Standing Committee on Finance and Economic Affairs Auto Insurance Hearings - Day 1

The following are summaries of presentations made on July 9, 2012.

Financial Services Commission of Ontario
Philip Howell. Superintendent of Financial Services and CEO
Tom Golfetto, Executive Director, Auto Insurance Division

Auto insurance is mandatory in Ontario and has been since 1980. It is privately delivered in a competitive market. There are over 100 licensed companies in the province. These companies compete for the business of nine million Ontario drivers who drive 6.6 million vehicles.

According to Ministry of Transportation data, the number of people injured in accidents each year has been falling. In 2009, the latest year for which data is available, only about 62,500 of Ontario’s nine million drivers were injured in accidents. Of these, almost 60,000 suffered injuries that were categorized as only minimal or minor by the MTO definition.

In Ontario, the auto insurance system is a closed-loop system. In simplest terms, this means that the costs of the insurance system are recovered through premiums charged to drivers. These premiums fund the cost of claims, including the cost of treatment provided to those injured in accidents.

Historically, the reforms of the Ontario system have largely been motivated by the need to stabilize rising costs and premiums. The auto insurance system is complex, and there have been several reforms over the past 30-odd years. With each set of changes to the system, there was some initial success in stabilizing costs and premiums, followed by another cycle of rising costs.

The reforms announced by the Ontario government in 2009 and implemented in 2010 have addressed rising costs, many of which stem from abuse.

While the number of personal injury collisions decreased from 2006 to 2009, the number of injury claims made during the same period increased. In addition, between 2006 and 2010, claims costs in Ontario increased by $3 billion. During this period, the cost of an average claim increased by 43%. Accident benefits costs, the primary driver behind these increases, skyrocketed by 118%. Between 2006 and 2010, examination and assessment costs increased by 228%. Without the 2010 reforms, the cost of assessing those injured in accidents likely would have surpassed the cost of treating them in 2011.

The Ontario government appointed an Auto Insurance Anti-Fraud Task Force in 2011 to assess the extent and nature of the fraud in the province’s auto insurance system and to recommend actions to reduce it. The Task Force's December 2011 interim report concluded that fraud in Ontario’s auto insurance system, though it cannot be precisely quantified, is extensive, increasing and having a substantial impact on premiums.

The overutilization of accident benefits through misuse, abuse and apparent fraud was the primary driver behind increases in claims costs and premium increases. Currently, close to 30,000 health care providers are authorized to treat those injured in accidents in Ontario, and over 17,000 of these are members of regulated health care professions. These health care providers service accident victims at over 8,600 health care clinics in Ontario. Insurers also may have contributed to overutilization in the system through inadequate claims management processes. To deal with the volume of claims they were receiving before reforms, some insurers were likely inappropriately approving requests for assessments in medical treatment.

More evidence of overutilization can be seen in the dramatic increases in cases in the dispute resolution process at FSCO. In 2006 we received just over 13,000 requests for mediation; in 2011 we received almost triple that number.

The government implemented a number of longer-term initiatives to follow the September 2010 reforms and underpin achieving greater rate stability going forward. These initiatives focused on the accident benefits system and were based on the presumption that using scientific, outcome-based approaches was the best way to determine appropriate benefits for accident victims. The government direction to FSCO to have medical experts develop a new, medical, evidence-based minor injury treatment protocol. After an open, competitive RFP process, FSCO awarded a contract for this project last week, and work on the project will begin shortly. The government also directed FSCO to consult with medical experts on the definition of catastrophic impairment as set out in the statutory accident benefits schedule. I have submitted my report, the Superintendent’s Report on the Definition of Catastrophic Impairment, to the Minister of Finance. That report was publicly released by the ministry last month and recommends adopting refinements to the definition based on the medical and scientific evidence identified by the expert panel.

FSCO has assigned the responsibility for providing regulatory services that protect the public interest and promote public confidence in auto insurance. The FSCO act and the Insurance Act provide the legislative framework for this responsibility.

Insurers and actuaries examine patterns in past claims to estimate future costs. Their goal is to determine what rates to charge a consumer for the policy period to cover claims costs and operating expenses and to make a profit after taking into account investment income. Based on their actual experience, companies may need to revise their assumptions on prospective costs and future premiums. Insurers must submit proposed changes to their rates to FSCO for approval. FSCO reviews rate filings, analyzing the data supporting the insurer’s actuarial assumptions, to ensure that the proposed rate changes are adequate to maintain the financial solvency of insurers without being excessive.

Companies must file their underwriting rules with FSCO. These are the rules that insurance companies use to determine the risks that they may not accept. Regulations under the Insurance Act define the criteria that cannot be used to deny auto insurance coverage; for example, not-at-fault claims. Specifically, underwriting rules may not be subjective, be arbitrary, be contrary to public policy or bear little relationship to the risk.

Premiums vary based on the individual consumer’s risk characteristics. The mechanism for determining rates is an insurance risk classification system. Risk classification systems set out the factors that an insurer will use when setting the price they charge for auto insurance. They group risks with similar characteristics and expected claims costs.

FSCO also monitors compliance with the Insurance Act, and it takes enforcement action against those who violate it. We regularly conduct audits of insurers to ensure their compliance with regulatory obligations. We also review complaints about individuals and companies that may have engaged in unfair, deceptive or illegal practices under the Insurance Act.

After reviewing these complaints, FSCO may decide that some matters need to be investigated. Following an investigation, if FSCO deems non-compliance with the Insurance Act and its regulations has occurred, it can lay charges under the Provincial Offences Act or take regulatory enforcement actions such as issuing a cease-and-desist order.

I’d like to note that FSCO does not have the power to review or investigate criminal matters, including fraud. Criminal offences must be pursued by the police. FSCO does, however, work co-operatively with law enforcement agencies and provide police with assistance in their investigation of certain criminal matters.

Dr. Harold Becker

I have particular qualifications in catastrophic impairment as I was responsible for chairing an advisory panel that wrote the catastrophic impairment assessment guidelines for designated assessment centres, or DACs, in Ontario in 2001. I also served on the advisory panel that wrote the previous report on the redefinition of catastrophic impairment to the minister, released in 2001. This panel was composed of a physician—me—a psychologist, a neuropsychologist, a pediatrician, a plaintiff lawyer, a defence lawyer, two insurer representatives, two ministry representatives, and three FSCO representatives

I have great difficulty with the expert panel in this sequence because (1) the majority of the panel “experts” were not experts, in fact, in catastrophic impairment; (2) the panel was too small for the methodology chosen; and (3) the reported consensus model, involving six out of eight votes, contributed further to the lack of validity of the panel’s recommendations.

The FSCO expert panel of 2011 consisted of three academic epidemiologists, an academic public health expert, a pediatrician, a psychologist and two physiatrists—these are specialists in physical and rehabilitation medicine. While I highly regard the scientific contribution of epidemiologists to society and to medicine, I do not understand their central role in this panel to tackle the definition of catastrophic impairment, a medico-legal issue, not a fundamentally scientific one.

The expert panel used what is referred to as a modified Delphi method for reaching consensus on their various recommendations. The Delphi methodology states that choosing appropriate members of a panel is the most important step in the entire consensus process because it directly relates to the quality of the results generated. While the Delphi methodology suggests that as few as 10 to 15 panel members can be used, provided there is homogeneity in their backgrounds, much as in the original expert panel of 2001 that I was on, experts recommend that up to 50 members be used when there is a disparate degree of knowledge, experience and training among the members, as was seen in this panel. This panel of diverse participants had only eight members, rendering their consensus of questionable validity.

