Your car questions and complaints

Did I last update this blog in August? Where did September go? Thanks for continuing to post your comments here and checking to see what others are writing.

Here’s a recent post about car leasing from Sarah, who asks about an ethical issue. I thought I’d bring it your attention and get your comments about it.

I leased a car and I’m at my end of lease. I had the inspector come to my house and watched him do the inspection.

Long story short, he was VERY lazy and missed something that I know is a major repair. (it’s a convertible and the top won’t go down! He was so lazy he didn’t even TRY IT!)

The leasing company told my husband not to mention it and only to repair this item if the inspector catches it.

Am I only responsible for the items he listed on his report? Or am I at risk of being billed for this after the fact, even though I was not told to fix it?

This is my first lease and I don’t know what to do. I don’t want to pay the $1,500 to fix it if I don’t have to.

Kerry has a complaint about a car rental, where a large damage charge was added to her bill after she returned the vehicle. This is a cautionary tale.

Attached is a bill for repairs to a car I rented 14 MONTHS after it was returned. I returned the car during office hours and was issued a receipt after the normal check for gas levels, etc. I was shown no damage.

From Avis Budget Group:
With respect to the damage that occurred to the rental vehicle, our claim is based on the following:
— $498.00 (cost of repairs)
— $110.98 (loss of use)
— $100 (administration)
— $708.88 (Total).

Is it possible for car rental companies to make claims after so much time has elapsed? What can I do as a consumer to prevent this from happening again?

Karl has a story about taking his car to a few repair shops and getting wildly varying quotes for what was needed.

My Chevy Malibu was due for an oil change and an emissions test. The car has less than 60,000 kilometres on it.

I took it to a Chevrolet dealer that I’ve used many times, without any problem. Since their emission test machine was down, I told them to go ahead with an oil change, with the GM Good Wrench 20 point check. I would do the emission test somewhere else.

The shop called me to say that the steering shaft was bent. The cost to replace it, using used parts, would be about $400. I declined, as I hadn’t felt anything unusual with steering.

The oil change was done. The 20 point check came back with green scores. There was no printed record on either invoice about the steering shaft.

Two days later, I took the same car to another dealer for the emission test. This shop had been a GM Good Wrench, now changed to KIA.

The dealer called to say the emission test could not be done because the exhaust system was leaking. The cost to fix it would be $700 plus. I declined, as the car was comparatively new and not heavily driven. I didn’t get charged by KIA. The exhaust leak finding was printed on the zero charged invoice.

The same day, I took the same car to a garage recommended by a friend, not GM, not KIA, to do the emission test. One hour later, the emission test report came out with flying colours. No mention of any exhaust leak or bent steering shaft.

Finally, I can renew my licence plate.

Talking about complaints, I got more than my usual share when I wrote a column about rising car insurance rates and shrinking accident benefits in Ontario.

Many people said I didn’t go far enough in denouncing the government’s insurance changes imposed a year ago. Some complained about rising property insurance rates as well. Check out a sample of their comments below.

If you want to see what I’m writing elsewhere, you can find my Toronto Star columns (three a week) and blog posts (two a week) at Moneyville, which just celebrated its first anniversary. You can also follow me on Twitter.

Finally, you can come to my free financial literacy workshop on Tuesday, Nov. 22, from 5.30 to 9.30 p.m., at Ryerson University’s Chang School of Continuing Education. Details below:

COEC 100 Financial Basics

Work on your budgeting skills, learn how to track your spending, understand how credit products are marketed, manage your debt, compare different saving and investing options, choose a financial adviser, and avoid common financial frauds. Participants will learn the need for financial literacy as an essential life skill, the importance of asking questions when dealing with financial products and financial advisers, and the ways to save money when they think they’re stretched to the limit.

Note: Prior to the workshop, you may enroll online or in person. On the day of the workshop, you may enroll in person at the workshop location (Heaslip House, 7th Floor, Peter Bronfman Learning Centre, 297 Victoria Street, Toronto).

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

25 thoughts on “Your car questions and complaints”

  1. I have my own horror story. I moved from Etobicoke to North York. I have no tickets, no accidents, and I drive a 1999 Toyota with 250,000.00 kms on it.

    Because I moved to a postal code area (roughly Keele & the 401 highway) that has a “high rate of accidents” – according to the car insurance people – I’ve been charged a rate of $3,100, compared to about $1,500 per year before.

    I changed companies and put my car insurance with my Mom’s home insurance. That saved me almost $600. But I am still paying about $1,000 more a year. It’s highway robbery.

    I did check with other companies, but because of the postal code I moved to, they were all about the same cost.

    I soon will be no longer able to drive because of gas prices, parking downtown, wear and tear on the car, etc.

    I am absolutely disgusted with the big car insurance companies who are ripping off the little people.

  2. I just recently received my renewal notice for my six month premium and was shocked to see it had gone up by almost 50%.

