Auto Insurance Fraud Legislation Reform

It is estimated that auto insurance fraud in Ontario costs the system up to $2 billion per year. In a response to the problems surrounding auto insurance fraud claims, this week the Ontario government introduced new legislation designed to combat such fraud. As their press release indicated, the government’s proposed legislation includes significant reforms that will address fraud in the system, put victims first by providing better access to care for those injured in auto collisions and strengthen consumer protection.

Highlights of the plan include:

  • Implementing standard treatment plans for common collision injuries such as sprains, strains and whiplash to help people receive the treatment they need after an accident, changing the emphasis from cash payouts to ensuring appropriate care for victims.
  • Reducing diagnosis and treatment disputes between insurance companies and people injured in collisions by instituting independent examination centres to assess more serious auto collision injuries.
  • Cracking down on fraud by launching the province’s first Serious Fraud Office in spring 2018. The office will use an integrated and dedicated approach to combat serious fraud, with a focus on auto insurance fraud, which has been identified as one of the factors contributing to higher premiums.
  • Directing the Financial Services Commission of Ontario (FSCO) to review risk factors used by insurers to calculate premiums with the goal of ensuring drivers in certain areas of the province are not subject to unfairly high rates.
  • Ensuring that lawyers’ contingency fees are fair, reasonable and more transparent.

The plan is based on recommendations made by David Marshall, Ontario’s advisor on auto insurance. In a report released in April 2017, Marshall urged transformative changes aimed at improving the care received by people hurt in collisions, reducing disputes around diagnosis and treatment, promoting innovation, competition as well as other steps to improve consumer protection.