The expert panel indicated that only a very restricted set of three psychiatric diagnoses could be considered in determining whether a claimant meets the catastrophic definition. In restricting qualifying psychiatric diagnoses to major depressive disorder, post-traumatic stress disorder, or psychotic disorder, the panel discriminated against Ontarians receiving accident benefits on the basis of a mental disability.

While the expert panel’s decision to use the global assessment of functioning, or GAF, score as a tool for rating catastrophic psychiatric impairment is a reasonable one, they set the threshold for catastrophic impairment unreasonably high.

The expert panel’s requirements of institutionalization of claimants suffering mental and behavioural impairment is far too high a threshold and would leave many legitimately impaired claimants suffering mental illness with limited funding.

The failure to acknowledge the coexistence of traumatic brain injury and associated psychiatric impairment, and the expert panel’s corresponding prohibition on allowing separate rating of these two distinct impairments, is seriously flawed and demonstrates a serious bias against both brain-injured claimants and claimants who develop associated psychiatric reactions resultant from traumatic brain injury.

The expert panel’s recommendations would throw seriously injured claimants suffering significant mental illness into the already overburdened, underserviced public sector of psychiatric services.

) The expert panel has no authority to overrule accepted judicial decisions, some at the level of Ontario’s highest court. The Ontario Court of Appeal recently recommended that psychological impairment should be combined with physical impairment when determining a true whole-person impairment rating. The expert panel concluded that there was no scientific evidence to do so and have essentially overruled the Ontario Court of Appeal.

Although the expert panel touted fundamental science as the cornerstone to its deliberations, there is utterly no scientific validity to many of their recommendations.

Sidney Chelsky

I’m a consultant to the laundry, dry cleaning and hospitality industry. I’m outraged at the television ads that depict insurance brokers acting in the best interests of their clients. This, in fact, is not true.

On one occasion my agent suddenly sent me a renewal from another company with an increase of $600 for the year. When I questioned this increase, he said that his agency was no longer affiliated with Lombard and therefore placed it with a company he was affiliated with, and this was the best price he could get me.

I called the insurer, and they provided me with a list of other agents they were affiliated with, so I contacted one of them which promptly provided me with a policy from that same insurer at a further reduced rate. It definitely was not in my best interest to continue with the previous agent.

Again, after a number of years passed, the agency I was insured with sent me a renewal policy which was closer to the price I had previously paid. The policy was with another company. It was a combined auto and home coverage policy. However, on closer examination of the policy, it showed reduced coverage. For example, instead of $200,000 of contents coverage, it was reduced to $40,000.

Again, I searched out an insurance broker to provide me with a quote. After finding a company and a quote that I was satisfied with and paying with my credit card immediately for the policy, I later received the policy with an invoice for an additional amount of $130 for coverage, which was attributed to the fact that my wife had an accident seven years ago and they were charging me for this. I paid the additional amount, then received an additional invoice for a further $320. I phoned the broker and questioned this additional cost, and he later called back and said that it was because the car was registered to my numbered company. All this information was provided to the insurance broker at the time of the quote, and the numbered company information was also provided. I subsequently cancelled the policy and again searched for another insurance broker.

Panel of Clinical Experts Endorsed by the Alliance of Community Medical and Rehabilitation Providers
Tracy Milner
Patricia Howell

We are here to represent a panel that’s comprised of experts in the field of physical medicine, rehabilitation, neurology, psychiatry and neuropsychology; experienced clinicians from both the public and private sectors who work with those who are seriously injured in motor vehicle accidents every day; and a number of not-for-profit groups that support accident victims across Ontario, including the spinal cord and brain injury associations of Ontario.

In 2011, we prepared a detailed, evidence-based critique of the FSCO expert panel report on catastrophic definition. We had outlined very specific and practical revisions. A subgroup of our members met recently to review the recommendations of the superintendent’s final report. We were distressed to see that our recommendations were ignored, with only one notable exception around the removal of the in-patient rehabilitation requirement.

In our original submission, we questioned the reason for change. No data has been released to indicate that the estimated 1% of victims who are currently deemed catastrophic are accessing benefits inappropriately. We also question the composition of the methodology of the panel. Six out of eight members of the FSCO panel are academic researchers with no clinical experience working with auto insurance victims. Half of the panel had been consultants to the IBC, which has introduced a real potential for bias. In addition, it’s important to note that they used a modified Delphi method to develop consensus.

We also feel that the combination of mental and physical impairments should be allowed and that pain should be taken into consideration. Disability can result from the sum effect of physical pain, psychological and cognitive symptoms which can lead to an inability to manage at home, in the community and at work.

We also feel that existing measures should not be replaced until new ones are proven practical, reliable and valid. The FSCO panel and the superintendent acknowledge that further study is indicated for one key test to be used with children with brain injuries. In fact, the FSCO panel rewrote that test. That is no longer a valid or reliable assessment.

We also added in our original submission that many other tools also needed further study. For example, the GOSE, which is used with adults with brain injury, has very poor inter-rater reliability at the key moderate disability cut-off point. Further study is needed. The SCIM, which is an assessment for spinal cord, is a very valid and reliable tool, but only when administered in its entirety. The panel has recommended only use of one subtest. It is also noted that there is actually evidence to support ongoing use of the GCS, the Glasgow coma scale, which the FSCO panel did not appear to consider.

We also disagree with the benchmarks chosen by the panel, as they’re far too difficult to reach. For example, in the case of psychiatric impairments, why would the panel recommend that the cut-off on the GAF test be 40 when a GAF score of 41 to 50 is equivalent to a 55% rating, or marked impairment? In a case of spinal cord, what rationale is there for excluding someone with incomplete paraplegic who can only walk a short distance inside with a walker and will always need a wheelchair to function? Why would we consider excluding the adult whose brain injury is so severe that he can only work at a sheltered workshop? And certainly children who, at a year, still need attendant care for a good part of their day need long-term and intensive support.

The superintendent recommended in his report that he felt that all treatment plans must be signed by a doctor. It’s not realistic, as family doctors do not have the time or the training to oversee the complex rehabilitation needs of these most seriously injured individuals.

The superintendent also recommended that catastrophic assessments be done by doctors alone, without input from a multidisciplinary team. For the same reasons that family doctors should not be gatekeepers, this is highly problematic.

The superintendent recommended that interim catastrophic benefits should be limited to $50,000 and that this would have to cover both medical and rehab benefits, as well as the attendant care needs. A $50,000 cap is completely unreasonable as it will only last for months and will in no way bridge the years it can take to obtain a catastrophic determination.

In addition, the superintendent recommended that those admitted for in-patient, day patient or outpatient rehab should be deemed interim catastrophic. We agree that these individuals need access to early and more intensive supports. However, as there is no access to care in many areas of Ontario and there are no set standards across facilities or across the province for admission to what programs do exist, this criterion is unfair and discriminatory.

Richard Gauthier, Actuary

I’m the partner in charge of the P&C actuarial practice of PricewaterhouseCoopers. As a consultant, I’m the actuarial consultant to the New Brunswick Insurance Board since 2004.

I’m here to present a proposal on how to simplify the rate approval process in such a way as to increase efficiency, give a faster response to requests by the various insurers, permit FSCO to focus their resources on the more important classes of business, create a transparency of the decision-making process and recognize that rates need to be updated regularly.

If I look at the broad goal of automobile insurance, the broad goal of affordability, availability and fairness, there are roles for the government and there are roles for the insurance industry. The government sets up and defines the insurance contract and, consequently, determines the overall costs and affordability of the automobile product. The definitions in the contract basically dictate its overall cost.