    When I asked my agent to check into it, the only response he had was:

    “I looked at your policy. The only thing I can say is you’re in M9R postal code, which has taken a huge increase due to loss ratios the company is experiencing in that area.

    “Since most of these losses are due to injury cases, with the new legislation that limits the payouts on minor injury cases, we are hoping to see some improvement in the near future.

    “That legislation took effect late last year and it usually takes a year or two to see the results.”

    My response to that was:

    “I appreciate that insurance works on statistics (where does someone get these details?) except they should also be tempered by other factors.

    For instance, I have been with XXXXXXXXXXXX since 1956 and have made only one claim in all that time, I believe, about 30 or 40 years ago. I had my car repainted when it was damaged in a hail storm.”

    I have since attempted to get online quotes from two other companies. Both would have been higher.

    For now, I am staying with the same company as they also have my home insurance.

  3. I just received my auto insurance renewal and was shocked at the increase in premiums and decrease in benefits.

    We’re a family of four. My wife and I work full-time in better than average jobs, so we find it difficult to justify “greed gouging premiums” for less fortunate families.

    We own three vehicles. My daughter (22) is the principal driver of one since she was 17. My wife and I drive the remaining two vehicles. My son (19, away at university) is an occasional driver.

    Our family has a clean driving record, no tickets or accidents in the past 10 years.

    I got the following quotes at the Insurance Hotline website:

    Wawanesa: $7,700/year
    Aviva: $7,938
    Campbell Roy & Eldridge: $8,072
    Mitchell & Whale: $8,227
    Mass Insurance Brokers: $8,500

    If the lowest is $7,700 for two adults, one university student as a principal driver and one university student living away from home, that’s obscene.

    If my family didn’t have a clean driving record, no tickets or accidents for over 13 years, what prices would they be charging?????

  4. Most motorists do not understand the changes. Indeed, I failed to understand them until I had an accident last January.

    In my case, a driver slammed into my back while the light was red. He begged me not to call the police, even offered me money.

    I had surgery on my spine before, but this accident has aggravated my condition. Yet the insurance company is denying my claim after six months, including ongoing treatments.

    It’s refusing to accept that I am constantly in pain and losing my independence. I can’t work as my entire right hemisphere is impaired. Please note I am right handed.

    Cynically, I can say that I am paying more for no coverage! I have never had an accident in all my life or had to file a claim.

    I work in the insurance industry, though not in property and casualty, and I am aware of the stories of fraudulent claims.

    But I do think there is need for more oversight with respect to the rights of honest consumers. Certainly, the consumer has little recourse to ‘big Insurance’.

    Engaging a lawyer to resolve these issues seems to be just another prong in ‘passing the money around’.

    Lastly, it is being alleged that some lawyers seem to work with the insurance companies, rather than the victims of the accidents! This is because of the preponderance of denied claims!

  5. The maximum coverage for patients who get a third grade whiplash is only $3,500. Most car accident victims will get whiplash.

    It is not only those severely maimed whoi suffer, but all car accident victims who become injured.

  6. It goes deeper than what you think.

    In reality, the Minor Injury Guideline was introduced in September 2010. Nearly 85% of injured parties are “directed” into this program, either by their provider or the insurer.

    Once in this program, the patient is only entitled to $3,500 in health recovery services. The $50,000 is available to the very few.

    Even worse, there is a large gap for people who have severe injuries that may fall short of catastrophic and those that suffer psychological issues from the accident.

    (What happens when people have severe injuries, but use all the $50K? They have to wait two years before they can apply for CAT status.)

    The changes were not developed to address fraud, but to reduce insurer assessment costs when they challenged a claim.

    Now they have more discretion to decide how they want to challenge the claim, often opting for a medical assessment and not responding to further requests for therapy.

    You’re right this should be an election issue. Sadly, the parties have focused on insurance COSTS by saying the changes will address fraud (which they do not) and therefore will reduce costs (which they have not).

    The parties should really be focusing more on insurer BENEFITS.

  7. I am an injury and insurance lawyer. An extremely important change to benefits that started Sept. 1, 2010, is the creation of something called the “minor injury guideline”.

    Anyone who sustains a “minor injury” has now had their policy coverage cut to $3,500, not 50k. Thus, for almost all injured Ontarians, their coverage fell from $100k to $3.5k in one fell swoop.

    Go ask the insurance industry what percentage of injured people are “classified” as minor injuries.

    Anecdotally, it’s about 80%. This is a huge problem for injured people who now won’t be able to get much treatment.

    And when the government tells us that Ontarians have a generous benefits system, it’s not true. For those put into the minor injury guideline (the MIG), we now have the worst benefits system in North America.

    One big problems is that there is no real lobby for the best interests of injured people.

    No one really wants to hear from their lawyers. Yet the insurance company lobby is incredibly powerful.

    And since there are hundreds (or thousands) of motorist voters for every injured person voter, the government jumps when the words “premium increase” are uttered by the industry.

    The newspapers, perhaps, might be the only voice for injured people.

