Scammers Cash in on Car "Accidents"
In this tough economy, one type of insurance fraud is more popular than ever. It involves scam artists who stage car crashes in order to cash in. CBS News chief investigative correspondent Armen Keteyian shows us how it works.
In Tampa, Florida, security cameras outside a business captured an accident: an SUV "slammed" into a car.
read more...
Thứ Năm, 12 tháng 12, 2013
If the Shafia Family Lived in Ontario Would They Qualify for SABS Benefits?
The Montreal Gazette reports that despite some media reports the Shafia family, who resided in Montreal before they were convicted of first-degree murder, might receive payouts under Quebec's no-fault auto insurance system, there will be no payout, the board says.
The three Shafia family members convicted of four counts of first-degree murder made no request for auto insurance compensation for their four relatives found dead in a car in an Ontario canal, said Gino Desrosiers, a spokesperson for the Société de l'assurance automobile du Québec (SAAQ).
In any case, they would not be eligible, he said, because the Shafia case does not meet the criteria for compensation.
SAAQ rules state that the car involved must have been in an accident on a public roadway; that the vehicle must not have been used for anything other than its intended purpose (to transport people from A to B under its own power); and that the injuries or deaths that resulted were due to a car accident.
So if the Shafia family resided in Ontario, would they be able to claim death and funeral benefits under the Statutory Accident Benefits Schedule (SABS)?
Subsection 3(1) of the SABS defines an “accident” as “incident in which the use or operation of an automobile directly causes an impairment.” The Crown in this case contends that the four passengers in the vehicle were likely killed before it went into the lock. If that is the case then clearly there is no entitlement because the use or operation of an automobile did not directly cause their death.
Even if the four passengers had drowned in the lock, the evidence presented at trial was that the vehicle was not driven into the lock. The key in the ignition was on the off position and the front seats were reclined in a position that would have made it impossible to operate the automobile. The evidence suggested that the automobile had been pushed in by another vehicle owned by the family. Again, their death was not directly caused by the use or operation of an automobile.
This is consistent with Ontario Court of Appeal decision Chisholm v. Liberty Mutual Group. In that case the plaintiff had become a paraplegic while driving his wife’s car as a result of wounds from gun shots fired by an unknown assailant. Liberty Mutual denied SABS benefits because the use or operation of the automobile did not directly cause the impairment. The Court agreed and indicated that the provision in the SABS provided a restrictive causation requirement.
Ontario Court Finds Broker Failed to Properly Offer SABS Optional Coverage
The Ontario Superior Court has dismissed a plaintiff’s action against a broker, claiming the broker did not ‘properly’ offer him the chance to purchase optional income replacement benefits.
In Zefferino v. Meloche Monnex Insurance, the plaintiff was injured on a May 27, 2005 in a motor vehicle accident. The plaintiff had purchased standard coverage including income replacement benefits to a maximum of $400 per week.
The plaintiff alleged that the insurer failed to offer optional income replacement benefits which, if they had been offered, the plaintiff would have purchased. His income at the time of the accident would have qualified him for income replacement benefits of $1,000 per week.
The defendant claimed that their practices were consistent with industry practices which was to mention the availability and only follow up if the consumer showed some interest. The judge found that the broker’s conduct fell below the required standard of care required of a seller of insurance as set out in the SABS.
However, the judge dismissed that action because the judge was not convinced that the plaintiff would have purchased the optional benefits had they been properly offered. The plaintiff and his spouse purchased insurance from four other insurance companies during the ten years and never purchased more that the standard accident benefits coverage.
This case has some significance in light of the reforms introduced in Ontario on September 1, 2010. With the reduction of standard accident benefits coverage and the expanded optional coverage, brokers, agents and direct writers are vulnerable to similar actions if their practices fall below the standard of care expected.
Zefferino v. Meloche Monnex Insurance, 2012 ONSC 154
In Zefferino v. Meloche Monnex Insurance, the plaintiff was injured on a May 27, 2005 in a motor vehicle accident. The plaintiff had purchased standard coverage including income replacement benefits to a maximum of $400 per week.
The plaintiff alleged that the insurer failed to offer optional income replacement benefits which, if they had been offered, the plaintiff would have purchased. His income at the time of the accident would have qualified him for income replacement benefits of $1,000 per week.
The defendant claimed that their practices were consistent with industry practices which was to mention the availability and only follow up if the consumer showed some interest. The judge found that the broker’s conduct fell below the required standard of care required of a seller of insurance as set out in the SABS.
However, the judge dismissed that action because the judge was not convinced that the plaintiff would have purchased the optional benefits had they been properly offered. The plaintiff and his spouse purchased insurance from four other insurance companies during the ten years and never purchased more that the standard accident benefits coverage.
This case has some significance in light of the reforms introduced in Ontario on September 1, 2010. With the reduction of standard accident benefits coverage and the expanded optional coverage, brokers, agents and direct writers are vulnerable to similar actions if their practices fall below the standard of care expected.
Zefferino v. Meloche Monnex Insurance, 2012 ONSC 154
Thứ Tư, 11 tháng 12, 2013
Insurance News - Friday, February 10, 2012
NY Senate Passes Bill Making Forging Auto Insurance Card a Felony
The New York State Senate has passed legislation designed to ramp up penalties for those who commit automobile insurance fraud.
The bill, SB 578, would make it a felony to forge an auto insurance card, certificate of insurance or other documents that are required to legally operate a motor vehicle. Forged insurance cards and documents are often used to fraudulently register cars so that owners may operate them without paying auto insurance premiums. The bill also makes it a felony to sell 10 or more false insurance cards or documents.
read more...
Hillsborough County's Crackdown Leads to 62% Decrease in Staged Auto Accidents
Crackdown on Personal Injury Protection (PIP) fraud - or staged auto accidents - yields dramatic results in just the first six months in Hillsborough County, Florida. Today, the National Insurance Crime Bureau and the County's Consumer Protection Agency are releasing numbers spotlighting a 62 percent decrease in staged auto accidents and questionable insurance claims. This is the first report since passage of the Hillsborough County PIP Medical Providers Ordinance last September.
read more...
Judge Declares Mediation “Failed” if not Mediated within 60 Day
A decision from the Superior Court of Justice of Ontario was released that declares a mediation by the Financial Services Commission of Ontario (FSCO) failed if it has not been mediated within 60 days of the application being submitted.
The New York State Senate has passed legislation designed to ramp up penalties for those who commit automobile insurance fraud.
The bill, SB 578, would make it a felony to forge an auto insurance card, certificate of insurance or other documents that are required to legally operate a motor vehicle. Forged insurance cards and documents are often used to fraudulently register cars so that owners may operate them without paying auto insurance premiums. The bill also makes it a felony to sell 10 or more false insurance cards or documents.
read more...
Hillsborough County's Crackdown Leads to 62% Decrease in Staged Auto Accidents
Crackdown on Personal Injury Protection (PIP) fraud - or staged auto accidents - yields dramatic results in just the first six months in Hillsborough County, Florida. Today, the National Insurance Crime Bureau and the County's Consumer Protection Agency are releasing numbers spotlighting a 62 percent decrease in staged auto accidents and questionable insurance claims. This is the first report since passage of the Hillsborough County PIP Medical Providers Ordinance last September.
read more...
Judge Declares Mediation “Failed” if not Mediated within 60 Day
A decision from the Superior Court of Justice of Ontario was released that declares a mediation by the Financial Services Commission of Ontario (FSCO) failed if it has not been mediated within 60 days of the application being submitted.
Cornie v. Security National [2012 ONSC 905] was heard with three other similar cases.
Justice Sloan found the insurance companies’ postion that accident victims must simply wait to be ”preposterous” and suggests that FSCO can continue to try to comply with the 60 day period or seek a change and/or ask for some legislative direction to extend the 60 day period in appropriate circumstances.
He points out that it currently appears that FSCO’s Dispute Resolution Services’ Mediation Unit is functioning without timelines and has been doing so for years. No one wants to go to court for any sum under $10,000 if mediation can resolve the issue, but accident victims should not have to remain in perpetual limbo.
Staged Accident of the Week
The Right Turn Fraud
This video illustrates the popular "Right Turn" staged car accident. Staged traffic accidents are on the rise, endangering the lives and boosting the car insurance rates of innocent drivers who may unwittingly think they're at fault.
Can an Insurer Terminate Benefits When It Learns the Accident Was Staged?
Synopsis:
An insurer introduces a new internal policy where they review claims more carefully if they occur within six months of a newly created policy. The insurer in good faith pre-approves a number of treatment plans submitted on behalf of one of their policyholders while they investigate the accident. The investigation concludes that the accident was staged and did not occur. What can the insurer do?
The insurer could argue that although it may have agreed in good faith to pay certain amounts based on the representations it received about an accident having occurred and injuries having been sustained, once it learns that its agreement to pay was based on misrepresentation or fraud, it may rescind the agreement for that reason.