On the other hand, the role of the industry is to distribute the cost of the product to the insured population according to each individual’s expected cost. It’s an actuarial principle that has been recognized as generally accepted actuarial practice by the Canadian Institute of Actuaries.

Each time you violate that principle of paying according to the expected costs, you have someone who pays too much for insurance and you have someone who doesn’t pay enough for insurance. It creates a disincentive for the person who is underpriced because it’s a disincentive for them to improve.

For the survival of a company, they must charge according to the expected costs of their insured. Therefore, the industry has a built-in incentive to price individuals appropriately according to their expected costs; no more, no less. We have competition in this province and in this country, in most places, and therefore there is a built-in process, a built-in safeguard, that everybody will pay according to their expected costs.

I suggest, for those recreational vehicles, ATVs, motorcycles—I also suggest commercial non-fleet. They do not look at commercial fleet, five or more vehicles, but I would put commercial non-fleet in that category—not that they’re not important, but they are specialized vehicles. I would suggest that FSCO adopt more oversight and not get too deep into details of approval of every single rating factor and so on. This will free up fiscal resources to better address the more sensitive area of private passenger vehicles. This is the area that impacts the most general population.

The determination of the overall rate level, we study the past, we study the trends and we combine the two to figure out what we think the losses are going to be next year and therefore how much money we’ll require next year.

Significant resources at the company and at FSCO are required to do that review. Currently, when an insurer sends a rate application to FSCO, it takes three to six months to get approval. You’ve got to put that three to six months in context. When you issue an insurance policy, it’s for 12 months. It is a little disquieting that it would take three to six months to get a rate approval for a product that’s 12 months. We suggest that by maybe having a lighter approach in some of the classes that I already mentioned, more resources at FSCO could focus on private passenger auto.

This would be a simplified filing process and anything that falls within that category should be presumed to be approved unless the regulator sees something that is completely out of tune and says no to it. We would suggest that this simplified process should be relatively quick, from FSCO’s standpoint, for approval. After 30 days of having sent the simplified package to FSCO, we should be deemed approved and we move on.

A full filing, which would require, then, the submission of all information, including actuarial justification, would be required for anything that is not of a maintenance nature, and this package has to be signed by an actuary.

Nadira Kanhai

On October 2, 2004, I survived a two-car collision. The auto insurance carrier required an in-home assessment for a claim for statutory accident benefits. An occupational therapist/registered nurse conducted the assessment. The report generated was inaccurate and biased and the health professional used and abused my personal health information to discredit my injuries.

My request to have the report corrected by the member was denied. The insurance adjuster utilized the report to decrease and stop benefits, ordered me to attend a functional abilities assessment by an orthopaedic surgeon. Needless to say, the orthopaedic surgeon’s report followed the identical template of minimizing, trivializing and discrediting injuries.

I reported my concerns to the respective health colleges— the College of Occupational Therapists and the College of Nurses of Ontario.

COTO conducted a mediocre investigation and issued a lame reprimand to justify to the public that some action was taken, but it did not address my issues concerning the accuracy of the report, the member’s unprofessional conduct and the impact on the vulnerable public. COTO informed me in writing that these assessments are considered non-therapeutic.

CNO dismissed my complaint on the grounds that the member was not providing nursing services and was not acting in the capacity of an RN, although this member is currently registered and holds a current licence to practise and is utilizing her credentials to augment and enhance her credibility.

A follow-up with the Office of the Information and Privacy Commissioner of Ontario concluded that this member was not acting as a health information custodian as defined under the act. Furthermore, these assessments are not conducted under the health professionals act for the purposes of providing care and are therefore deemed commercial assessments under the Insurance Act.

Please note that after all the experts paid by the insurance carrier declared me a malingerer and that my pain was subjective, a bone scan report revealed healing fractures to three of my ribs as a result of the impact from the airbag and fractures in my pelvis and symphysis as my knee went into the dashboard.

My experience clearly demonstrates that there are “trusted” health professionals, whom I prefer to call mercenaries, whose credentials and opinions are for sale.

If the government was serious about regulation of the industry and protection of the public, it would slap hefty fines on the insurance carriers, and the health colleges would discipline their members by enforcing their own standards, leading to revoked licences. However, conflict of interest is the grease that oils the wheels of the insurance giant and the financial sector of Ontario’s economy.

Speaking with One Voice
Dr. Sukhvinder Kalsi-Ryan

I am a physical therapist by training and I work in the public sector. I’m currently a post-doctoral fellow at the Toronto Western Hospital, where my area of expertise is in the development and implementation of outcome measures specific to traumatic and non-traumatic spinal cord injury.

I’ve come together, along with many other stakeholders, to join a group called Speaking with One Voice. We are essentially a group of organizations. We’ve come together to advocate for the rights of individuals who are seriously injured in car accidents. We are a multi-stakeholder group that is comprised of leading experts in the rehabilitation field, health care providers from both the public and private sectors, professional organizations, organizations that support accident victims, such as the provincial Acquired Brain Injury Network and the Ontario Brain Injury Association, the legal community, and victims from across Ontario who are deeply concerned about the pending changes to the definition of catastrophic impairment related to automobile insurance.

Our concerns are really about what the proposed changes to the catastrophic definition are. Firstly, the FSCO panel and superintendent recommend new assessment tools and new thresholds that would make it much more difficult to be deemed catastrophic. They will no longer allow designated assessors to combine both mental and physical impairments or consider chronic pain in the total-person impairment rating. This goes against the World Health Organization, the American medical guidelines protocol, best practices in care, and some recent decisions made by courts.

The superintendent has added a major barrier to access of benefits to those that are deemed catastrophic, as he suggests that only doctors should be able to sign insurance forms on an ongoing basis for therapy, equipment and support. One million people in Ontario do not have a family doctor. Those individuals will not be able to access any care.

It is our understanding that the insurance industry will continue to enjoy record profits. FSCO has recently reported that insurer accident benefit costs have plummeted by over half, from $764 to $300 per vehicle, since the minor injury guideline was introduced and the non-cat benefits were slashed back in September 2010. However, there has been no reduction in premiums.

So, essentially, we feel that the changes should not happen as yet. The recommended changes by FSCO should not be implemented at this point as these reflect the opinion of the insurance industry and are in direct opposition to the opinion of almost all stakeholder groups.

What we do recommend or what we are asking for is that the funding for those who sustain serious non-catastrophic injuries be restored as they were a casualty of the war on fraud in 2010 and are now left unprotected. This is preferable to introducing an interim category, which will only add more complexity to the system.

Debbie Thompson, independent insurance broker

Our association, the IBAO, often differs on certain policy matters with insurers, as brokers’ prime responsibility is to advocate and serve their customer, often given a different perspective from the companies themselves.

I believe that the single most important thing that could be done to lower claims costs and thus insurance premiums is to tackle fraud and abuse in Ontario’s auto insurance system, particularly in the accident benefit area.

The IBAO is a participant in the consumer engagement and education task force working group and it supports the work of the task force and its direction. The task force recommendations are scheduled to come out later this year and we want to urge the government to implement those recommendations as quickly as possible.

As mentioned, tackling fraud and abuse in auto insurance is probably the most important thing we can do to lower premiums. However, we would like to caution against any further tampering with the system in the wake of the 2010 auto reforms. We’re not here to defend insurers, but we do believe that any aggressive tampering with this system will threaten market stability, which is just getting a foothold post-reform.