  8. Letter to the Editor:

    Kudos to Ellen Roseman for highlighting the issue of car insurance in this election. One way or another, auto insurance impacts on every voter in Ontario.

    Roseman correctly identifies the fundamental problem that faces the next government: Over the last few years benefits to auto accident victims have been slashed, while premiums paid to insurance companies continually rise.

    With Ontario drivers paying the highest insurance rates in Canada, they pay increasingly more, for less.

    This worrisome trend has been accelerating in recent years. Many motorists will be surprised to find that their policies provide only $3,500 in medical benefits for most accidents.

    And now, insurance companies are pressing the government to further restrict benefits available to some of the most seriously injured people.

    Insurers want to make it much harder for individuals with catastrophic injuries to get the care and treatment they so desperately need.

    On the other hand, profits for insurance companies appear to be on the rise. Just this past spring, one major insurer attributed a significant improvement in profitability to the recent cuts to benefits described in Roseman’s piece.

    While fraud may be the source of some avoidable cost in the system, it should not be used as a justification to reduce benefits to those seriously injured in car accidents.

    Nor should it be used to increase rates and insurance company profitability without valid data being provided by the industry in a transparent rate setting process.

    To date, there is no publicly available data to back up industry claims and no clear explanation as to why the industry itself has been unable to address the problem of fraud, other than just passing on the cost of fraud to consumers.

    The rights of car accident victims should not take a back seat to insurance company profits.

    Paul Harte


    Ontario Trial Lawyers Association

    Burlington, Ont.

  9. I treat a number of patients with injuries related to motor vehicle accidents.

    I am distraught at the limitations in rehab services that are available since the reforms.

    Most patients have no idea how little they are entitled to now. Their claims are denied by adjusters who have no training in diagnosing conditions.

    I understand that insurance companies are trying to reduce fraud, but punishing true victims is definitely not the way.

  10. In August 2010, I paid premiums of $570.34 for my house and $1,996.16 for my cars.

    With nothing changed in my household status, policy coverage and no traffic tickets, my house premium jumped this August to $689 and the auto premium totaled $2,614.81

    Like many Ontarians, I feel so helpless. I hope the “NEW” government will help.

  11. I have recently been struggling with my insurance broker and company.

    I had a policy with them for a full 8 days and they are claiming it will cost me $342.83!

    Let me explain:

    On July 27, I was looking for an auto insurance policy. I went to my long-standing broker and asked for the basic insurance policy over the phone.

    I was told to bring a money order or certified cheque for $575 and sign some papers. This was for the first and last months’ payment (his description).

    As I was signing the papers, I could see that the policy he was signing me up for was with Pafco and my full premium would end up being $3,444 for what I thought was a year.

    With a clean record, I thought something was amiss.

    So, over the next few days, I went looking. I found insurance from RBC for a FULL ONE THIRD less than what I trusted my broker to insure me for.

    I went back to my broker to cancel the policy a mere 8 days later.

    Not only have I not been refunded, but I’m told that those 8 days of insurance will cost me $342.83.

    I’ve still had none of the $843.89 returned to me and I have real bills to pay.

    They still had $843.89 of my money and I still have no idea why I was going to lose $342.83 of it.

    I have taken all of my business away from the company, except a motorcycle policy, and that will also be cancelled shortly.

    I’m really not sure what else I can do beyond the high cost of a lawyer to fight this.

  12. Although your facts on the benefits reduction are quite accurate, the percentage of increase is understated.

    My wife and I recently had our car insurance renewed.
    I have a 2007 Camry and have been with the same company 20 years, accident free. My increase was 39%.

    My wife has a 2008 Saturn Aura and has been with the same company as I for about 15 years, accident free. Her increase was 41%.

    We’ve gotten quotes from four other insurance companies. Three were higher for less coverage and one was slightly lower, but not enough to warrant changing companies.

    The main area of increase was our Accident Benefits. Mine went from $273 to $578 (a 52% increase).

    My wife’s went from $293 to $619 (a 52% increase).

    The first item the insurance companies require is your postal code.

    Ours is M9R and we are in Etobicoke. Unfortunately for us, M9R is grouped with Vaughan and Maple. Why???

    Also, we have our house with the same company, so supposedly we have a better rate!

    Overall our insurance went from 2010 to Oct. 2011 as follows:

    Mine went from $1,275 to $1,773. My wife’s went from $1,285 to $1,813.

    That’s an overall increase for us of $1,026 per year.

    We are receiving less coverage and paying more. Something is definitely wrong.

  13. Did you know there’s an even worse problem with home insurance? My premium was raised 60 per cent this year after being stable for many years.

    My correspondence with the company’s ombudsperson is below. She will not respond to my emails any more and refuses to provide any real explanation.

    My claim was a small one, about $700, for damage caused by a power surge.

    Home insurance is not regulated. So there is nowhere I can turn.

    I do not believe payouts on home insurance increased so dramatically in my area in the past year. If they had, I would have read about it in the paper.