Section 53 of the Statutory Accident Benefits Schedule (SABS) states that:
“An insurer may terminate the payment of benefits to or on behalf of an insured person,
(a) if the insured person has wilfully misrepresented material facts with respect to the application for the benefit; and
(b) if the insurer provides the insured person with a notice setting out the reasons for the termination. O. Reg. 34/10, s. 53.”
So the insurer could invoke that section by providing notice under section 53 (b) that it refuses to pay anything not already paid including the outcome of their investigation.
Section 52 (1) of the SABS also says a person is liable to repay an insurer:
"Subject to subsection (3), a person is liable to repay to the insurer,
(a) any benefit described in this Regulation that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of wilful misrepresentation or fraud;
(b) any income replacement or non-earner benefit under Part II that is paid to the person if he or she, or a person in respect of whom the payment was made, was disqualified from receiving the benefit under Part VII; or
(c) any income replacement, non-earner or caregiver benefit under Part II or any benefit under Part IV, to the extent of any payments received by the person that are deductible under this Regulation from the amount of the benefit. O. Reg. 34/10, s. 52 (1 )."
So if the insurer has already paid out amounts to a provider, this section gives it the right to claim it back by first invoking section52 (2) (a) and then following up in court if necessary.
"If a person is liable to repay an amount to an insurer under this section,
(a) the insurer shall give the person notice of the amount that is required to be repaid; and
(b) the insurer may, if the person is receiving an income replacement or caregiver benefit, give the person notice that the insurer intends to collect the amount by reducing each subsequent payment of the benefit by up to 20 per cent of the amount that would otherwise be the amount of the benefit. O. Reg. 34/10, s. 52 (2)."
In summary, an insurer is not obligated to continue to pay pre-approved treatment when it subsequently discovers that the claim is fraudulent. By law, any benefits already paid out should be repaid to the insurer.
Insurance News - Thursday, February 2, 2012
Insurance Benefits Backlog a Nightmare for Accident Victims
Getting hurt in a car crash is bad enough, but for many people in Ontario, it’s only the beginning of a lengthy nightmare.
People turned down for accident benefits by insurance face a wait of as long as two years before their appeals wind their way through the system administered by the Financial Services Commission of Ontario.
read more...
Steps being taken by the Financial Services Commission of Ontario (FSCO) to address the mediation backlog include mandatory settlement blitz days, joint consent to fail mediation, and the introduction of an electronic scheduling process.
read more...
FSCO also released a Request for Proposal on January 16, 2012 with the intention of contracting with up to four dispute resolution companies to provide high volume services to eliminate the file backlog. The companies would need to be able to provide arbitration services in addition to mediation services to prevent a backlog in arbitration cases as files work through the system. The deadline for proposals is February 24, 2012 and contracts are expected to be in place by May, 2012.
read more...
FSCO Releases the Costs of Goods Guideline
The Financial Services Commission of Ontario (FSCO) has released a guideline on the costs of goods. The Guideline was developed as a result of a recommendation by the Auto Insurance Anti-fraud Task Force in its interim report regarding measures that should be undertaken as soon as possible.
The Guideline indicates that where an insurer has agreed to pay for a medical or rehabilitation good under sections 15 or 16 of the SABS, they are only required to pay the lowest retail price available to any member of the general public in Ontario. In the event of a dispute, the onus is on the insurer to provide evidence of the retain price of an item.
read more...
Social Media Sleuthing
Social media has quickly become the foremost activity on the Internet. The explosive growth in user-generated content has been a boon for insurance claims adjusters and fraud investigators. Navigating the social media landscape, however, can be tricky.
read more...
Getting hurt in a car crash is bad enough, but for many people in Ontario, it’s only the beginning of a lengthy nightmare.
People turned down for accident benefits by insurance face a wait of as long as two years before their appeals wind their way through the system administered by the Financial Services Commission of Ontario.
read more...
Steps being taken by the Financial Services Commission of Ontario (FSCO) to address the mediation backlog include mandatory settlement blitz days, joint consent to fail mediation, and the introduction of an electronic scheduling process.
read more...
FSCO also released a Request for Proposal on January 16, 2012 with the intention of contracting with up to four dispute resolution companies to provide high volume services to eliminate the file backlog. The companies would need to be able to provide arbitration services in addition to mediation services to prevent a backlog in arbitration cases as files work through the system. The deadline for proposals is February 24, 2012 and contracts are expected to be in place by May, 2012.
read more...
FSCO Releases the Costs of Goods Guideline
The Financial Services Commission of Ontario (FSCO) has released a guideline on the costs of goods. The Guideline was developed as a result of a recommendation by the Auto Insurance Anti-fraud Task Force in its interim report regarding measures that should be undertaken as soon as possible.
The Guideline indicates that where an insurer has agreed to pay for a medical or rehabilitation good under sections 15 or 16 of the SABS, they are only required to pay the lowest retail price available to any member of the general public in Ontario. In the event of a dispute, the onus is on the insurer to provide evidence of the retain price of an item.
read more...
Social Media Sleuthing
Social media has quickly become the foremost activity on the Internet. The explosive growth in user-generated content has been a boon for insurance claims adjusters and fraud investigators. Navigating the social media landscape, however, can be tricky.
read more...
Insurance News - Monday, February 6, 2012
P&C Industry Supports U.S. Crash Parts Law
The property and casualty insurance industry is supporting legislation that would alter patent law to allow for use of parts not made by the manufacturer in repairing damaged vehicles.
Defence lawyers hope the decision may bring some balance to what they say is the current arbitrary treatment of minor injury claims.
In its judgment in McQueen v. Echelon General Insurance Co. on Nov. 16, the Court of Appeal refused to overturn an award of $25,000 for mental distress caused by the denial of benefits.
read more...
The property and casualty insurance industry is supporting legislation that would alter patent law to allow for use of parts not made by the manufacturer in repairing damaged vehicles.
The Promoting Automotive Repair, Trade, and Sales or PARTS Act, was introduced by Rep. Darrell Issa (R) and Zoe Lofgren (D), both of California.
The bill amends currentU.S.design patent law to limit to 2 and half years the period during which car companies can enforce their design patents on collision-repair parts against alternative suppliers.
Florida Auto Insurance Reforms Clear Senate Subcommittee
The automobile insurance industry scored a small victory Thursday when the Florida Senate banking and insurance subcommittee approved a bill that would limit the types of health care clinics that could get reimbursements under the state’s personal injury protection law.
Claim for Mental Stress Puts Pressure on Insurers
Defence lawyers hope the decision may bring some balance to what they say is the current arbitrary treatment of minor injury claims.
In its judgment in McQueen v. Echelon General Insurance Co. on Nov. 16, the Court of Appeal refused to overturn an award of $25,000 for mental distress caused by the denial of benefits.
read more...
Thứ Ba, 10 tháng 12, 2013
Insurance News - Thursday, March 1, 2012
$279 Million No-Fault Auto Insurance Scam In NYC Called Largest Ever
A cadre of corrupt doctors and scam artists sought to cheat auto insurance companies out of $279 million in bogus medical claims — the largest-ever fraud involving New York’s no-fault law, authorities said Wednesday.
A $250 Million Fraud Scheme Finds a Path to Brighton Beach
The plot involved 10 doctors, 9 separate clinics in New York City and 105 different corporations, all in service of a health care fraud ring that federal authorities say conspired to steal more than a quarter of a billion dollars from insurance companies. And when the details were announced on Wednesday, they cast an unflattering spotlight on how immigrants from the former Soviet Union have often dominated such schemes in the city.
read more...
A cadre of corrupt doctors and scam artists sought to cheat auto insurance companies out of $279 million in bogus medical claims — the largest-ever fraud involving New York’s no-fault law, authorities said Wednesday.
The investigation resulted in federal racketeering, health care fraud, mail fraud and money laundering charges against 36 people, mainly of Russian descent. They include 10 physicians and three lawyers. One had the nickname “KGB.”
At a news conference, U.S. Attorney Preet Bharara said while the false claims totaled $279 million, the actual loss to private insurers was $113 million. Some of the ill-gotten gains were spent on vacations in Mexico, shopping sprees at Saks Fifth Avenue and rides in limousines, he said.
read more...A $250 Million Fraud Scheme Finds a Path to Brighton Beach
The plot involved 10 doctors, 9 separate clinics in New York City and 105 different corporations, all in service of a health care fraud ring that federal authorities say conspired to steal more than a quarter of a billion dollars from insurance companies. And when the details were announced on Wednesday, they cast an unflattering spotlight on how immigrants from the former Soviet Union have often dominated such schemes in the city.
This one, like many others, was rooted in Brighton Beach, Brooklyn, the locus of the city’s Russian-speaking immigrant population, many of whom grew up under a Communist system that bred disdain for the rules and a willingness to cheat to get around them.