In 2005, the Ontario government banned the use of credit scoring in the rating of automobile insurance. However, shortly after, many carriers began to circumvent the ban by refusing to offer quotes to those who refused access to a consumer’s credit information. By refusing to offer quotes, carriers were naturally not writing business for anyone who refused access to credit information.

In January 2009, via a bulletin from the superintendent, carriers were asked to stop this practice. After a refusal to abide by this request, the use of credit was later defined as an unfair and deceptive act or practice as part of the 2010 auto reform package, a measure we wholeheartedly support.

Ironically, however, almost immediately after the credit ban was introduced in auto, insurers began to use credit more aggressively to price people’s property insurance, once again circumventing the ban on auto.

You see, many consumers buy their home and auto together to get the discounts that are available. By using credit on home policies, some insurers are able to significantly increase premiums, sometimes as much as 100%. By directly impacting the affordability of the home policies, insurers are able once again to successfully force the policyholder to go elsewhere. The problem is that soon there won’t be an elsewhere to turn.

MPP Colle introduced Bill 108, the Homeowners Insurance Credit Scoring Ban Act. Ontario lawmakers should follow these provinces and pass Mr. Colle’s bill. A ban can also be accomplished by amending the unfair and deceptive practice—regulation under the current authority in the Insurance Act. The ban on credit in auto is done this way.

CarSharing Association
Kevin McLaughlin
Wilson Wood

Auto insurance and affordability is certainly something that we’re very concerned with. Undeniably, from our experience, the best way to dramatically reduce your auto insurance costs for the consumer in Ontario is to simply not own a car. But you can still get access to one by sharing a car, so the insurance implications move to us. We represent 40,000 people in Ontario who share a car today.

Car ownership costs you thousands of dollars a year: payments, insurance, maintenance, depreciation, all of those items. Car sharing, in turn, costs a fairly modest amount because members pay only for the hours and the kilometres that they use our vehicles.

Academic studies in Canada and the US indicate that this type of car sharing removes eight to 10 privately owned cars from our streets. This reduces pollution, parking woes and gridlock.

The Financial Service Commission of Ontario and the Insurance Bureau of Canada are silent about car sharing. We don’t exist. Car sharing through an organization or supplier is not addressed in auto insurance regulations or legislation.

Our insurance providers do provide us with auto insurance to cover our named members. They were initially quite skeptical about this new service, and some of these concerns still exist today. Sometimes, our coverage is provided to us under the personal lines, sometimes it’s under the commercial lines—there’s no set way that it’s done.

There are concerns in our industry about accident benefits. Current legislation is essentially based on the 1950s and 1960s model of car ownership: The people who drive cars are either car owners or family members of car owners. This lack of direction or clarity in the regulations puts our insurance providers and the car sharing organizations liable when a car sharing member is walking, riding a bicycle or using public transit and involved in an auto collision.

Insurance News - Wednesday, July 11, 2012

Organized Crime Empires Shift From Drugs To Staged Accidents and Bogus Clinics

Mikhail Zemlyansky was nothing if not ambitious. The Russian native masterminded a sprawling crime empire that bled New York auto insurers with seeming impunity.

His gang made at least $400 million in dirty crash-injury claims, federal prosecutors say. That audacious money haul is nearly the team value of the Baltimore Orioles. It was the largest auto-fraud scheme in U.S. history until the gang was broken open this winter.

read more...

Almost One-Third of Ontario Men Polled Have Nodded Off Behind Wheel

The Neglected Driver Survey, an online study of 1,003 Ontario parents with children under the age of 12 who take family road trips, was hosted on the Angus Reid Forum on behalf of InsuranceHunter.ca. The survey reveals: a significant amount of men (30%) have nodded off behind the wheel (compared to 14% of women); almost one-quarter of men (23%) swerved because they were tired (compared to 11% of women); and almost one-third of men (32%) said they worried about getting their family into an accident because they were tired while driving (compared to 24% of women).

According to the survey, many male motorists have driven with heavy eyelids even when they knew their attention to the road was waning:

• 64% of men have continued driving on a road trip when tired
• 24% of men said they have not paid close attention to the road because they were tired
• 17% of men said they hoped they wouldn't get into an accident and kept driving even though they were exhausted
• 10% of men almost got into an accident because they were tired

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Insurers Oppose New York Legislative Changes

The legislature adopted the New York auto insurance legislation S7787/A10784 on the last day of the past session. This was an amendment to the existing law for supplementary uninsured and underinsured (SUM) coverage, and watered down the choices available to the consumer. The current regulations say that policyholders must now opt out of their increased coverage for SUM, instead of the previous opt in process that was more transparent to consumers.

The impact of this legislation could drive premiums sharply upward, and many drivers may end up forking over more money than necessary for coverage that they didn’t specifically select to be a part of their New York auto insurance policy. This most recent legislation also involves a provision that is related to the no fault system, but that isn’t a part of an effort against fraudulent use of the system. The New York Insurance Association fears that the bill’s negative impact could be worsened by the fact that there was no meaningful reform passed by the legislature to the no fault system.

A similar issue was debated in Ontario in 2010 with the introduction of the most recent reforms. At the time standard coverages for medical and rehabilitation expenses, attendant care and caregiver and housekeeping expenses were being reduced. There were parties suggesting to the government that consumers should be renewed with their existing coverages and offered the option of buying down to the new standard coverages. The government chose to require that consumers have their coverages lower at renewal with the option of buying back up.

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Man who allegedly faked cat's death arrested for insurance fraud

A 29-year-old Tacoma man who filed a $20,000 insurance claim for the death of a cat he claimed to have loved "like a son" has been charged with insurance fraud and attempted theft.

According to the charges filed last week in Pierce County, Yevgeniy Samsonov's beloved cat never existed and photos he submitted to bolster his claim had been pulled from the Internet.

According to court documents, Samsonov's car was rear-ended in March 2009 while stopped at a traffic light in Tacoma. The other driver told her insurance company, Pemco, that her foot had slipped off the brake, according to Rich Roesler, a spokesman for Kreidler's office.

Pemco paid Samsonov nearly $3,500 to settle his claim of having suffered soft-tissue damage and needing chiropractic treatment.

More than two years later, Samsonov was back, this time asking for additional money for the loss of a pet cat named Tom, who he said had died in the same accident.

The insurer sent Samsonov a check for $50 to compensate him for the cat, but Samsonov said Tom "had been like a son to him," Roesler said

"Given the intense sentimental value of the cat, he wanted $20,000," Roesler said.

Pemco agents asked Samsonov for photos of the cat and Samsonov submitted two he claimed to have taken himself, court documents allege.

However, a Pemco employee did a Google search and turned up the very images Samsonov submitted, court documents allege.

The two pictures actually turned out to be of different cats, and neither belonged to Samsonov, according to court documents. One of the photos is featured on the Wikipedia page dedicated to cats.

When Pemco refused to pay the $20,000 and revoked the original check for $50, Samsonov contacted the state insurance commissioner's office, asking the agency to advocate for him, Roesler said.

source

The Courts Tackle the Definition of 'Incurred Expense'

Henry v. Gore Mutual is the first court decision to deal with the SABS definition of "incurred expense" which was introduced on September 1, 2010.

Justice Ray found that as long as a family member providing attendant care sustains "an" economic loss, regardless of the amount of the loss, presuming the injured person pays, promises to or is obliged to pay for the attendant care, the insurer must pay "all reasonable and necessary attendant care".