    My inquiry:

    The premium on my property insurance will be raised from $1,488 per year to $2,385.66.

    I questioned this 60 percent increase and am not happy with the explanation (loss of claim-free discount following a small claim and a huge increase in claims in my area).

    The ombudsmwoman’s response:

    Based on the information we have on file, the premium is correct.

    While the loss of the 15% Claims Free Discount attributed to the increase, the largest factor was the change in rating territory.

    In reviewing your policy, we noticed that there may be an opportunity to lower your premium.

    Currently, the policy states that there is no fire hydrant within 300 meters of your home.

    However, if the city has installed hydrants, this could reduce your premium significantly.

    If there is no hydrant, perhaps the area has Superior Tank Accreditation (pump truck service)?

    Please call us to review your policy in more detail.

  14. Excellent column Ellen. Here are some reasons why we might need a Public Inquiry into Ontario auto insurance. Maybe your blog readers will weigh in on either side – those who like the system versus those who think in needs to open its books and show us the fraud losses it claims to suffer?

    1) The current $1.3 billion per year Ontario auto insurance fraud numbers are mind-numbingly confusing and simply don’t add up. (Car insurance: less for more)

    2) The Sudbury Star column about the Mason family’s allegation of coding abuses by auto insurers (calling operating costs claims expenses). And why the effort on the part of FSCO and the Ministry of Finance to stonewall and silence the Masons? (Family wants insurance inquiry‎)

    3) That McGuinty is now poised to enact changes that put into effect the recommendations received from his panel of experts on catastrophic injury designation is distrubing. This will make it harder for the most seriously injured to qualify for catastrophic benefits. So our premiums will get us even less. As a result the costs of care for the catastrophically injuredd will be downloaded to taxpayers.

    4) That two of the members of McGuinty’s Expert Panel are long time IBC consultants is problematic. That others have a list of rebukes from triers of fact (judges and FSCO’s own arbitrators) for substandard, flawed, partisan, catastrophic impairment assessments as long as your arm is also disturbing.And why are Quebec doctors deciding Ontario accident victim’s treatment needs?

    5) That business/insurer interests are well represented on the McGuinty Anti-Fraud Task Force is but there is no voice on the panel speaking for accident victims in another reason for a Public Inquiry. Further, its madate is unclear and has never been articulated in detail. What kinds of fraud are being investigated? What counts as fraud as opposed to mere \abuse\? Does improper denials of claims based on the medicolegal opinions of hired guns count as an abuse. Do \doctored\ doctor reports count as an abuse?

    6) Will any empirical research be done into how much money taxpayer are paying each year because insurers frequently wrongfuly deny claimants’ prescription expenses for months and years on end. Every welfare office in the province is picking up the cost of prescriptions for welfare recipients who can’t work but have been denied income replacement and treatment policy benefits. If the denials are found to have been wrongful and the insurer is ordered to pay the wrongly denied income replacement to the welfare recipients – that claimant needs to reimburse welfare. Not to do so would be double-dipping. Not to do so would be fraud. And yet the insurer isn’t asked to pay back the welfare/taxpayer for the money they saved in prescriptions (estimated back in 2000 to run into God knows how many millions) via wrongly denied coverage of prescription costs.. Will the Task Force be exploring this form of auto insurance ‘abuse’.

    7) Will the Task Force be exploring the logic behind granting auto insurance adjusters the authority to diagnose and make medical decisions?

    8) I’m guessing (and I hope I’m wrong) that what finally gets included in the Task Forces detailed mandate versus what is chosen to be excluded might to turn out to be the most powerfull of all reasons to demand a Public Inquiry.

    9) And is it an abuse of some sort when FSCO refuses to inform former brain injured former Applicants/claimants that they were denied policy benefits and painted as fakers based on the acceptance of \expert\ testimony from a psychologist found by the courts to have been completely unqualified (in the child custody context the Durham police call that fraud but FSCO won’t talk about it)? So far nobody has been willing or able to answer that simple question. Ergo, yet one more auto insurance issue that will never be aired unless/until we demand and get a Public Inquiry.

    10) Lastly, is it an abuse to deploy \doctored\ doctor reports to defeat auto injury claims? See FSCO Minutes:

    March 25, 2011 – FSCO Minutes
    5. \Doctored\ Reports:
    \Senior Arbitrator Nastasi reported that a recent unit meeting arbitrators reported two separate hearings in which in the middle of testimony by a doctor or assessor, it became clear that the report issued / produced by the Clinic or assessor was not the same report created by the doctor / assessor on the witness stand. Liz put the issue out to the group to assess whether this has been a recent issue or new trend that counsel have also experienced.
    Counsel Response:
    In the past IR adjusters would contract out to individual assessors and defence counsel could potentially request certain doctors that they liked to work with BUT today – to save money almost 100% of the assessment work is farmed out to Brokers leaving very little choice about who will do the assessment.
    Stan P. – 100% of ALL assessments are \doctored\ – in that the actual doctors and assessors are not able to do MOST of the report for $2000. The result is that the clinic administrators are the ones setting up most of the report and then doctors actually write a small portion of the actual report.
    Eric G – the $2000 cap is \unworkable\ – most of the work is done by the broker because of the limited amount of money available to pay for the report.
    Suggestion – FSCO needs to look at this in a more systemic way
    Query – what is FSCO’s or an arbitrators’ responsibility when this issue comes up during a hearing ? – When an arbitrator does encounter this during a hearing then they need to report on it and this will have an effect in the future on whether that company or assessor receives any further business.\