Brighton Beach has one of the highest rates of health care fraud in the nation, according to federal statistics. In fact, an analysis of data from the Centers for Medicare and Medicaid Services, the federal agency that regulates those two programs, shows that more health care providers in the Brighton Beach ZIP code are currently barred from the programs for malfeasance than in almost any other ZIP code in the United States. (The top spot is in southern Florida, with its high proportion of older residents.)read more...
Staged Accident of the Week
The Swoop and Squat Fraud
This video illustrates the popular "Swoop and Squat" staged car accident. Staged traffic accidents are on the rise, endangering the lives and boosting the car insurance rates of innocent drivers who may unwittingly think they're at fault.
This video illustrates the popular "Swoop and Squat" staged car accident. Staged traffic accidents are on the rise, endangering the lives and boosting the car insurance rates of innocent drivers who may unwittingly think they're at fault.
Which claims should be treated under the Minor Injury Guideline
The Statutory Accident Benefits Schedule (SABS) introduced in September 2010 expands on the previous definition of whiplash associated disorders (WADs) by including sprains, strains, dislocations, lacerations, contusions, abrasions and any clinically associated sequelae (secondary consequences or results of an injury) in a new minor injury definition. Including associated sequelae in the definition is meant to cover common complaints associated with soft tissue injuries such as pain, headaches, dizziness, difficulty sleeping, anxiety, depression and fatigue.
The Minor Injury Guideline (MIG) and a $3,500 cap on treatment and assessment expenses apply if the claimant sustains an impairment that is predominantly a minor injury. Currently there hasn’t been any guidance provided from the Superintendent, arbitrators or the courts on how to determine which impairment is predominant where the claimant sustains multiple impairments. However, another impairment may not necessarily create entitlement to medical and rehabilitation expenses in excess of $3,500.
In other jurisdictions over 80% of auto accident injuries fall under this description. That fact that the percentage is lower in Ontario suggests that some health care providers resist categorizing their patients as having a minor injury.
The MIG was not intended to cover complete tears of muscles or ligaments, fractures or serious psychological impairments. Still a minor fractured nose or finger may require little treatment in comparison to a WAD injury and therefore it could be argued that the WAD injury is the predominant one. Adjusters should seek independent medical advice when a claimant appears to have multiple impairments or a more serious impairment that would exclude them from treatment under the MIG. As well, the SABS does not set out that all claimants start out being treated under the MIG, only those with minor injuries. An insurer that insists on starting all claims in the MIG is providing clients with poor service and exposes themselves to special awards and bad faith claims.
The MIG and $3,500 cap do not apply to a claimant if his or her practitioner determines and provides compelling evidence that a pre-existing condition prevents the claimant from achieving maximal recovery if subject to the cap or the MIG. There is no guidance as yet as to what constitutes compelling evidence but these situations should be rare and an independent medical opinion would be appropriate.
Common diagnoses used by providers to escape the $3,500 cap are psychological impairment and WAD III (see below). Depression and anxiety are common complaints following an auto accident and often resolve themselves over time. That is not the case with post-traumatic stress disorder. Again, an independent medical opinion would be appropriate in these situations. Keep in mind that if the exam needs to determine whether a physical impairment or psychological impairment is predominant you need to select a provider with an appropriate background, who can properly weigh the impact of both impairments.
Insurance News - Friday, February 17, 2012
Police showed this BMW, that had its frame is welded together, which was part of a massive chop shop and insurance fraud racket operating out of Toronto and the Niagara Region on Thursday, Feb. 16, 2012. (Danny Pinto / CTV News)
Police in southern Ontario have arrested six men and laid more than 500 charges in connection to a massive chop shop and insurance fraud racket operating out of Toronto and the Niagara Region.
Police in southern Ontario have arrested six men and laid more than 500 charges in connection to a massive chop shop and insurance fraud racket operating out of Toronto and the Niagara Region.
Five Toronto men and one from the Niagara Region were charged in connection to the theft of 100 stolen vehicles, many of which ended up back on the road after passing fraudulent structural safety inspections.
Police allege the suspects would steal vehicles and register them with vehicle identification numbers taken from cars and trucks that had been written off and purchased as salvaged parts.
read more...Insurance News - Thursday, February 23, 2012
'Project Whiplash' Leads to Early Morning Arrests
Toronto Police Services news release on Project Whiplash.
FSCO Lays Charges Against Rehabilitation Clinics
The Financial Services Commission of Ontario (FSCO) has charged four rehabilitation clinics and six individuals affiliated with these clinics with offences under Ontario’s Insurance Act. These clinics and individuals are alleged to have submitted false invoices to insurers as part of a staged auto accident ring.
FSCO Arbitrator Recognizes 60-Day Timeline for Mediations
A recent decision by FSCO Arbitrator Jeffrey Rogers supports that a mediation can be deemed to have failed if it has not been mediated within the 60 day timeframe noted in both the Insurance Act as well as The Dispute Resolution Practice Code.
More than three dozen people are in custody Thursday following multiple arrests across the Greater Toronto Area overnight which targeted a vehicle insurance fraud ring.
The investigation, code named "Project Whiplash" concentrated on an accident and insurance fraud ring allegedly run by members of the Tamil community. The 37 suspects arrested in Scarborough, Brampton and Markham face 130 charges.
read more....Toronto Police Services news release on Project Whiplash.
FSCO Lays Charges Against Rehabilitation Clinics
The Financial Services Commission of Ontario (FSCO) has charged four rehabilitation clinics and six individuals affiliated with these clinics with offences under Ontario’s Insurance Act. These clinics and individuals are alleged to have submitted false invoices to insurers as part of a staged auto accident ring.
On February 23, 2012, the following clinics were charged with one count each of knowingly making false or misleading statements to an auto insurer to obtain payment for goods and services provided to an insured and engaging in an unfair or deceptive act or practice:
- McCowan Rehabilitation Clinic (1583 Ellesmere Road, Suite 104, Scarborough, Ontario)
- Ontario Rehabilitation Clinic (3031 Markham Road, Suite 31, Scarborough, Ontario)
- Physiotherapy Clinic (1920 Ellesmere Road, Suite 110, Scarborough, Ontario)
- North York Health & Rehabilitation Centre (1280 Finch Avenue West, Suite 519, Toronto, Ontario)
FSCO Arbitrator Recognizes 60-Day Timeline for Mediations
A recent decision by FSCO Arbitrator Jeffrey Rogers supports that a mediation can be deemed to have failed if it has not been mediated within the 60 day timeframe noted in both the Insurance Act as well as The Dispute Resolution Practice Code.
In the decision, Leone and State Farm, Arbitrator Rogers states the following:
There is no merit to State Farm’s submission that the Application is not filed until a mediator is appointed. The definition of “file” does not suggest that interpretation. The Insurance Act and the Rules themselves treat filing and appointing a mediator as separate events. Section 280(2) of the Act sets the requirement for filing the application. Section 280(3) then requires the Director to “ensure that a mediator is appointed promptly.” Rule 13.1 states that on “receipt of a completed Application for Mediation… a mediator will be appointed promptly.” The Commission recognized this separation when it advised Mr. Leone that “[C]omplete applications are taking longer to be assigned to a mediator as a result of the large volume of applications which we continue to receive.read more...
Thứ Hai, 9 tháng 12, 2013
Florida Passes Auto Insurance Reform Law
Governor Rick Scott got the legislation he wanted to reform Florida’s mandatory motor vehicle no-fault law and crack down on the abuses in personal injury protection cases that have led to skyrocketing increases for coverage.
Whether the new measure will be effective remains to be seen.
The measure (HB 119) passed on a 22-17 vote in the State Senate after some heavy duty lobbying by Gov. Scott on Friday, March 9th just before the annual legislative session was to end. The Bill had passed the House earlier in the day.
The personal injury protection (PIP) law was adopted in 1972 to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation provided that a driver’s insurance company pay up to $10,000 to cover medical bills and lost wages after an accident, no matter who is at fault.
PIP costs have risen by $1.4 billion since 2008, largely because of the runaway fraud that threatens the system, most notably in the metropolitan Miami and Tampa areas. Florida ranks first nationally in staged accidents.
The legislation requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.
Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits.
The bill would also establish an organization within the Division of Insurance Fraud to combat motor vehicle insurance fraud.
Health-care practitioners found guilty of insurance fraud would have their licenses revoked for five years and banned from seeking PIP reimbursement for a decade.
Another provision in the bill requires the Office of Insurance Regulation to hire an independent consultant by September to calculate the savings expected from the Act.
The bill includes a 10 percent rate reduction on PIP that’s not guaranteed. If insurers who offer PIP do not provide their customers a minimum 10 percent rate reduction, they must explain in detail why not. A second rate filing required on Jan. 1, 2014, proposes insurers have a 25 percent premium reduction for policyholders unless they can show why they’re unable to provide the cut.
The final bill represents a compromise as both the Senate and House had passed different legislation to reform PIP. However a bill must be passed by both bodies to become law.