In this case the actual economic loss was just over $2,000.00 per month. The family was claiming $6,000.00 as determined by a Form 1 submitted to the insurer. The Court found that test of "economic loss" was a threshold finding for there to be an "incurred expense", "but is not intended as a means of calculating the quantum of the incurred expense".

So was this decision consistent with the intent of the section 3(7)(e) of the SABS? Did the judge get it right?

Well it depends on who you are asking. I am sure many in the insurance industry are upset by this decision because it has been their view that the benefit payments are intended to be limited to the family member's economic loss. I've also attended numerous seminars where the advice from someone in the plaintiff bar is that if the family member used $5 in gas to get to claimant then it allows them to claim the full attendant care benefit.

For almost two years I've expressed the view that neither of these interpretations would likely prevail. The intent of the SABS drafting was not to limit payments to the amount of the economic loss. If it had been different language would have been used. In fact during consultations on the Regulation in 2010, some insurers were concerned that the proposed definition was unfair if it limited family members from being compensated for providing attendant care services.

However, to suggest that any economic loss , even the most trivial one, would trigger thousands of dollars in benefit payments would also be contrary to the intent of the Regulation. In fact such an interpretation would make the definition meaningless. Justice Ray recognized that the drafters had intended to exclude non-professional caregivers if they did not incur an economic loss. In his decision he is clear that they type of economic loss that would trigger benefit payments was lost income.

However I am sure there will be lawyers that will take the arguments made in Henry v. Gore Mutual and try to extend it to other economic losses not just income loss. They may even suggest that the $5 in gas consumed to see the claimant qualifies as an economic loss under the definition. For now we have to rely on the courts to follow the original intent of the provision.

Trial Lawyers Quit FSCO Advisory Committee - Is That A Good Thing?

The Toronto Star reported last week that a group of prominent personal injury lawyers has resigned en masse from an informal legal advisory committee on auto insurance reform in Ontario. The protest action by the trial lawyers was in response to the release by the Ontario Minister of Finance of a report from the Superintendent of Financial Services on recommended changes to the SABS definition of "catastrophic impairment."

The contentious nature of the proposals is the Superintendent’s recommendation to preclude allowing the combination of psychological and physical impacts when determining if someone qualifies as having suffered a catastrophic impairment, in constrast to the Ontario Court of Appeal which recently said it combining should be allowed.

The lawyers contend that the number of accident victims that will meet the catastrophic impairment threshold will fall. I think that is likely undisputable. Unfortunately there isn't sufficient data to make a determination on the numbers. Other changes could possibly increase the number of catastrophic determinations but again there is no way of confirming the numbers.

The group of personal injury lawyers, who include Richard Halpern, partner at Thomson Rogers, Roger Oatley of Oatley Vigmond Personal Injury Lawyers LLP, Nigel Gilby, partner at Lerners LLP and Stephen Firestone of Lackman Firestone, resigned because their recommendations on catastrophic impairment were ignored.

The Legal Advisory Committee was one of several advisory groups set up by the Superintendent to continue the dialogue with stakeholders during the development and implementation of the 2010 auto insurance reforms. These advisory committees were not created as policy or decision making groups and I believe those participating understand that. That doesn't make the process a sham. Nonetheless, there is always an expectation that discussions with senior public servants will influence policy makers. When they don't it invariable leads to frustration.

In my 20 plus years in government, I have conducted many stakeholder consultations and outreach. It is a considerable challenge to manage expectations. My advice to groups has always been to continue dialoguing. Ongoing participation is not a sign of acceptance of the policy direction.

No doubt the trial lawyers feel that their time on the committee is a waste of time and that lobbying efforts should be concentrated elsewhere. My view is that you have a role in ensuring transparency and accountability by continuing to participate.

Treatment/Assessment Plan Numbers to Become Mandatory on HCAI Invoices

On November 8, 2011, the Superintendent released a bulletin (A-07/11) outlining changes to the HCAI Guideline to address abusive billing practices including frequent invoices, duplicate invoices, "double dipping" and invoicing for non-approved goods and services .

At the time the Superintendent committed to further changes to the Standard Invoice (OCF-21) that would provide that the “Plan Number” on the form would become a mandatory field. This is the unique number generated by the HCAI system when the Treatment and Assessment Plan (OCF-18) or Treatment Confirmtion Form (OCF-23) to which the OCF-21 refers is submitted, and will enable insurers to properly reconcile invoices.

These changes have now been made and announced by the Superintendent in a recent bulletin (A-02/12). The updated HCAI system will become available at 8 a.m. EDT on July 3, 2012. At that point, HCAI will begin enforcing the new rules for OCF-21 submissions.

If there is no Plan Number because of a valid business scenario (e.g., the insurer has waived the requirement for an OCF-18 or OCF-23 as applicable) the word “exempt” must be inserted in the Plan Number field and details of the circumstances must be provided in the “Other Information” section of the OCF-21.

FSCO will in the near future be issuing an amended OCF-21 form to address information gaps a regarding Minor Injury Guideline (MIG) claims. These changes will be effective for use on and after November 1, 2012 and will contain the following changes:

• The amended OCF-21C form will include two new mandatory additional data fields in which the date that the MIG treatment Block commenced and the profession(s) of the health care provider(s) who provided the treatment are to be identified. In addition, use of the OCF-21C will become mandatory for billing all amounts applicable under the MIG. The OCF-21B and OCF-18 will no longer be approved for use with MIG codes.
  
  
• The amended OCF-21 form will also reflect the requirement, already noted above, that completion of the “Plan Number” field in the manner specified in the Guideline is mandatory effective July 1, 2012.
  
  
• In addition, the OCF-21 will be amended to raise the awareness of those individuals signing the form of their responsibility and accountability in doing so.

The revised HCAI Guideline (No.2/12) can be found here.

Insurance News - Thursday, June 20, 2012

New System To Verify Alabama Auto Insurance Coverage

About 22 percent of Alabama’s drivers don’t have liability insurance, but a new online system could change that starting next year.

The system will allow officials who issue license plates to immediately verify the insurance status of the vehicle’s owner. If insurance can’t be verified, proof of insurance will have to be presented before a tag is issued.

The new system was necessitated by the passage of the Alabama Mandatory Liability Insurance Law, which State Sen. Arthur Orr, R-Decatur, helped sponsor during the 2011 session.

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The new Alabama system is similar to the Unisured Vehicle Project (UVP) in Ontario. The UVP is an initiative that is led by the Ministry of Transportation of Ontario that will provide an electronic means of determining whether a vehicle carries mandatory insurance coverage at the time their license plates are being renewed. The vehicle identification number and mandatory coverage status of each insured vehicle are maintained in a database by Insurance Bureau of Canada on behalf of the insurance industry.

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Driverless Cars Inching Closer To Reality

Last month, Google received permission to test driverless vehicles in Nevada. The state set regulations for the companies before issuing the permit, but before we get to those, there are some obvious concerns that other motorists have about the new technology.

The California Senate has approved legislation that would have the California Highway Patrol develop standards and performance requirements for "autonomous" vehicles to be licensed for testing and operation on public roads.

Building autonomous vehicles that don't cause accidents is a difficult but crucial challenge. It's not enough to be as safe as the human driver. We need to be crashless," said John Maddox, an associate administrator at the National Highway Traffic Safety Administration (NHTSA) and keynote speaker at the Driverless Car Summit in Detroit.

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Sebastian Thrun helped build Google's amazing driverless car, powered by a very personal quest to save lives and reduce traffic accidents.



Driverless car driving through heavy city traffic.