  15. Losing $1.3 billion a year lost to fraud must be based on fiction.

    Or, even scarier, insurers find that losing in excess of $20 billion since the 90’s isn’t bothersome because they can easily recoup the losses from consumers who are conveniently legislated and captivated to buy into ever decreasing coverage.

    To PM, Oct 9th – the insurers count on their propaganda mill to keep us in the dark until it is too late. By then, we are injured and less capable of looking after the larger issues such as those raised in this article.

    The system itself seems to be designed to discourage making a claim by its complicated nature, yet again, taking advantage of the claimant.

    Dalton McGuinty may have managed to hold onto power based on his improvements to our health care system this time, but how will that work out when all the concessions to the insurance industry his government has allowed start working their magic?

    Increased profits for insurers alright, but when all the expenses begin to show up, it will be apparent that our OHIP system was pillaged by the insurance industry once again.

    Only this time it’s really going to hurt because it will be right across the spectrum with the new Minor Injury Group threshold.

    What will this do to our OHIP, our welfare system? Where will the injured get the funds for medications or treatments?

    Insurers will get ever increasing profits, the claimant will get less and less at a time of greatest need, and the already overburdened taxpayer will end up paying for the costs incurred by injured Ontarians seeking the medical treatments denied by their insurance companies.

    We need a public inquiry into how the insurance industry is doing business in Ontario – long overdue.

  16. It IS a VERY serious issue McGuinty has NO consumer stakeholders, or accident victim advocates at the table when he “addresses” insurance legislation. It was convenient for my Liberal MPP to forget I wanted to join an insurance task force, or panel,etc. HOW would McGuinty,or an Ontario voter who voted form him feel if their family member fell under MIG,or severe,but not catastrophic because of his OWN legislation? I have never seen the definition for catastrophic injury,why doesn’t Google even have an answer? How much more catastrophic is it to NOT be able to return to a job because you’re now truly unable to work? The Ontario options for those who will not have long term disability,you can get for a single person,about $1000/month with ODSP,where you get limited dental,and medication coverage. IF you don’t qualify for yet another McGuinty legislation [ODSP],you can get Canada Pension Plan disability for a single person where it’s even less,about $800/month,with NO health benefits. Consider within the GTA, rentals are average $900/month; food is a luxury item?

    A law firm in Ontario needs to lodge a class action law suit against IBC,Ontario Liberals,and insurance companies of Ontario,whomever has vested interests in creating such outrageous, and barbaric insurance legislation. Erin Brockovich results would be great before people needlessly die because they aren’t getting help,and have nowhere to turn.

    As someone who knows,Ontario car insurance legislation reduces a successful jury trial into a moral victory:

    ” In Canada, only about two per cent of all claims end up in court.”

    Risky business was a 2004 insurance story,it’s worse now!

    Can someone elaborate on CAT status, DM commented on this. IF fighting an insurance claim now under MIG,what can a claimant do when the deductible is $30000?!

  17. Today’s Star carries a letter to the editor from a senior Ontario auto insurance (ICB) lobbyist replying to the one written earlier by OTLA (posted above).

    Clearly, Ellen’s column calling into question the auto insurers’ fraud estimate has hit a nerve.

    In his letter to the the Toronto Star, the vice-president of the IBC writes: “In Ontario, fraud costs run over a billion dollars annually”. Yet on the IBC site, it states that yearly “An estimated $500 million is paid out by home, car and business insurers for claims containing elements of fraud.”

    I’m having trouble reconciling these seemingly self-contradictory statements, both in terms of the yearly estimated cost of fraud ($1 billion plus versus $500 million) and in terms of what the conflicting figures are said to represent – Ontario auto accidents alone versus home, car and business insurance across Canada.

    Can anybody clear this up for me? I’m confused. How is it that a letter to the editor of the Toronto Star from the IBC doubles the fraud estimate placed in the Insurance Crime section of its own website? (see below)

    Toronto Star
    Letter on insurance disputed
    Re: Car insurance: less for more, Letter Oct. 11

    The Ontario Trial Lawyers Association’s letter misrepresents the facts about the role of insurers and the costs of fraud in Ontario.

    Insurers are not, as claimed, trying to reduce benefits for those who sustain catastrophic injuries in accidents. With accident claims costs rising while the number of collision injuries is declining, insurers believe reforms will help the most seriously injured access appropriate funds.