The original House bill required those injured in auto accidents to get treatment in an emergency room within 72 hours or with the medical provider of their choice if the cost is under $1,500. It also capped attorneys' fees in both individual and class-action disputes and allows insurance companies to examine policyholders under oath when investigating claims.
The original Senate bill tightened procedures for licensing medical clinics and authorizing who can provide treatment and required long-form incident reports as a way to root out staged accidents. It updated the bill-payment system and gave hospitals priority standing in personal injury protection claims.
Lessons for Ontario:
One of the shortcomings of the Ontario system is the ability of a wide range of health care practitioners to recommend treatment and assessments. The Florida bill requires treatment recommendations come from a physician, osteopathic physician, dentist, or a nurse practitioner. Otherwise only $2,500 in treatment is available. However, in Ontario treatment has already been restricted to $3,500 for accident victims with minor injuries.
Florida has essentially delisted massage therapy and acupuncture treatment. In Ontario there is a need to limit treatment to interventions where there is scientific evidence to support those interventions.
The Florida bill would ban health care providers who are convicted of fraud from billing auto insurers for 10 years. A similar ban is needed in Ontario.
Bill HB 119 can be found here.
Whether the new measure will be effective remains to be seen.
The measure (HB 119) passed on a 22-17 vote in the State Senate after some heavy duty lobbying by Gov. Scott on Friday, March 9th just before the annual legislative session was to end. The Bill had passed the House earlier in the day.
The personal injury protection (PIP) law was adopted in 1972 to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation provided that a driver’s insurance company pay up to $10,000 to cover medical bills and lost wages after an accident, no matter who is at fault.
PIP costs have risen by $1.4 billion since 2008, largely because of the runaway fraud that threatens the system, most notably in the metropolitan Miami and Tampa areas. Florida ranks first nationally in staged accidents.
The legislation requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.
Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits.
The bill would also establish an organization within the Division of Insurance Fraud to combat motor vehicle insurance fraud.
Health-care practitioners found guilty of insurance fraud would have their licenses revoked for five years and banned from seeking PIP reimbursement for a decade.
Another provision in the bill requires the Office of Insurance Regulation to hire an independent consultant by September to calculate the savings expected from the Act.
The bill includes a 10 percent rate reduction on PIP that’s not guaranteed. If insurers who offer PIP do not provide their customers a minimum 10 percent rate reduction, they must explain in detail why not. A second rate filing required on Jan. 1, 2014, proposes insurers have a 25 percent premium reduction for policyholders unless they can show why they’re unable to provide the cut.
The final bill represents a compromise as both the Senate and House had passed different legislation to reform PIP. However a bill must be passed by both bodies to become law.
The original House bill required those injured in auto accidents to get treatment in an emergency room within 72 hours or with the medical provider of their choice if the cost is under $1,500. It also capped attorneys' fees in both individual and class-action disputes and allows insurance companies to examine policyholders under oath when investigating claims.
The original Senate bill tightened procedures for licensing medical clinics and authorizing who can provide treatment and required long-form incident reports as a way to root out staged accidents. It updated the bill-payment system and gave hospitals priority standing in personal injury protection claims.
Lessons for Ontario:
One of the shortcomings of the Ontario system is the ability of a wide range of health care practitioners to recommend treatment and assessments. The Florida bill requires treatment recommendations come from a physician, osteopathic physician, dentist, or a nurse practitioner. Otherwise only $2,500 in treatment is available. However, in Ontario treatment has already been restricted to $3,500 for accident victims with minor injuries.
Florida has essentially delisted massage therapy and acupuncture treatment. In Ontario there is a need to limit treatment to interventions where there is scientific evidence to support those interventions.
The Florida bill would ban health care providers who are convicted of fraud from billing auto insurers for 10 years. A similar ban is needed in Ontario.
Bill HB 119 can be found here.
Staged Accident of the Week
Curb Drive Down Fraud
This video illustrates the popular "Curb Drive Down" staged car accident. Staged traffic accidents are on the rise, endangering the lives and boosting the car insurance rates of innocent drivers who may unwittingly think they're at fault.
This video illustrates the popular "Curb Drive Down" staged car accident. Staged traffic accidents are on the rise, endangering the lives and boosting the car insurance rates of innocent drivers who may unwittingly think they're at fault.
Three new auto insurance private member's bills introduced in Ontario
Let's be perfectly clear, very few private member’s bills become law. However, the fact that three private member's bills were introduced in the Ontario legislature in one week indicates a growing awareness that problems with the Ontario auto insurance system persist.
Mississauga-Brampton South MPP Amrit Mangat reintroduced her auto insurance bill, which she first introduced in June 2011. The purpose of Reducing Automobile Insurance Premiums by Eliminating Fraud Act, 2012 (Bill 41) is to protect people who report insurance fraud. It is also intended to ensure that insurance investigators have the proper tools to investigate fraud.
Bill 45
The Bill amends the Act to require that elements of a proposed risk classification system use the following mandatory factors in decreasing order of importance:
Mississauga-Brampton South MPP Amrit Mangat reintroduced her auto insurance bill, which she first introduced in June 2011. The purpose of Reducing Automobile Insurance Premiums by Eliminating Fraud Act, 2012 (Bill 41) is to protect people who report insurance fraud. It is also intended to ensure that insurance investigators have the proper tools to investigate fraud.
York West MPP Mario Sergio introduced Insurance Amendment Act (Elements in Classifying Risks for Automobile Insurance), 2012 (Bill 43), which deals with allowable elements of a risk classification system.
Then a similar bill was tabled by Bramalea-Gore-Malton MPP Jagmeet Singh. The Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012 (Bill 45) also deals allowable elements of a rsk classification system.
The Bill provides whistle-blowing protection to an inspector under the Independent Health Facilities program of the Ministry of Health and Long-Term Care, health regulatory College investigators, insurance company employees, IBC staff and the police. It does not protect private citizens. The Bill protects these employees from dismissal and other forms of discipline as well as from harassment and other forms of coercion. It also protects them from civil suits as long as their were acting in good faith.
The Bill allows the health regulatory Colleges to appoint investigators to determine whether College members have been involved in fraudulent activities related to auto insurance claims. I believe the College Registrars already have that authority. The Bill does go further by requiring that the police be notified if an investigation suggests that there has been such fraudulent activity.
The Bill also amends the Independent Health Facilities Act to provide that a licensee under the Act must be a member of a health profession college. This amendment appears to be irrelevant. An Independent Health Facility is a facility where members of the public receive services (lab tests, diagnostic imaging, laser surgery, etc.) paid for by the Ministry of Health and Long-Term Care. They are not involved in auto insurance claims.
The Bill can be found here.
The Bill amends the Insurance Act by requiring automobile insurers to use a person’s driving record, a person’s age, the type of automobile, and any element prescribed by regulation in classifying risks for a coverage or category of automobile insurance. The Bill also prohibits automobile insurers from using a person’s home address or postal code and any element prescribed by regulation in classifying such risks.
Essentially the Bill would eliminate territorial rating. The Ontario Cabinet already has regulation-making authority to prohibit territories as an element of a risk classification system. Section 16 of Ontario Regulation 664 deals with prohibited elements. The impact of this Bill is that it removes discretion from Cabinet regarding the use of territories as an element of a risk classification system.
The Bill can be found here.Bill 45
The Bill amends the Act to require that elements of a proposed risk classification system use the following mandatory factors in decreasing order of importance:
1. The driving safety record of the insured person, but only in respect of accidents where the person was found to be principally at fault.
2. The number of kilometres driven annually by the insured person.
3. The insured person’s years of driving experience.
4. The population of the statistical area in which the driver primarily resides.
If other factors are used, they cannot, when taken together, be given more weight than the fourth mandatory factor.
Insurers are prohibited from using a geographical region in which an insured person resides as an element in classifying risks. Other elements may continue to be prohibited under the regulations. Insurers must provide written explanations and other prescribed information regarding rate determinations in specified circumstances.
This Bill goes beyond the proposed amendments in Bill 43. Not only does the Bill eliminate territorial rating but it requires insurers to use specific factors in classifying risks and sets out their relative weights.
The Bill can be found here.
New York State Targets Doctors Involved in Auto Insurance Fraud
In the wake of an epic car-insurance scam, New York state officials are preparing to crackdown on doctors who loan their names to clinics that are nothing more than billing mills.
New York Superintendent of Financial Services Benjamin Lawsky said he plans to zero in on white-collar criminals in white coats within a month.
A rigorous statewide initiative is underway to close medical offices billing for services that are either wholly unnecessary or never rendered to auto accident victims. Under the new regulation, physicians engaging in unscrupulous billing practices to siphon funds from New York’s personal injury protection (PIP) system will ostensibly turn themselves into pariahs, at least in the professional sense.
