Double Indemnity
An iniquitous housewife in a dead end marriage uses duplicity to murder her husband and claim gross insurance payouts; a brilliant, jaded claims adjuster solves the crime and bags the mendacious crook; the lights go up in the theatre, and everyone stops munching on their popcorn. Unfortunately, the real world of insurance fraud isn’t as glamorous as the movies. Even more unfortunately, auto insurance fraud and regulatory lapse have become rampant and costly drains on the Ontario insurance system, so much so that it may have an impact on the average claim for a car accident.
Claims and Benefits in Ontario
First, the good news (which is actually kind of the bad news): the average claim for a car accident in Ontario (bodily injury claims in particular) comes to $143,630, while the average in Alberta, to compare, is $12,785. Furthermore, Ontario’s average accident benefit payout is $31,785, versus $7,895 in Nova Scotia and $3,766 in Alberta. But bigger payouts are better for the insured, right? So what’s the problem?
This Is the Problem
As you probably feared, these absurdly inflated claims and benefits payouts aren't coming from the magnanimity of the insurance companies. Rather, they’re coming out of our pockets. The average car insurance premium in Ontario is hundreds of dollars higher than other provinces’:
- Average Premiums in 2015, by Province
- Ontario: $1,425
- Alberta: $1,170
- New Brunswick: $774
- Nova Scotia: $783
- P.E.I.: $767
For Ontarians, these are some gristly numbers. But these numbers, coupled with the massive claims and benefits payouts, raise an intriguing question: if so much of the premiums are being diverted into payouts (as opposed to directly into the insurers’ coffers), why are the insurance companies setting the premiums so high in the first place?
Fraud, Corruption, Regulation
Premium payments in Ontario total somewhere around $10 billion per year. That's a lot of money (duh), so it should be clear that there’s no single group of fat cats responsible for the faulty system. There are, however, a few clear culprits that critics have identified:
- Fraudulent Claims
- These include opportunistic claims (such as exaggerating injuries or including pre-collision damage in the claim), and premeditated fraud (such as staged accidents).
- The Ontario Automobile Insurance Anti-Fraud Task Force estimates that fraud costs the system between $768 million and $1.56 billion per year and that eliminating fraud alone would save drivers between $116 and $236 per year.
- Poorly Regulated Health Benefits
- There are more than 9,000 for-profit clinics and over 31,000 individual health care providers registered with the Health Claims for Auto Insurance (HCAI) system (which acts as the conduit between insurers and health care providers).
- Meanwhile, there are only approximately 85,000 accident benefit and personal injury claims annually, most of which are minor injuries. This means that there is only an average of 8.8 injured claimants per year per clinics, and 2.7 per year per individual health care provider.
- Thus, in order for these clinics and providers to make a profit, they charge superfluous and exorbitant fees for their services, and, since they’re approved by the HCAI, the insurers are forced to pay.
See Through the Flaws with an Experienced Attorney
Evidently, even the average claim for a car accident is significantly impacted by these systemic breakdowns. An experienced auto attorney, with years in the industry, knows the problems, and knows how to get through them, saving you money.
Sources:
http://business.financialpost.com/fp-comment/terence-corcoran-why-ontarios-auto-insurance-system-is-a-car-wreck
http://www.wheels.ca/news/we-pay-more-for-our-auto-insurance-here-than-anywhere-else-in-canada-the-question-is-why/
http://www.ibc.ca/nb/auto/insurance-crime