    To that end, the Ontario government established a panel of medical experts to develop a definition of catastrophic injury. The panel’s definition eliminates ambiguity and includes scientific-based assessments that help to establish the level of injuries — so that funds go where they are needed.

    Fraud costs everyone: in Ontario, fraud costs run over a billion dollars annually. Insurers are concerned enough to tackle this societal problem. The member companies of Insurance Bureau of Canada and IBC itself have devoted huge resources to detect and prevent fraud along with Ontario’s law enforcement agencies.

    We do not understand the reluctance of the Ontario Trial Lawyers Association to accept that fraud and staged accidents, together with abuses in the med-rehab benefits system, drive up costs and are a safety issue for innocent victims of such “accidents.”

    Nor do we understand why trial lawyers don’t accept their civic responsibility to work with us, the government, opposition parties and law enforcement to determine the best ways to eradicate insurance fraud.

    Ralph Palumbo,
    Vice-President, Ontario,
    Insurance Bureau of Canada,


    IBC site – Insurance Crime

    The Cost of Personal Injury Fraud

    In 2001, IBC studied the cost of personal injury fraud across Canada (except BC, the only province that chose not to participate).

    Fourteen companies, both public and private, of varying sizes and representing 60% of the insurance marketplace, participated in the study.

    Personnel reviewed files randomly selected from their records, looking for evidence of personal injury insurance fraud. A total of 4,066 closed claims files with payment were examined, providing IBC with a 3% margin of error.

    Key findings:

    More than 26% of all personal injury claims contain elements of fraud.

    Opportunistic fraud is the single largest contributor to claims costs.

    An estimated $500 million is paid out by home, car and business insurers for claims containing elements of fraud.

    Insurance policyholders are more likely to commit personal injury fraud than are health care providers or other professionals.

    Premeditated and opportunistic fraud are more prevalent in major cities and metropolitan areas than in small towns and rural communities.

    Fraud indicators used by the industry are important to the successful detection and control of premeditated and opportunistic fraud.

    These findings suggest that health-related costs to insurers could be reduced substantially by minimizing the opportunities for personal injury fraud. They also suggest that, regardless of who pays (private insurers or provincial health plans), our limited health care resources are often being misused.

    Many people think of health services as “free,” so they may not consider misuse a big deal. But in the end, we all pay for it, either through our taxes or through our insurance premiums.

  18. “The member companies of Insurance Bureau of Canada and IBC itself have devoted huge resources to detect and prevent fraud, along with Ontario’s law enforcement agencies.”

    Don’t recall my friend. who was denied a claim. being investigated by Ontario law enforcement.

    This car accident had the at-fault driver’s car split in half because the impact was that severe, leaving a young mother’s car flying into a neighbor’s driveway, one hour to extract her, while her 2 young kids witnessed the whole thing in horror from their house.

    It was always the insurer that did the surveillance and submitting “questionable” IME reports. One notable IME stated she could easily unload a dishwasher when she didn’t have one!

    Why doesn’t the insurer disclose the costs paid to deny a claim: Surveillance, lawyers, IME, adjusters who are lawyers assigned to more “difficult” claims?

    When you add up the insurers’ cost to deny a legitimate claim, it may very well add up to more than $100,000 (previous coverage for medical care for non catastrophic claims).

    Perhaps the insurer community is getting confused and adding their claim denial costs to the “fraud” numbers?

    Consumers have never said they don’t want fraud to be managed. However, they’re not asking the insurers or politicians to unnecessarily harm those with legitimate insurance claims — or have less transparency, and be charged more to receive less care if one was to be legitimately injured in a car accident.

    Somehow this point is lost on those who lobby for such repugnant, egregious legislative changes.

  19. I suspect that Lonewolf may have hit the nail right on – what a great place for insurers to hide the costs of defending against a claim and make everyone look bad except themselves.

    And those costs add up, consider what those insurer lawyers make – the denial process would cost far, far more than a mere $100,000.

    Often enough, the costs to deny a claim exceed what a legitimate claimant receives if he or she is able to prove their claim. There’s little to no penalty for denying a legitimate claim at FSCO and the insurer’s only problem is that they ‘might’ have to pay ‘if’ they lose at a hearing.

    Sounds a lot like gambling – like a roll of the dice, only the insurance industry is playing with our health and using our own premiums to bet against us.

    It’s not just that the insurance industry isn’t required to disclose where they get the $1.3 billion dollar fraud loss amount, but that Ontario’s 9 million drivers are expected to pay for this sketchy accounting in their yearly premiums to the tune of $145 per driver, per year, without questioning the amount, where the funds have been lost, or what the insurance industry is going to do about it.

    These hidden ‘file management’ costs (like lawyers, adjusters, IMEs, surveillance) need to be looked at by an investigatory body – a public panel because anything else would be as useless as the propaganda being fed to us by the IBC and then regurgitated by past task forces and study panels.