The Department of Financial Services has already identified 135 medical providers whose billing practices have raised concerns regarding possible no-fault fraud through audits and information obtained from law enforcement and insurers. As part of an ongoing investigation, letters are being sent to all 135 medical providers demanding a response and information. According to the department, failure to answer the letters may automatically lead to the medical provider being banned from the no-fault system.
The Federal government in March charged 36 people in a massive $279 million scheme to bilk New York insurers out of the state's PIP no-fault benefit. The fraud is alleged to have started in 2007 and continued until discovered last year. The organization allegedly scammed the medical system by having doctors prescribe physical therapy, acupuncture and chiropractic treatments as many as five times a week.
New York Superintendent of Financial Services Benjamin Lawsky said he plans to zero in on white-collar criminals in white coats within a month.
A rigorous statewide initiative is underway to close medical offices billing for services that are either wholly unnecessary or never rendered to auto accident victims. Under the new regulation, physicians engaging in unscrupulous billing practices to siphon funds from New York’s personal injury protection (PIP) system will ostensibly turn themselves into pariahs, at least in the professional sense.
The Department of Financial Services has already identified 135 medical providers whose billing practices have raised concerns regarding possible no-fault fraud through audits and information obtained from law enforcement and insurers. As part of an ongoing investigation, letters are being sent to all 135 medical providers demanding a response and information. According to the department, failure to answer the letters may automatically lead to the medical provider being banned from the no-fault system.
The Federal government in March charged 36 people in a massive $279 million scheme to bilk New York insurers out of the state's PIP no-fault benefit. The fraud is alleged to have started in 2007 and continued until discovered last year. The organization allegedly scammed the medical system by having doctors prescribe physical therapy, acupuncture and chiropractic treatments as many as five times a week.
Insurance News - Friday, March 23, 2012
New York Senate Passes Tough Auto Insurance Fraud Measures
On Thursday the New York Senate passed three bills to combat auto insurance fraud, which costs New Yorkers more than $1 billion a year, as well as legislation that would impose stronger criminal penalties for staging auto accidents. Recent cases of auto insurance fraud have uncovered massive crime rings, including doctors, lawyers and scam artists who staged accidents and used New York’s no-fault insurance program as their own, giant, state-sponsored ATM machine.
Senate Bill 4507B would enable insurance companies to retroactively cancel policies taken out by people who commit auto fraud. Senate Bill 1685 would establish a new felony-level crime of staging a motor vehicle accident. Senate Bill 2004 would make the use of “runners” illegal in New York. All three bills need to be passed by the state House before becoming law.
On Thursday the New York Senate passed three bills to combat auto insurance fraud, which costs New Yorkers more than $1 billion a year, as well as legislation that would impose stronger criminal penalties for staging auto accidents. Recent cases of auto insurance fraud have uncovered massive crime rings, including doctors, lawyers and scam artists who staged accidents and used New York’s no-fault insurance program as their own, giant, state-sponsored ATM machine.
Senate Bill 4507B would enable insurance companies to retroactively cancel policies taken out by people who commit auto fraud. Senate Bill 1685 would establish a new felony-level crime of staging a motor vehicle accident. Senate Bill 2004 would make the use of “runners” illegal in New York. All three bills need to be passed by the state House before becoming law.
Chủ Nhật, 8 tháng 12, 2013
Is the Rate Differential Between Young Male and Female Drivers Still Justified?
According to a study published this week in the Journal of Studies on Alcohol and Drugs, cited by U.S. News & World Report, in 1996, an underage male driver (aged 16-20) with a blood alcohol concentration of .1 percent was four times as likely as a similarly impaired underage female to get into a fatal car accident.
By 2007, that gap had closed.
Eduardo Romano, one of the study's co-authors, speculates that the rise in fatal accidents among female drivers may be related to Independent Women (Part I)'s new found taste for danger, in the form of night driving."I think it's a reflection that women have become more independent out in the world. In the past, men always drove on dates, now more women are driving themselves. They're driving more often at night," he says. "Night is always a much more risky time to drive."According to a AAA report released last week, newly licensed teen girls are also twice as likely as boys to use an electronic device while driving. They are more likely to eat, drink, and adjust non-essential controls like the radio or air conditioner. Boys are more likely to turn around and interact with people outside the vehicle. Girls are more likely to groom themselves while driving.
Journal of Studies of Alcohol and Drugs study is here
AAA report: Distracted Driving Among Newly Licensed Teen Drivers is here
Mobilizing Against Fraud
The Ontario Auto Insurance Anti-Fraud Task Force has taken preliminary steps to establish the scope and appropriate response to fraud.
by Willie HandlerMarch 2012 issue of Canadian Underwriter
Recognizing the importance of preventing auto insurance fraud, the Government of Ontario appointed the Auto Insurance Anti-Fraud Task Force on July 29, 2011. Directed by a five-person steering committee, the Task Force is independent of the government. Its mandate is to:
• assess the extent and nature of fraud in the Ontario auto insurance system; and
• recommend actions to reduce the incidence of fraud for the benefit of policyholders.
The Task Force submitted an interim report to the government on Nov. 21, 2011. The interim report describes what the Task Force has learned during the four months since its appointment; outlines actions with short-term benefits that might be taken; and establishes an agenda for the balance of its mandate.
The final report of the Task Force is due by Fall 2012.
Early Observations
For some time, a figure of $1.3 billion has been used to describe the cost of fraud in Ontario, but the Task Force believes this figure is not reliable. The Task Force indicates in its report that a comprehensive research and analysis on the scope of auto insurance fraud in Ontario will be undertaken over the remainder of its mandate.
The Task Force has categorized fraud into “organized,” “premeditated” and “opportunistic.” These defined categories will create some controversy among auto insurance stakeholders, since some groups do not agree they all constitute fraud.
Organized fraud
The Task Force defines “organized” fraud as an organized scheme designed to generate cash flow through either staged accidents or fabricated accidents. Individual claimants are not the organizers of these schemes: they generally rely on white-collar professionals to support the schemes. Stakeholders in the system completely agree that these activities constitute fraud.
Premeditated fraud
Premeditated fraud is defined as continual pattern of charging insurers for goods and services that are not provided or that are unnecessary. A claimant may or may not be complicit in the fraud. As well, in this type of fraud, the participant is not dependent upon a larger organization. Some stakeholders do not consider that claiming for some of these goods and services to be fraud. Rather, they believe these are simply disagreements over what constitutes reasonable and necessary expenses.
Opportunistic fraud
Opportunistic fraud involves an individual claimant who pads the value of his or her auto insurance claim by claiming for goods and services that are unnecessary or unrelated to the accident. Again, some people will see this as a disagreement about what constitutes a reasonable or necessary expense rather than a deliberate, fraudulent “padding” of claims.
Cost Trends
A significant portion of the Task Force’s interim report is dedicated to analyzing the costs structure and trends in the Ontario auto insurance system. Although the Task Force did not make a quantitative estimate of the extent of fraud in the system, it did make a number of interesting observations.
The Task Force identified a large — and as yet unexplained — gap between changes in accident benefits claims costs and changes in factors that are expected to influence those costs. The report notes that theses costs are concentrated in the GTA.
According to Exhibit 3 in the interim report, accident benefits claims costs increased by $2.4 billion or $370 per vehicle between 2006 and 2010. Exhibit 6 shows that $2 billion in accident benefits claims costs or $300 per vehicle is unexplained.
This gap was calculated by comparing actual accident benefits claims costs with projected accident benefits claims costs over that same period had they grown at the same rate as private health expenditures in Ontario.
Another concern for the Task Force was the increased frequency of accident benefits claims. Between 2006 and 2009, 6,400 fewer people were injured in auto accidents, based on Ministry of Transportation statistical reports. And yet, accident benefits claims increased by 14% over the same period.
The Task Force concluded that the fastest-growing categories of auto insurance fraud are premeditated and organized fraud. This is based on the belief that opportunistic fraud through the padding of claims could not have grown so quickly in such a short period of time.
Task Force Analysis
The Task Force spent a considerable amount of time collecting and analyzing available historical data. This gives us a very good perspective of how the Ontario system has gone off the rails over the past few years. However, the historical analysis is based on a system that no longer exists. Ontario’s auto insurance reforms, implemented in September 2010, dramatically changed the landscape of the province’s auto insurance system.
Prior to the reforms, the largest increases in accident benefits costs from 2006 to 2010 were assessments and examinations (228%), caregiver benefits (186%), housekeeping expenses (178%) and medical benefits (105%), according to Exhibit 16 of the interim report. All these benefits were affected by the reforms. Caregiver benefits and housekeeping expenses are now only paid to catastrophic claimants (about 1% of claims) and policyholders who purchased the optional coverage (also about 1% of claims).
Anecdotal feedback from health care professionals conducting medical assessments and examinations indicates business is down 50% since the reforms were introduced. Meanwhile, a number of insurers report that 50% to 70% of their claimants are being treated under the Minor Injury Guideline and are consequently subject to the $3,500 medical and rehabilitation cap.
