Consumers in Ontario pay almost double the national average for car insurance because of fraud and abuse, though efforts to tighten regulations could spread the problem to other provinces, RBC Insurance said.
In the Greater Toronto Area, the problem is even worse, with motorists paying about $4,600-$4,700 in annual car insurance compared with $1,100 in Nova Scotia and $1,600 in Alberta, the company said during a press briefing to highlight how fraud and abuse is affecting the industry.
RBC said auto insurance fraud takes up as much as $1.3 billion of the $9 billion in annual industry premiums, making the business costly for insurers. In 2006, the insurance arm of the country’s biggest bank was paying out 60% of every premium dollar in the province on injury claims. That figure is now up to 160%.
The Ontario government is introducing new legislation from September this year that is designed to crack down on fraud. While it’s a step in the right direction, it’s unlikely to completely solve the problem and may encourage fraudsters to migrate to other areas.
“What we see is that fraud migrates to where the opportunities are,” said Cathy Honor, president of RBC General Insurance.
“This kind of fraud was pervasive in the U.S. but they have put more regulation in place and we have seen some of those
criminals migrate north of the border.”
That said, even if the new reforms do succeed in stamping out some of the problems, Ontario is still likely to be the major target for insurance fraud as potential payouts are the highest, said Francois Boulanger, RBC Insurance’s head of business innovation.
Honor said the industry needs to work more closely to help detect fraud by sharing information, while more legislation is needed to boost penalties for insurance fraud.
Regulators should also be able to do more, such as requiring proper accreditation for the clinics, which form the base of much of the fraudulent activity.
Much of the problem stems from patients being sent for assessments following minor injuries for treatment they may not need.
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Ontario car insurance double national average on fraud http://car-insurance-news.biz/642.html
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