    If the newest task force into fraud is made up only of those with a clear bias and pro-insurer sentiments, as this present one seems to be, how will we ever know what these fraud numbers mean or how long the consumer must pay for mismanagement within the industry?

    Is the IBC being deliberately confusing with one number on the website and yet another number put out in press releases to the media?

    If the Insurance Bureau of Canada and IBC have devoted huge resources to detect and prevent fraud along with Ontario’s law enforcement agencies, then why has the problem persisted at the rate of loss -$1.3 Billion – for almost 20 years?

    Gross mismanagement? Or just a convenient way to get that extra $145 pp a year, all the while painting claimants and medical care providers as the scammers?

    This situation is ripe for a public inquiry – taxpayers should demand one. We know who the scammers are, those who protest too loudly…..

  20. The lack of representation on behalf of the innocent injured in MVAs is becoming catastrophic.

    The facts should speak to McGuinty and his government. However, he is like the Emperor and His New Clothes. He and his government has taken a stand and will not budge in advocating for the Insurance Industry.

    They have, in effect, created legislated extortionists that have been given full authority to stall, thwart and deny claims to those who have been injured in an MVA.

    I was on a public transit vehicle that was struck by another public transit vehicle. The point of impact was where I was sitting.

    Despite evidence of a significant injury, my car insurer (yes, Ontario No Fault requires pedestrians, cyclists and injured on public transit to process injury claims thru their OWN insurance) has consistently denied my benefit claims.

    They have spent thousands of dollars sending me to eight assessments and their own expert provided an IME that states my injuries are so serious I am unable to work. Still, I am denied benefits.

    Now my LTD provider is ordering me back to work, despite the injury and subsequent pain. No one is advocating for me and no one is advocating for the innocent victims of this injustice.

    What is required for this situation to change? Who is willing to step up?

  21. Psychologist Fights for Auto Accident Victims’ Rights to Mental Health

    Recent changes to the insurance industry have had dramatic effects on rehabilitation professionals’ abilities to provide for their patients.

    On Sept. 1st, 2010, the Ontario Minister of Finance approved changes to the Ontario automobile insurance legislation, which have profoundly changed the state of the motor vehicle accident (MVA) injury rehabilitation industry.

    Amendment 289/10 altered the Ontario Statutory Accident Benefit Schedule (SABS), which, amongst other significant changes, introduced the Minor Injuries Guideline (MIG). Under MIG, claimants deemed to be suffering from “predominantly minor injuries” now have their rehabilitative/medical benefits and assessment disbursements capped at $3,500.

    For individuals deemed to be suffering from “non-minor” injuries, the available compensation has been reduced by half.

    As a result, we have witnessed a disturbing trend of denials for much-needed psychological assessment and treatment. Dr. Andrew Shaul, a concerned psychologist and mental health professional, wishes to raise awareness regarding insurance companies’ potentially dangerous decisions to deny much-needed psychological assessments and treatment, and has raised concern about the climate of mistrust of claimants’ legitimacy, and the overall lack of provision for accident victims’ mental health.

    Dr. Shaul, whose practice has a special focus in MVA psychological rehabilitation, said the following:

    “It’s important to remember that even in a minor accident, where relatively minor physical injuries are sustained, severe emotional and psychological injury may occur. The Minor Injury Guideline is used to categorize physical injuries, though it often severely restricts our ability to provide psychological and emotional help. A lot of people are suffering from very distressing emotional issues as a direct result of their car accidents and they’re not getting the help they need.”

    Since these legislative changes have been implemented, there is significant evidence that insurance companies have dramatically increased the number of denials of motor vehicle accident victims’ legitimate claims for rehabilitative benefits.

    Citing that the vast majority of claimants fall within the Minor Injury Guidelines (i.e. did not sustain severe physical injuries), insurance companies now only grant up to a total $3,500 for all rehabilitative needs.

    This allotment is often not enough to cover a victim’s physical rehabilitation (i.e. physiotherapy, medical bills, etc.), let alone provide for any needed psychological treatment. As such, most requests for much-needed psychological assessment and treatment are being routinely denied due to lack of funds.

    In addition, the changes to the legislation have apparently given insurance company adjusters increased power to decide if an accident victim’s injuries are minor, and/or if the claim is legitimate and not fraudulent.

    It is important to note that insurance claims adjusters are generally not properly trained to make these critical clinical judgements. While the above group of professionals recognizes that fraudulent claims do occur, which affect the insurance industry’s overall trust in the honesty of accident claimants, insurance companies have clearly over-compensated to such an extent that unprecedented numbers of legitimate claims are being arbitrarily denied.

    Consequently, scores of accident victims are left to suffer with their injuries without the benefits to which they are entitled.

    Following an insurer’s denial of the claimant’s psychological benefits, claimants are often sent for an Insurer Examination (IE). These IEs are conducted by psychologists who are paid by insurance companies. The goal of an IE is to determine the legitimacy of requests for an assessment and/or therapy.