And so, assuming most claimants no longer claim caregiver benefits and housekeeping expenses, if health professionals are conducting half the number of assessments as they did pre-reforms, and if at least half of insurers’ claimants are subject to the $3,500 cap, one would expect significant claims cost reductions since September 2010. I estimate this should work out to a reduction in costs of roughly $1.3 billion. This leaves about $700 million in current unexplained costs in the system. This is still a significant figure, and it speaks to the need to gain a good understanding of the extent and source of fraud in Ontario, particularly during the post-reform period.
Expected Changes
The Task Force is already working on changes that should have a positive effect on the auto insurance system. These include working on optional e-learning for police officers; changes in Health Claims for Auto Insurance (HCAI), the electronic system health professionals use for transmitting auto insurance claims forms to insurers, that allow health professionals to check for unauthorized use of their identity, FSCO guidelines on health care billing practices; and new anti-fraud brochures and Internet material.
More substantive recommendations are still to come. The interim report highlights some of the possible recommendations including:
• licensing and/or regulation of rehabilitation clinics;
• enhancing regulation of the towing industry;
• establishing a dedicated fraud investigation unit; and
• developing a consumer engagement and education strategy.
Licensing/regulating rehab clinics
The Task Force indicated interest in the licensing requirements introduced by Hillsborough County, Florida in September 2011. Some of those requirements include:
• A physician must be responsible for operating a clinic.
• All persons associated with operating a clinic must submit 1) a copy of their state license; 2) a list of criminal convictions, if any; and 3) a set of fingerprints.
• A clinic must agree to inspections by county code or law enforcement officers.
These changes are new, so there is little experience to date regarding their effectiveness as an anti-fraud measure.
It is also difficult to determine what body in Ontario would take on this regulatory responsibility, which would include licensing, inspection and enforcement activities. Ontario is reportedly facing a $16-billion deficit and has appointed former bank economist Don Drummond to conduct a public service review. Under the current fiscal environment, don’t expect new money and resources from the Ontario government to regulate rehabilitation clinics.
Is there an alternative model? Well, there are the health regulatory colleges. But moving in this direction would require a substantial change in mandate to cover multidisciplinary facilities. In addition, the colleges have their own fiscal and resource restraints.
Regulation of the towing industry
Towing operators and drivers are currently licensed and regulated by a patchwork of municipal bylaws. Some are effective but many are not.
Regulation of the towing industry was proposed in a private members bill (Bill 147) introduced in the Ontario Legislature in April 2011. Bill 147 did not proceed past second reading before the fall Ontario election; therefore, it died on the Order Paper. Had the bill passed, it would have introduced a self-regulatory body, the Towing Industry Council of Ontario.
Don’t expect to see the bill revived under the current session, because the towing industry does not yet have the infrastructure in place for self-regulation. Government expenditure constraints will challenge the Task Force to develop a framework that will require minimal public resources.
Dedicated fraud investigation unit
The Task Force has shown interest in the U.S. National Insurance Crime Bureau (NICB). The NICB partners with insurers and law enforcement to identify, detect and prosecute insurance criminals. Data analytics is a critical tool of the NICB. The mandatory reporting of data by insurers facilitates the data collection. Introducing a similar model in Ontario would likely require legislation and engage some discussions about existing privacy legislation.
Where in Ontario would such a potential fraud investigation body be housed? Again, government financing constraints would likely be a factor. Building in some way on the experience of the IBC’s Investigative Services makes sense and more closely follows the American model.
Consumer education strategy
The Task Force concluded there is little public awareness of Ontario’s auto insurance system and existing types of fraud. Fraud organizers use this lack of public knowledge to their advantage. Some consumers participate in fraud schemes without their knowledge and without understanding the risks.
The Task Force believes fraud prevention includes a better-informed public. The extent of any potential public education campaign is unknown at this time. But if it happens, it will require funding. FSCO and the Ministry of Finance have no history of funding consumer education campaigns dealing with auto insurance, so expect the financial burden to fall on the insurance industry.
The Task Force’s interim report received almost no media coverage, but expect more interest when the final report is completed and released later this year. None of these issues are simple, so the Task Force has its work cut out for itself.
Some U.S. States are Considering Credit Score Restrictions
As in prior years, proposed credit scoring restrictions continue to be a focus in many states. Here is a brief recap of some recently introduced bills:
- Illinois: HB 5839 proposes to require insurers, which are using credit information to underwrite or rate risks, to recalculate the insured's insurance score at the request of the insured, but not more than once annually. The purpose is to determine whether the insured is eligible for a reduction in his or her premium rate.
- Kentucky: SB 121 would require insurers to provide reasonable exceptions for extraordinary life circumstances, as well as prohibit insurers from declining, refusing to renew or cancel an automobile policy solely because of credit history, lack of credit history or extraordinary life circumstances that directly influence the credit history of the applicant or insured. SB 31 would declare the use of credit history or the lack of credit history, including a credit score or insurance score, of an insured or an applicant as the basis in whole or in part to decline, refuse to renew, cancel, rate, or determine the premium rate for any insurance policy, contract, or plan of insurance an unfair or deceptive trade practice.
- Maryland: SB 785 proposes a prohibition on private passenger motor vehicle insurers from rating a risk based, in whole or in part, on the credit history of an applicant or insured in any manner.
- Minnesota: HF 2279 would require that no insurer be permitted to limit coverage under or determine the premium rate for any person, in whole or in part, on the basis of credit information, without consideration and inclusion of any other applicable underwriting factor. Insurers would also not be permitted to use credit as a factor in adverse decision considerations if the credit information is adversely impacted or cannot be generated due to the absence of credit history.
- Missouri: HB 1406 proposes to prohibit taking any adverse action based on a credit report or insurance credit score against a person currently insured under an existing insurance contract with the insurer.
- Rhode Island: Both SB 2296 and HB 7411 would prevent the consideration of an applicant's credit history in determining automobile insurance rates.
- Virginia: HB 355 proposes prohibiting an insurer from setting rates or making pricing decisions based on a person’s credit information contained in a consumer report, bearing on an individual’s creditworthiness, credit standing, or credit capacity except as otherwise permitted under existing Virginia law. Also, an insurer would not be permitted to take any adverse action based in whole or in part upon an individual applicant’s or individual insured’s credit information contained in a consumer report if the applicant or insured has a perfect driving record. Both HB 432 and SB 350 would prohibit insurers from setting rates or making pricing decisions based on a person’s credit history, lack of history or credit score.
- West Virginia: HB 2049 proposes to prohibit the use of a person's credit history in insurance transactions, while HB 2319 would prohibit the use of a credit score in casualty insurance rate filings. HB 2467 proposes to prohibit credit scoring from being considered as a factor in calculating rates in homeowners or automobile liability policies.
What's Behind the 2012 Budget Announcements
There are a few key things that we can take away from the 2012 Budget announcements yesterday. Should the minority government survive a number of significant auto insurance initiatives will occur. Note that the Budget also addressed on a number of initiatives that have already occurred or are underway. It is not unusual to repeat previous announcement in particular where they have no monetary impact on the government.
1. Auto Insurance Anti-Fraud Task Force
The section of the Budget document has nothing really new. The announced initiatives were included in Task Force's interim report that was released in December 2011. For example. the government notes that it has amended regulations (see Ontario Regulation 194/11) to ensure that treatments are provided as invoiced and issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate. The Budget document also sets out areas where the Task Force has committed to making recommendations.
2. Scientific and Evidence-Based Approaches
The government has signalled that it is moving ahead on two important projects. One is that minor injury guideline is to be developed the is evidence-based, that is, based on medical ad scientific research to be conducted by a consultant. FSCO released a Request for Proposals in November 2011 to hire the consultant but no announcement has been made regarding the successful bidder. This work should take two years to complete.
The second project is deals with the definition of catastrophic impairment found in the Statutory Accident Benefits Schedule (SABS). In December 2010 FSCO appointed a Expert Panel lead by Dr. Pierre Cote to review the SABS definition. That panel submitted two reports to the Superintendent which are both available on the FSCO website. The Budget document indicates that the Superintendent has made his final recommendations and his report will be made public. In addition, the government intends on making amendments to the SABS based on those recommendations. No time frame has been provided but regulation changes do not need to go to the Legislature for approval. Cabinet has the authority to amend the SABS.
The Expert Panel reports deal with such things as combining psychological and physical impairments, more objective tests for spinal cord, brain and psychiatric impairment and interim benefits for those waiting for a catastrophic determination. Hopefully the government will move quickly on this issue.
3. Other Initiatives
The government has signalled that it will review FSCO's Dispute Resolution System. Cracks have appeared in the system which has not undergone significant reform since it was first introduced in 1990. However just think about how much Ontario's auto insurance system has evolved over the past 22 years. Apart from the mediation backlog, a comprehensive review is likely overdue. No timeframe has been provided nor a mechanism for undertaking that review.