Superintendent's Report on the Definition of Catastrophic Impairment in the SABS

The Minister of Finance has now released the Superintendent's Report on the Definition of Catastrophic Impairment in the Statutory Accident Benefits Schedule. The Superintendent's report recommends changes to the SABS definition that reflect the two reports submitted by the Catastrophic Impairment Expert Panel as well as consultations conducted last year by FSCO.

The recommended changes if implemented would update the catastrophic impairment definition to reflect current scientific knowledge. The chart below describes the current test and the proposed test for each impairment group covered by the definition as well as the evidence used by the Expert Panel to support the recommended changes.

In addition to changes to the definition, the Superintendent recommends the payment of interim benefits to some claimants awaiting catastrophic impairment designation and automatic designation to other claimants. Only some of the Expert Panel's recommendations regarding the qualifications of catastrophic impairment assessors has been accepted by the Superintendent.

The most contentious recommendation deals with the combining of physical and psychiatric impairments. The Superintendent agrees with the recommendation originally made by the Expert Panel that these impairments not be combined which reverses the direction provided in the 2004 court case, Desbiens v. Mordini. The Superintendent also recommended that the catastrophic impairment definition not allow pain to be quantified as a separate impairment which would exclude chronic pain and fibromyalgia as catastrophic impairments.

Impairment	Current Test	Proposed Test	Evidence
paraplegia and tetraplegia (quadriplegia)	none	American Spinal Injury Association classification of spinal cord injuries	standard in medical practices literature suggests classification system is valid and reliable
amputations	none	none	clinical and scientific judgment of Expert Panel members
burn and crush injuries to limbs	not covered in SABS	Spinal Cord Independence Measure	clinical and scientific judgment of Expert Panel members The scientific evidence supports the validity and reliability of the SCIM
blindness	none	Legal blindness
traumatic brain injuries in adults	Glasgow Coma Scale Glasgow Outcome Scale	Extended Glasgow Outcome Scale	strong psychometric properties and reliable when used with a structured interview and standard scoring algorithm
other physical impairments	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapters 3-13	very little scientific literature supporting use for determining catastrophic impairment but Expert Panel found no alternative rating system
psychiatric impairments	class of mental or behavioural disorder using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapter 14	Global Assessment of Functioning Scale	literature suggests scale has adequate reliability and validity
combining physical and non-physical impairments	none but the courts have assigning whole body impairment scores to impairments under Chapter 14 of AMA Guides to allow combining with scores under Chapters 3-13	no combining	no scientific literature to support combining physical and non-physical impairment ratings The physical and mental/behavioural impairement rating chapters were not developed to be combined
traumatic brain injuries in children	none	King’s Outcome Scale for Children Head Injury	little scientific evidence to support so Expert Panel recommended a study be conducted

Insurance News - Monday, June 11, 2012

Assault Victim May Qualifies for SABS Because of Psychological Trauma

The plaintiff was physically assaulted by several unidentified assailants while parked at a gas station sorting his money. He escaped by putting his car in gear and driving away. He believed he may have run over one of his assailants in the course of fleeing. He claimed he sustained psychological and physical injuries as a result of the incident.

This case is revolves on the meaning of subsection 2(1) of the SABS, which defines an "accident" as “an incident in which the use or operation of an automobile directly causes an impairment”. The motion judge granted a declaration that the plaintiff was involved in an “accident” within the meaning of the SABS. The insurer appealed.

The Court of Appeal allowed the appeal with respect to the physical injuries, holding that the physical assault did not constitute an “accident”. The Court held that a trial was required to determine whether the psychological injuries were caused by the ordinary use of a motor vehicle.

With respect to the psychological injuries, the Court held that running someone over could be considered a normal incident of the risk created by the use or operation of a vehicle.

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Louisiana Cracks Down on Uninsured Drivers

A new law has passed in Louisiana, giving the state’s law enforcement expanded authority over vehicles that may not be insured.The legislation, House Bill 1053, was signed into law this week by Governor Bobby Jindal. State officials believe the new law will help law enforcement ensure that drivers are protected while taking to the state’s roadways.

According to the new auto insurance law, officers will now be able to tow vehicles if drivers cannot show proof of insurance coverage on their first offense. State officials suggests that more than 850,000 vehicles are currently uninsured in Louisiana, many of which are likely to have been targeted by citation in the past but were allowed to stay on the road due to faulty laws.

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Top 7 Most Dangerous Cars in America

The Insurance Institute for Highway Safety recently performed crash tests and rated the cars in four separate categories. 24/7 Wall St. analyzed the ratings and ranked the seven most dangerous cars in the country.

1. Dodge Ram 1500
2. Chevrolet Colorado Crew Cab
3. Mazda CX-7
4. Mazda CX-9
5. Nissan Pathfinder
6. Jeep Wrangler
7. Suzuki SX4

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Update on Auto Insurance Private Member's Bills

Reducing Automobile Insurance Premiums by Eliminating Fraud Act, 2012 (Bill 41)

Bill 41 was introduced by Mississauga-Brampton South MPP Amrit Mangat to protect people who report insurance fraud. The bill is also intended to ensure that insurance investigators have the proper tools to investigate fraud.

Bill 41 was introduced on March 7, 2012 and passed second reading on March 22, 2012 a which time it was sent to the Standing Committee on Good Government for review.


Insurance Amendment Act (Elements in Classifying Risks for Automobile Insurance), 2012 (Bill 43)

Bill 43 was introduced by York West MPP Mario Sergio and deals with allowable elements of a risk classification system.

Bill 43 was introduced on March 7, 2012 and has not proceeded yet to second reading debate.


Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012 (Bill 45)

Bill 45 was introduced by Bramalea-Gore-Malton MPP Jagmeet Singh and also deals allowable elements of a risk classification system and would prohibit auto insurers from using a person’s home address or postal code and any element prescribed by regulation in classifying such risks.

Bill 45 was introduced on March 7, 2012 and was defeated on second reading on June 2, 2012.


New Drivers' Insurance Rate Reduction Act , 2012 (Bill 71)

Bill 71 was also introduced by York West MPP Mario Sergio and is intended to lower rates for new drivers by crediting new drivers with additional years of driving experience.

Bill 71 was introduced on April 23, 2012 and passed second reading on April 26, 2012 a which time it was sent to the Standing Committee on Good Government for review.

Standing Committee on General Government Auto Insurance Hearings - Day 2

The following are presentations made on May 30, 2012


City of Brampton
Elaine Moore, Regional Councillor
John Sanderson, Regional Councillor

Why should where you live be the primary determinant of your insurance rates? Brampton has many residents who travel outside of Brampton for employment or school, hence their vehicles spend more time outside of Brampton but their insurance rates are based on their home address.

Conversely; Brampton’s business community, including the corporation of the city of Brampton, has employees with addresses in Guelph, Georgetown, Erin, Orangeville. Their vehicles probably spend more time in Brampton than in their home community, yet these good folks enjoy a cheaper insurance rate. This just simply is not fair or right.

In the areas that Councillor Sanderson and myself represent in Brampton, there are five insurance brokers—all have been located within half a kilometre of each other in the downtown, and they’ve been there for decades. So we have a particular concern for the sustainability of the generational relationships that they have built over these many years. We’ve had many conversations with our local brokers, and they are losing clients for as little as $100 a year in savings. They have had clients return because at the expiry date of their policies their rates have returned or surpassed what they would have paid, had they remained with their broker. Call this what you want, but I call it “bait and switch,” and it’s happening every day. It’s unfair, and it’s wrong. Controls need to be put in place to prevent this practice.

