Insurance fraud costs $1.5B every year in Ontario
Monday, January 30, 2012 Admin
That amount of fraud was changed to read $1.5 billion, not million. We apologize for the error.
If the insurance industry’s performance is a curling match, it’s throwing bad rocks and not scoring points with consumers.
Home and auto policies are less affordable largely due to an unstable world economy and rise in fraud, although the insurance industry is partly to blame for losing consumer confidence, says the head of one of the country’s oldest insurers.
“As an industry, we’ve not done a very good job of keeping the public well informed on these matters and helping each insured understand what their part of the solution is. We haven’t even told them what the problem is,” said George Cooke, president and CEO of The Dominion of Canada General Insurance Company.
The company announced this month it’s the title sponsor for a men’s national curling skins game. The Haileybury native brought his love of the sport and knowledge of the insurance industry to North Bay on Thursday to address more than 100 independent brokers, educators and students about the industry’s push to give consumers meaning behind rate increases.
Insurance fraud costs the industry $1.5 billion every year in the province — about $150 per driver — from unscrupulous body shops, tow truck operators and health care professionals, said Bernie Robertson, president of the North Bay and Area Insurance Brokers Association and a commercial risk manager at Knox Insurance.
He said insurance companies have formed special investigation units to handle fraud and raise these issues with consumers, while the province created an Auto Insurance Anti-Fraud Task Force last year.
Cooke sits on that steering committee on behalf of the insurance industry and expects its final report to be ready by the fall.
He’s hopeful the industry can reduce fraud and give consumers a break on their policies.
Other issues are out of their control.
The debt crisis in Europe is hurting insurance company investments needed to pay claims. The U.S. Federal Reserve announced this week it plans to hold down interest rates until 2014 to stimulate its economy as the country braces for a presidential election in November.
The central bank’s decision could hurt trade if Canada raises interest rates, and that would put pressure on Canadians who are holding a record amount of debt, Cooke said.
“There will be some affordability issues … that weren’t there five or 10 years ago,” he said.
Closer to home, Ontario downloaded health care costs onto the insurance industry with its no-fault legislation, and the industry can’t change how it does business without the green light from its governing body; the Financial Services Commission of Ontario.
The province reformed auto insurance in 2010 by giving consumers an option for less coverage, but few policyholders have bought additional benefits, Cooke said, adding more would buy it if they understood it.
Cooke said he expects to see a lawsuit or class-action claim from consumers who didn’t buy enough coverage.
The Dominion created a website to explain auto reform in Ontario.