    It is our contention that this arrangement often represents a conflict of interest, as it is within the best interest of the insurance companies to encourage and reward denials of their clients’ claims.

    Moreover, IE psychologists often only conduct “paper review” assessments, which consist of a review of the claimant’s application for assessment, without any in-person interview and evaluation. These IE psychologists are thereby able to deny much-needed assessment and therapy without ever meeting or talking to the accident victim.

    This dramatic increase in the numbers of denials of claims for psychological assessments, and counselling sessions, have left many accident victims to cope on their own with their often profound psychological distress. Depression, anxiety, nightmares, Post-Traumatic Stress Disorder, fear of driving or entering a motor vehicle, and many other negative behaviours and emotions are very common following motor vehicle accidents.

    Concerned mental health professionals have witnessed many disturbing examples of accident victims whose suffering has been treated with blatant disregard by insurance companies and IE assessors, and as such, have been put at serious risk for increased suffering and potentially suicide.

    In addition, formal appeal processes that were previously in place to rebut claim denials were eliminated by the latest legislative change. This situation has left many accident victims without any recourse except mediation, arbitration, or taking their cases to the courts – a process that often takes several years.

    In the meantime, these victims are suffering immeasurably, as they do not have the resources to cope with the lengthy legal process.

    The public needs to be informed that all citizens are in danger of being treated in this dismissive manner, regardless of the severity of their injuries or automobile insurance policy. We assert that unless the system is made more balanced and fair, insurance companies will continue to operate in this profit-driven manner with little or no regard for accident victims’ rehabilitation needs.

    We fear it is only a matter of time before we see more horrendous consequences for motor vehicle accident victims.

    For more information about this topic or to schedule an interview, please contact Jaime Boccongelle at or 416-780-1791.

  22. fyi: Thompson’s World Insurance News:

    Consultants hired to tally total cost of fraud

    The Insurance Bureau of Canada has retained consultants to peg exactly how much fraud is costing Canadians.

    IBC Ontario vp Ralph Palumbo said at the bureau’s 11th annual regulatory affairs symposium in Toronto that a figure of $1.2 billion has been bandied about for some time as the total cost of insurance fraud in Canada per year.

    “We need a better grasp on that figure,” he said. (More in our Nov 7, 2011 edition )

  23. Ellen wrote: “The government betrayed the trust of motorists and didn’t protect them from inflated insurance costs.”

    Here’s the proof – profits made on the backs of Ontario motorists/accident victims are covering property losses in western Canada – and then some!

    DAILY NEWS Nov 3, 2011.

    The Co-operators reports Q3 profit of $6.2 million, cites improved Ontario auto results.


    The Co-operators General Insurance Company reported a Q3 profit of $6.2 million, marking a dramatic improvement from its 2010 Q3 loss of $8.9 million.

    The combined ratio (excluding the market yield adjustment) for 2011 Q3 was 101.1%, marking an improvement from 111.7% during the same period of 2010.

    Favourable claims development in the Ontario auto line of business was a primary driver of a 28.6% decrease in loss ratio, bringing it to 68.6% in 2011 Q3.

    “Hail, wind and rain storms in Ontario and western Canada negatively affected our results, but were offset by much-improved claims results in the Ontario auto insurance market,” said Kathy Bardswick, The Co-operators’ president and CEO.

    “At this point, we are cautiously optimistic that Ontario auto reforms introduced last year are having a positive impact.”

  24. “The Insurance Bureau of Canada has retained consultants to peg exactly how much fraud is costing Canadians.

    IBC Ontario vp Ralph Palumbo said at the bureau’s 11th annual regulatory affairs symposium in Toronto that a figure of $1.2 billion has been bandied about for some time as the total cost of insurance fraud in Canada per year.

    “We need a better grasp on that figure,” he said in describing a new initiative with KPMG and IBM.

    (from: Thompson’s World Insurance News – Nov. 7, 2011 edition)


    p. 43

    Estimating the Cost of Fraud

    Part of the Task Force’s mandate is to determine the scope and nature of auto
    insurance fraud in Ontario.

    Although, as noted above, we have heard anecdotal stories about fraud from
    many individuals, we have also heard from others that claims of fraud have been exaggerated by the insurance industry.

    In particular, skepticism has been expressed regarding the dollar amounts that have been attributed to fraud by industry spokespersons.

    A figure of $1.3 billion has been used to describe the cost of auto insurance fraud in Ontario for some time. We have attempted to understand the basis for that calculation and have concluded that the $1.3 billion figure cannot be considered a verifiable measure of the extent of fraud at this time.

    At this stage in our mandate, the Task Force is not able to indicate with any
    precision what percentage of the gaps in claims frequency, severity and overall
    costs can be attributed to fraud.

    It may even turn out to be the case that a precise measurement of the cost of fraud in Ontario cannot be calculated with confidence.

    In order to determine whether or not such measurement can be made, the Task
    Force will be overseeing comprehensive and objective research and analysis on
    the scope of auto insurance fraud in Ontario.

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