If Brampton residents are hiring paralegals to extract from insurance companies what they believe the policyholder is entitled to, then the industry needs to address this within their operating budgets and stop sending the invoices extract from insurance companies what they believe the policy holder is entitled to, then the industry needs to address this within their operating budgets and stop sending the invoices to recover the costs from the Brampton residents. If some rehabilitation centres are a problem, then deal with the centres.


Insurance Brokers Association of Ontario
Randy Carroll, Executive Director
Bryan Yutman, Past President

The lnsurance Brokers Association of Ontario represents over 12,000 insurance brokers who assist over 5 million consumers across Ontario with their insurance needs. Our priority is to protect the interests of consumers, from the purchase of a policy right through to when they need an independent advocate at the time of claim.

On the issue of broker independence, we take a look at the motion establishing this committee’s study, and it makes reference to the role of brokers and their independence. This is a matter that is fundamental to the IBAO and to the value of the broker channel. One of the key advantages of the broker channel versus the direct writers or agents who represent only one company or market is that brokers are independent and shop the market on behalf of their customers to get the best combination of coverages and price for that consumer. This means that a broker compares coverages from more than one insurance company provider. Typically it’s four or five, but it can be as many as a dozen different markets.

Over the last decade, however, financial linkages between insurance companies and brokerages have begun to increase. These linkages tend to take the form of ownership stakes in some brokerages and/or loans. Of course, this raised flags about conflicts of interest and steerage of business to insurers who had a financial interest in a brokerage.

IBAO took this development very seriously and notably, in 2005, our regulator, the Registered Insurance Brokers of Ontario, or RIBO, took two important actions. First, it required that all brokers disclose any financial relationships to their customers, including their commission rates. Second, it conducted a detailed study on the matter to determine the extent of financial or business relationships with an insurance company and the existence of concentration or steering issues among those brokers.

With respect to the issue of auto insurance fraud and abuse, we want to turn to the specific issues again related to fraud and abuse in the auto insurance product. IBAO believes that this is the single most important thing that can be done to lower claims costs and thus, to lower insurance premiums and that is to tackle fraud and abuse in Ontario’s auto insurance system, particularly in the accident benefits area. IBAO will support constructive recommendations to combat fraud and abuse from all parties in this Legislature. We can’t tolerate the abuse of the auto insurance product any further, as it’s costing the customers we serve too much money, as Ontarians pay the highest auto premiums in Canada. However, we would like to caution against further tampering with the system in the wake of the 2010 auto reforms. Those reforms are only beginning to make themselves felt, and we believe they are working.

We are not here to defend the insurers, but we do believe that any aggressive tampering with the system will threaten market stability which is just starting to get a foothold post reform. Nevertheless, we do believe there are measures that can be taken to deal with unfair pricing practices in the property and casualty insurance market. The measure we are referring to is banning the use of credit scoring in personal property insurance. Almost immediately after the credit ban was introduced in auto insurance in 2010, insurers began to use credit far more aggressively to price people’s property insurance, once again subverting the ban on auto.


Ontario Trial Lawyers Association
John Karapita, Director of Public Affairs
Andrew Murray, President-Elect

The association represents more than 1,300 personal injury lawyers, law clerks and students from across Ontario.

The association, for many years, has suggested when looking at the auto insurance system to focus on the three P's: profits, which is a reasonable return on equity for the insurers; premiums, which of course is fair prices for consumers; and protection, which is fair and appropriate coverage.

If you think of the three Ps as a stool, you cut off one of those legs—any one of those legs—it’s unbalanced and it doesn’t work. In anything that you recommend or anything that gets done as a result of the good work of this committee, please be mindful of the three P's. I would, indeed, add a fourth P, changing it from a stool perhaps into a table, which is predictability.

When a change is made, the law of unintended consequences always occurs and you have uncertainty injected. You’ve tried to help something here and now nobody knows exactly what the rules are and it gets sent back to the courts for years and years and years trying to sort it out.

We’ve just gone through 15 years or more of uncertainty with respect to certain issues pertaining to catastrophic impairment. Not long ago, the court of appeal in Ontario, our highest court in this province, provided great clarity to a lot of those issues. If we were to now make some changes that have been suggested, it would essentially throw out 15 years of hard work in the trenches, coming to terms with what are the rules of engagement. I would really try to dissuade anyone from doing that because it would not help.

We should suspend the introduction of restrictions on the definition of catastrophic impairment. There had been a lot of talk of that back in the fall, following the release of an expert panel report. We said, instead, we must focus on eliminating the backlog for mandatory mediations at the Financial Services Commission of Ontario because it is one of the most significant impediments, on both sides, to having a resolution of disputes in the system.

The expert report led to the superintendent, apparently, making some recommendations directly to Minister Duncan. That’s referenced in the budget announcement from back in March. It’s been at least that long that the minister has had that report from Phil Howell, and it has never been released publicly, and we don’t know why. We’ve called for its release, and I would hope that this committee calls for its release.

There needs to be an analysis of the impact of the changes that were made in September 2010 to the accident benefit schedule. Because until we know how those changes have filtered their way down in the system, we don’t really know whether there is a need to make further changes. There needs to be better anti-fraud measures taken in the system.


Ontario Safety League
Brian Patterson, President

The Ontario Safety League has been the chief public safety advocate in the province of Ontario for almost 100 years.

The public perception with respect to automobile insurance and its impact on homes and individual participants in the system leads me to one very significant conclusion, and that is that the general education level of the public with respect to what they’re buying when they’re receiving their insurance and what they’re going to receive when, in fact, they have an issue is significantly—there’s a significant education deficit among the public on what they’re purchasing with respect to insurance.

I know from those who are involved in the investigation of insurance fraud that between 40 and 60 major files are opened every month in this province, involving people who have actively targeted the insurance industry. In my mind, those are the thieves who go through the back door of your house when you’re not at home and steal directly from you, and all of us are paying.

Our concern is that right now—I know it’s limited time, but the issue we have is that the most vulnerable citizens in this province are often those with post-traumatic crash. The two areas that I think you should spend some focus on are the GCS, the Glasgow coma scale.

The other area is, of course, traumatic brain injury. A lot has been done with regard to engineering in vehicles, but we still have traumatic brain injury that results directly from an automobile crash involving two automobiles. If you look to the changes that are currently proposed, the resources in some areas of the province are non-existent. It will limit the likelihood of a victim to be brought into the catastrophic category, and in some areas of the province, they’re non-existent. To get someone into a recognized neuro-trauma rehabilitation centre, there are only a limited number. They tend to be in southern Ontario and they are not available for access.

Without a dedicated fraud unit you’re not going to be able to proceed effectively. These are complicated cases. You want to have dedicated resources because, in fact, there are a number of areas, both administrative and criminal, involved in this.


Alliance of Community Medical and Rehabilitation Providers
Nick Gurevich
Patricia Howell

The Alliance is a collection of 90 member practices, health care providers in the province of Ontario. Many of them conduct work within the auto insurance sector. The vast majority treat injuries that are not minor in nature; they are serious injuries.

After the last set of changes, implemented in 2010, benefits have been slashed by over 70%, to a point where Ontario now has the second worst auto insurance health care coverage in Canada.

We’re in complete agreement with fighting fraud. What we are not in agreement with is the steps taken to address the symptoms rather than the root cause, resulting in an imposition of a collective punishment of all victims.

A word of caution: New measures intended to fight fraud must be precise and focused. There cannot be measures introduced that will have the effect of imposing new barriers to victims to access services or prevent health care providers from delivering them.