The government has signalled a willingness to work with insurers to explore voluntary usage-based auto insurance policies. I will likely address this issue in future postings. I feel that as traditional risk classification criteria are being chipped away at (ie, credit scoring, territories), usage-based policies may be the answer to predicting risk.
The government will harmonize the timing of statutory automobile insurance reviews. There are currently three statutory reviews in the Insurance Act. At least once every two years, the Minister is required to table a report before the Legislature in respect of the adequacy of statutory accident benefits and setting out changes made to the SABS (section 289). The Superintendent is required to undertake a review of Auto Insurance sections of the Insurance Act and related regulations at least every five years and recommend any amendments that the Superintendent believes will improve the effectiveness and administration of the Act and regulations (section 289.1). The Superintendent is also required, at least once every three years, to consult on the operation of those sections of Ontario Regulation 664 that deal with rating and risk classification and submit to the Minister a report containing the Superintendent’s recommendations for amendments to the regulations (section 417.1). A similar recommendation was made in the Superintendent's Five Year Review report in 2009 and the 2011 Auditor General's report.
The government intends to propose amendments to give the Superintendent the authority to impose administrative monetary penalties (AMPs) in the insurance sector. AMPs are monetary penalties viewed as a middle ground between a ‘slap on the wrist’ and quasi-criminal proceedings, enabling insurance regulators to issue a penalty proportionate to the infraction.
1. Auto Insurance Anti-Fraud Task Force
The section of the Budget document has nothing really new. The announced initiatives were included in Task Force's interim report that was released in December 2011. For example. the government notes that it has amended regulations (see Ontario Regulation 194/11) to ensure that treatments are provided as invoiced and issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate. The Budget document also sets out areas where the Task Force has committed to making recommendations.
2. Scientific and Evidence-Based Approaches
The government has signalled that it is moving ahead on two important projects. One is that minor injury guideline is to be developed the is evidence-based, that is, based on medical ad scientific research to be conducted by a consultant. FSCO released a Request for Proposals in November 2011 to hire the consultant but no announcement has been made regarding the successful bidder. This work should take two years to complete.
The second project is deals with the definition of catastrophic impairment found in the Statutory Accident Benefits Schedule (SABS). In December 2010 FSCO appointed a Expert Panel lead by Dr. Pierre Cote to review the SABS definition. That panel submitted two reports to the Superintendent which are both available on the FSCO website. The Budget document indicates that the Superintendent has made his final recommendations and his report will be made public. In addition, the government intends on making amendments to the SABS based on those recommendations. No time frame has been provided but regulation changes do not need to go to the Legislature for approval. Cabinet has the authority to amend the SABS.
The Expert Panel reports deal with such things as combining psychological and physical impairments, more objective tests for spinal cord, brain and psychiatric impairment and interim benefits for those waiting for a catastrophic determination. Hopefully the government will move quickly on this issue.
3. Other Initiatives
The government has signalled that it will review FSCO's Dispute Resolution System. Cracks have appeared in the system which has not undergone significant reform since it was first introduced in 1990. However just think about how much Ontario's auto insurance system has evolved over the past 22 years. Apart from the mediation backlog, a comprehensive review is likely overdue. No timeframe has been provided nor a mechanism for undertaking that review.
The government has signalled a willingness to work with insurers to explore voluntary usage-based auto insurance policies. I will likely address this issue in future postings. I feel that as traditional risk classification criteria are being chipped away at (ie, credit scoring, territories), usage-based policies may be the answer to predicting risk.
The government will harmonize the timing of statutory automobile insurance reviews. There are currently three statutory reviews in the Insurance Act. At least once every two years, the Minister is required to table a report before the Legislature in respect of the adequacy of statutory accident benefits and setting out changes made to the SABS (section 289). The Superintendent is required to undertake a review of Auto Insurance sections of the Insurance Act and related regulations at least every five years and recommend any amendments that the Superintendent believes will improve the effectiveness and administration of the Act and regulations (section 289.1). The Superintendent is also required, at least once every three years, to consult on the operation of those sections of Ontario Regulation 664 that deal with rating and risk classification and submit to the Minister a report containing the Superintendent’s recommendations for amendments to the regulations (section 417.1). A similar recommendation was made in the Superintendent's Five Year Review report in 2009 and the 2011 Auditor General's report.
The government intends to propose amendments to give the Superintendent the authority to impose administrative monetary penalties (AMPs) in the insurance sector. AMPs are monetary penalties viewed as a middle ground between a ‘slap on the wrist’ and quasi-criminal proceedings, enabling insurance regulators to issue a penalty proportionate to the infraction.
Auto Insurance Annoucements in the 2012 Ontario Budget
Insurance
In 2010, the government made major changes to the auto insurance system. As a result, premiums are stabilizing for drivers across Ontario. Building on the success of the 2010 reforms, the government is taking action to tackle fraudulent and abusive practices, base insurance benefits on scientific and medical principles, and ensure its regulator continues to identify and respond to new and emerging issues. The government’s ongoing work in the area of auto insurance, including fraud, should continue to reduce the pressure on premiums.
Auto Insurance Anti-Fraud Task Force
The government remains committed to combating insurance fraud and continues to support the Auto Insurance Anti-Fraud Task Force. The Task Force was announced in the 2011 Budget and delivered an interim report in December 2011. The government is working with stakeholders to address the Task Force’s early recommendations and has already:
- enhanced auto insurance fraud training for police officers;
- started a pilot project using the Health Claims for Auto Insurance database, which will allow health care providers to flag clinics that are misusing their credentials and cut down on identity theft;
- amended regulations to ensure that treatments are provided as invoiced;
- issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate;
- encouraged the industry to communicate the issue of fraud across a number of media platforms, and measure the current state of consumer engagement and awareness on the issue; and
- required CEOs of automobile insurers in Ontario to annually attest that their accident benefit cost controls are effective and that legitimate claimants are treated fairly.
The Task Force recommended that the government should provide the Superintendent of Financial Services with the power to impose administrative monetary penalties for contraventions of legislation and regulations. The government is proposing amendments that will provide this authority in order to enhance regulatory effectiveness.
The Task Force is continuing its important work this year. Since the interim report, it has been building relationships with the Workplace Safety and Insurance Board (WSIB) and Crime Stoppers to share best practices in fraud prevention.
The Task Force’s final report will provide recommendations on the following:
- regulation of health clinics;
- other gaps in regulation;
- establishment of a dedicated fraud unit;
- consumer education and engagement strategy; and
- a single web portal for auto insurance claimants.
Scientific and Evidence-Based Approaches
Scientific and medical knowledge on how to identify and treat a variety of injuries has improved remarkably over the last decade. The government will ensure, where possible, that insurance regulations reflect the most relevant science on identifying and treating injuries from automobile accidents. Clarity will help minimize disputes in the auto insurance system, ensure people get the treatment they need and ensure that treatments provided are based on medical evidence.
Newer scientific and evidence-based approaches can be applied to serious and minor automobile accident injuries. Recommendations on a new Minor Injury Guideline, based on the latest research on successful treatment, are being developed. The government has also received the report of the Superintendent of Financial Services on catastrophic impairment based on the work of an expert panel. The government will make the Superintendent’s report public and will move forward to propose regulatory amendments in this area.
Modern Insurance Regulation
Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), will continue to modernize to meet today’s challenges. The government has welcomed the recommendations of the Provincial Auditor General, which will strengthen the oversight of the auto insurance system in particular. The government will further enhance the effectiveness of FSCO regulation of the insurance sector by proposing to:
- engage in a review of the automobile insurance dispute resolution system;
- strengthen the Superintendent’s authority regarding Unfair or Deceptive Acts or Practices;
- clarify the Superintendent’s authority regarding rate and risk classification approvals;
- support a Superintendent’s review of the profit provision benchmark in auto insurance rate change approvals;
- work with insurers to explore the implications of voluntary usage-based auto insurance policies;
- harmonize the timing of statutory automobile insurance reviews; and
- improve solvency supervision of Ontario insurers.
Analysis and comments to follow.
Thứ Bảy, 7 tháng 12, 2013
Insurance News - Wednesday, May 2, 2012
Why Fewer Car Thefts Doesn’t Mean Cheaper Car Insurance
Dramatic declines in car theft will not likely translate into cheaper car insurance, drivers may be sad to learn.
Auto Insurance Rates Stabilizing
The average auto insurance premium in Ontario declined slightly last quarter – a sign that rates may finally be stabilizing after years of sky-high increases.
Ontario witnessed the largest reduction in car insurance rates among the three provinces considered in Kanetix Ltd.’s latest quarterly, year-over-year review.
A FSCO Arbitrator has ruled that the FSCO prescribed Settlement Disclosure Notice might be inadequate to effect settlement. In Parveen vs. Aviva, a preliminary issue was whether Ms. Parveen had rescinded her accident benefits settlement and was entitled to move to arbitration.
