Ontario drivers pay the most for auto insurance: Auditor General

Fraud cost the industry $1.3 billion in Ontario.

Ontario drivers are paying more for auto insurance than other Canadians motorists. This is in part because the average cost of accident injury claims is five times greater than in other provinces, according to Auditor General, Jim McCarter.

McCarter says auto insurance fraud cost the industry about $1.3 billion a year in Ontario, and the province “does not have significant measures in place to combat fraud,” McCarter warned in his annual report, which sums up value-for-money audits done on a range of selected ministries and agencies each year.

“From 2005 to 2010, the total cost of injury claims rose 150% even though the number of injury claims in the same period increased only 30%,” wrote McCarter.

The number of personal injury claims in 2009 was almost 75,000, 20% higher than the number of people who reported having been injured in an automobile accident that year.

The number of people killed or injured in auto accidents in Ontario has fallen 25% in the last decade, but McCarter pointed out the government guarantees insurers what is called a “reasonable rate of return” of 12%, which was last adjusted in 1996.

“That profit margin has not been adjusted downward since that time, even though the long-term bond rate has been about 3% for the last couple of years and is projected to remain at a relatively low level for some time,” said McCarter.

“The commission that oversees the auto insurance sector does not know whether insurers are handling claims judiciously and paying out the proper amounts, and it needs better information on the impact of fraud on claim costs.”

IBC agrees with Auditor General

Meanwhile, Insurance Bureau of Canada (IBC) supports the Auditor General’s report.

“Is it reasonable that accidents are down while claims have increased? It just doesn’t add up. Too many people are using the auto insurance system as a profit-making opportunity,” said Ralph Palumbo, Ontario vice president, IBC. “There is a sophisticated network of service providers who use the auto insurance system for their own self-interest. This problem is especially acute in the Greater TorontoArea.”

Palumbo added, “We are appalled that groups like the Alliance of Community Medical and Rehabilitation Providers and others have pointed a finger of blame at insurance companies when the Auditor General clearly states what we have been saying: Ontario policyholders are paying higher insurance rates because of service providers who over-treating and over-assessing patients for personal gain.”

With files from The Canadian Press

This article was originally published December 5 and updated December 6

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