Let’s admit that we made a mistake a couple of years ago when we cut the non-cat benefits so drastically. Let’s put those $100,000 plus assessment costs back in the system. The pediatric brain injured population have legitimate long-term needs and $50,000 is not nearly sufficient. It will run out in less than a year.

Let’s also admit that we made a mistake around when we revamped the IE system a couple of years ago. This is one of the root causes for the escalation in applications for mediation. Of course denial rates for treatment have skyrocketed. For your information, they’ve gone from 11% of treatment plans denied before the changes were introduced in 2010 to, now, 42% of treatment plans are denied.

The FSCO Catastrophic Impairment Expert Panel had some good suggestions. For example, they introduced the notion of interim catastrophic designation. So a way that someone could be qualified as catastrophic early on and then later reassessed if that’s appropriate. That was a great idea. However, there were many, many basic premises in the expert report that need to be revisited.


Baron Insurance Services
Barb Addie

I am an actuary and have been a fellow of both the Canadian Institute of Actuaries and the Casualty Actuarial Society since 1983. I began work in 1979 and have been actively involved in Ontario auto insurance since.

Return on equity went up slightly between 2010-2011 from 7.6% from 8.0%. What this does not tell you is that personal lines insurers have, over the last five years, had returns on equities sub 4%.

Ontario auto results: I’m sorry, from an actuarial point of view, it is just much too early. For the bodily injury claims, right now we know about 5% have been paid and 50% to 60% of the claims that will ultimately be paid are unreported. If the MIG holds, the reforms may well be more effective than the actuaries had originally estimated. The original estimate was 32% of claims. It may well be closer to 40%.

The next area I wanted to direct you to is return on investment. Iif you look at the yield for 3-to-5-year bonds it’s gone from a high of 11% in 1991 down to slightly less than 2% in 2011. For P&C insurers, this is a massive issue. Approximately 83% of their investments are in bonds, and a high percentage of those are in government bonds. Insurers take huge risks with underwriting insurance, and they tend to have conservative portfolios to offset the insurance risks they’re taking on.

From an economic perspective, the rate of return on equity that achieves the goals that FSCO has set apart is the cost of capital. If insurers are receiving their cost of capital, consumers will pay the lowest possible rates in the long run and investors will make their expected returns. If the ROE is too high, investors earn more and consumers pay more, however, in the medium term, the rates would decrease as the P and C insurers with their 80-plus competitors are very competitive. They will bring down the rates or else they will lose business. If the ROE is too low, consumers benefit in the short term, but in the longer term firms either leave the market in search of better returns or rates will have to increase. There’s no magic to it.

If the territories were removed, because there’s such a significant difference in what happens between territories, people who live in territories where it is underrated would find that they might have a supply problem. As an insurer, why should I knowingly put a risk on my book that is underrated? If I do that, I’m being unfair to my policyholders because I’m impairing my solvency, and I am being unfair to my shareholders because I’m impairing profitability. I cannot, in good conscience, put that risk on my book. What do I do? If I’m a broker company, I cancel all my brokers in those areas. I can’t take that. If I am a direct writer, I’m going to have to go to FSCO and say, “I will write in this area because I cannot put that badly an underpriced risk on my books.”

The whole concept of a rating structure is to match risk and rate. If I arbitrarily choose to take out a variable that I know to be very predictive, then I am not matching risk and rate. I am putting underpriced risk and overpriced risk in my book.


Dr. Milan Unarket, Physiatrist
Dr. J. Douglas Salmon, Neuropsychologist

One of the comments I wanted to make regarding the Catastrophic Impairment Expert Panel is on the GCS. The GCS, the level of how unconscious you are after a brain injury, although it has flaws, is very widely used and it’s done by paramedics, done by nursing; it’s done by and during the trauma centres, done even in in-patient rehabilitation. GCS is still not a bad predictor of injury severity. Basically, even though there are some better predictors of injury severity, it’s something that widely used and should probably still continue to be used to deem whether someone is catastrophic or not in brain impairment because it’s something that can be done quickly and easily, it’s accessible and it’s done very widely.

One of the recommendations was that those who are admitted to an in-patient rehabilitation get an automatic catastrophic designation. That’s a good idea, but there are a lot of people who have brain injuries who just don’t get access to in-patient rehabilitation.

The change that was made in 2010 is that all the assessments that are done are also of that $50,000 medical and rehabilitation limit. It actually significantly impacts on someone’s treatment. So if you have $6,000 or $8,000 in assessments or $10,000 in assessments, that’s 20% of someone’s treatment. That’s 205% of $50,000. That significantly impacts. That further reduces the amount of money available.

I do have concerns about the expert panel recommendations, particularly with respect to the combination of physical and psychological impairments as well as changing the mental behavioural definition. Both of these will clearly, dramatically decrease the number eligible victims who will be eligible for catastrophic designation.

I also have concern with respect to the lack of clarity in the MIG relative to the inclusion of mood, anxiety and other mental health disorders with respect to what levels of severity are considered to be in or outside the MIG. Lack of interpretive definition, which will eventually come through case law—it’s still potentially many months to years away. And without this clarification, obviously both insurers as well as IE providers have a certain sense of confusion, lack of clarity and, as such, there will be many denials and lack of mental health services provision on that basis.

I also have concerns with respect to the insurer buy-up option. It’s understood that the buy-up has been very poorly undertaken by most consumers so far. That leaves folks greatly exposed. As well, within the buy-up, there’s no option to actually buy up relative to the MIG.

The removal of the DAC structure in 2006 basically removed the impartiality, the neutrality and the evidence-based assessment system. Other colleagues have already commented on the importance of and the stress and pressure on IE examiners relative to the relationship between an IE assessment centre and the IE. With a $2,000 cap, as well, there are significant, added cost-related pressures that have resulted in increased use of inexperienced new graduates and the like within the system.


Catastrophic Impairment Expert Panel
Dr. Pierre Côté, Chair

I am an associate professor of epidemiology at the Dalla Lana School of Public Health here at the University of Toronto and a scientist within the Division of Healthcare and Outcomes Research at the University Health Network.

The overarching goal of the panel’s work was to ensure that the individuals who are the most seriously injured in traffic collisions are assessed according to the best scientific and medical evidence. The expert panel included an independent multidisciplinary team of internationally renowned clinicians and scientists who are highly skilled in the evaluation of impairment and in scientific methodology.

With regards to the definition of catastrophic impairment, the expert panel was given two functions. First, to identify ambiguities and gaps in the current SABS definition of catastrophic impairment and to use emerging scientific knowledge and judgment to make recommendations for changes in the definition. In other words, the expert panel was asked to review the scientific evidence to modernize the definition which was initially developed in 1996 and to improve the accuracy of the determination of catastrophic impairments following traffic injuries.

All our recommendations were developed following an established methodology called the Delphi methodology which is a well-accepted scientific method to develop consensus statements in medicine. According to our methodology, consensus was reached when 75% of the panel, that is six out of eight members, agreed with the recommendation.

The expert panel proposed 10 main revisions to the current definition of catastrophic impairment. The panel reached consensus on all recommendations. The panel spent a great deal of time and energy to ensure that children with traumatic brain injury are assessed and managed according to state-of-the-art criteria and in a timely manner.

This may have been one of the most expensive crashes ever

The collision, involving a Bentley Azure (worth an estimated $400,000), a Mercedes S Class ($120,000), a Ferrari F430 ($230,000), an Aston Martin Rapide ($230,000) and a Porsche 911 ($130,000), occurred in front of Monaco's Place du Casino.