The Arbitrator found that important information in the Settlement Regulation was not conveyed by the text of the prescribed Settlement Disclosure Notice. Specifically, she noted that Paragraph 3 of subsection 9.1(3) of Ontario Regulation 664 sets out the information that must be included in the disclosure notice with respect to the right to rescind a settlement. It requires:
The arbitration decision is here.
Dramatic declines in car theft will not likely translate into cheaper car insurance, drivers may be sad to learn.
Diligent police work and new anti-theft devices have cut thefts by half, or about 9,800 cars per year in the Greater Toronto Area, for instance.
But when it comes to insurance, nearly a third of all car owners already pay nothing because they have no theft coverage, and those who do, pay very little for it.
The average premium for what’s called comprehensive coverage — for everything from theft to broken glass — was only $107 per car in Toronto, Peel and southern York regions in 2010, down from $134 in 2006.
read more...Auto Insurance Rates Stabilizing
The average auto insurance premium in Ontario declined slightly last quarter – a sign that rates may finally be stabilizing after years of sky-high increases.
The Financial Services Commission of Ontario, the body that regulates auto insurance, said the average premium fell 0.18 per cent.
Ontario Sees Average Car Insurance Rates Go Down 3.6%Ontario witnessed the largest reduction in car insurance rates among the three provinces considered in Kanetix Ltd.’s latest quarterly, year-over-year review.
Customers saw rates go down 3.6% compared with 2011 Q1, notes a statement from Kanetix, an online insurance marketplace. Suggesting an early positive trend fueled by Ontario’s auto reforms in 2010, the decrease is the first in more than a year.
FSCO's Settlement Disclosure Notice May Be InadequateA FSCO Arbitrator has ruled that the FSCO prescribed Settlement Disclosure Notice might be inadequate to effect settlement. In Parveen vs. Aviva, a preliminary issue was whether Ms. Parveen had rescinded her accident benefits settlement and was entitled to move to arbitration.
The Arbitrator found that important information in the Settlement Regulation was not conveyed by the text of the prescribed Settlement Disclosure Notice. Specifically, she noted that Paragraph 3 of subsection 9.1(3) of Ontario Regulation 664 sets out the information that must be included in the disclosure notice with respect to the right to rescind a settlement. It requires:
A statement that the insured person may, within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release, rescind the settlement by delivering a written notice to the office of the insurer or its representative and returning any money received by the insured person as consideration for the settlement.
The arbitration decision is here.
How Should Insurers React to Parveen vs. Aviva / Fredric vs. Aviva?
FSCO released Preliminary Decisions in two cases Parveen vs. Aviva and Fredic vs. Aviva both dated March 30, 2012 in which an arbitrator determined that both insureds had rescinded a settlement with Aviva Canada thus allowing Ms. Parveen and Mr. Fredric to proceed to arbitration.
In this particular case the arbitrator had agreed with the insureds that Aviva had failed to comply with the requirements of the Settlement Regulation, and she was entitled to rescind the agreement after the two-day period, in accordance with ss. 9.1(5) of the Settlement Regulation. The arbitrator was of the opinion that the Settlement Disclosure Notice was did not comply with the Settlement Regulation.
These decisions are the cause of considerable frustration within the system. The Settlement Disclosure Notice has been in effect since September 2010 and prior to that a very similar notice form was being used for years. The form is approved by the Superintendent of Financial Services following considerable involvement by both Dispute Resolution and Legal staff at FSCO and insurers and counsel representing insureds and insurers. In light of this, the arbitrators decision makes no sense.
Still these cases are relatively unique. A Settlement Disclosure Notice was executed. Over a month later a Release was executed. Following which the insurer received a letter rescinding the settlement. Settlement funds were then forwarded, and then returned.
Since the decisions have come out FSCO has posted a notice on its website stating that it is the Superintendent’s position that the current version of the Settlement Disclosure Notice form complies with the Regulation.
So how should insurers proceed in light of the decisions and the Superintendent's position?
I'm not so sure that revising he form will provide much additional protection. The Settlement Disclosure Notice is adequate. There will always be a risk that an arbitrator will make a similar ruling in the future. Insurers need to ensure that insureds understand the Settlement Disclosure Notice and the settlement process. Insurers who are concerned that they may not be providing sufficient disclosure should consider providing information additional to improve claimant communication and enhance the settlement process.
It would be a good idea to execute Releases first or at the same time as the Settlement Disclosure Notice. A Release terminates an insurers obligation to pay accident benefits which can be argued is not accomplished by the Settlement Disclosure Notice.
In this particular case the arbitrator had agreed with the insureds that Aviva had failed to comply with the requirements of the Settlement Regulation, and she was entitled to rescind the agreement after the two-day period, in accordance with ss. 9.1(5) of the Settlement Regulation. The arbitrator was of the opinion that the Settlement Disclosure Notice was did not comply with the Settlement Regulation.
These decisions are the cause of considerable frustration within the system. The Settlement Disclosure Notice has been in effect since September 2010 and prior to that a very similar notice form was being used for years. The form is approved by the Superintendent of Financial Services following considerable involvement by both Dispute Resolution and Legal staff at FSCO and insurers and counsel representing insureds and insurers. In light of this, the arbitrators decision makes no sense.
Still these cases are relatively unique. A Settlement Disclosure Notice was executed. Over a month later a Release was executed. Following which the insurer received a letter rescinding the settlement. Settlement funds were then forwarded, and then returned.
Since the decisions have come out FSCO has posted a notice on its website stating that it is the Superintendent’s position that the current version of the Settlement Disclosure Notice form complies with the Regulation.
So how should insurers proceed in light of the decisions and the Superintendent's position?
I'm not so sure that revising he form will provide much additional protection. The Settlement Disclosure Notice is adequate. There will always be a risk that an arbitrator will make a similar ruling in the future. Insurers need to ensure that insureds understand the Settlement Disclosure Notice and the settlement process. Insurers who are concerned that they may not be providing sufficient disclosure should consider providing information additional to improve claimant communication and enhance the settlement process.
It would be a good idea to execute Releases first or at the same time as the Settlement Disclosure Notice. A Release terminates an insurers obligation to pay accident benefits which can be argued is not accomplished by the Settlement Disclosure Notice.
Ontario Standing Committee to Review Auto Insurance
On April 16, 2012 the Standing Committee of General Government of the Ontario Legislature approved a motion presented by NDP MPP Rosario Marchese to conduct a review of the Ontario auto insurance system. The motion passed because the Liberal minority government also is a minority on standing committee because representation reflects the size of caucus in the Legislature.
As result of the motion the standing committee intends to initiate a fair and balanced study into a range of auto insurance industry practices and trends with the purpose of developing recommendations on how to make insurance rates more affordable, and that the committee report its findings to the House. The study shall include witnesses to be called upon to assist the committee and shall include, but not be limited to:
It is likely not helpful for the insurance industry or consumers to have parallel reviews taking place with two sets of recommendations. In fact many of the changes coming out of these reviews will not require legislation and likely never come before the Legislature. Cabinet has the authority to create and amend regulations specified in statute.
We have a minority government so it's not business as usual. Opposition parties are looking to flex their muscles and push their own agendas.
As result of the motion the standing committee intends to initiate a fair and balanced study into a range of auto insurance industry practices and trends with the purpose of developing recommendations on how to make insurance rates more affordable, and that the committee report its findings to the House. The study shall include witnesses to be called upon to assist the committee and shall include, but not be limited to:
- the current overall profitability of the property and casualty industry, with an analysis of current and future trends in both investment and underwriting income;
- the profitability of auto insurance underwriting in Ontario and costs related to Ontario underwriting, with particular emphasis on profits in the post-September 30, 2010, era where the statutory accident benefits were amended;
- assessing the adequacy of med-rehab treatment as per the capped minor injury guideline;
- the relationship between insurance underwriters and their sales representatives and/or the role independent brokers of insurance play in the industry. This would include an in-depth look at the extent to which brokers that portray themselves as independent of insurers really are independent;
- the impact of fraud in the insurance industry and how that impacts insurance rates;
- assessment of the adequacy of the current definition of “catastrophic injury”;
- ongoing and future trends in claims fraud as well as the impact of recent anti-fraud initiatives in combating such activity;
- the appropriateness of the 12% return-on-equity rate and the approvals mechanisms related to the ROE rate;
- reviewing the auto insurance dispute resolution system; and
- reviewing risk assessment factors of drivers and the corresponding rates assigned to particular drivers, as well as the eligibility and classification factors that currently determine individual, corporate and fleet coverage.
It is likely not helpful for the insurance industry or consumers to have parallel reviews taking place with two sets of recommendations. In fact many of the changes coming out of these reviews will not require legislation and likely never come before the Legislature. Cabinet has the authority to create and amend regulations specified in statute.
We have a minority government so it's not business as usual. Opposition parties are looking to flex their muscles and push their own agendas.
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