Ontario’s plan to reduce insurance rates by 15% over two years is using a variety of approaches to bring those rates down. Among the biggest issues affecting the cost of insurance in Ontario – and making it among the highest in the nation – is a large problem with insurance fraud. Ontario’s rate reduction plan depends in large part upon the ability to decrease the amount of insurance fraud that is perpetrated in this province – reducing the millions of dollars that are wasted on fraudulent claims.
What is Insurance Fraud?
There are a number of ways that an insurance claim can be fraudulent. Among the most common are staged accidents, inflating of repair costs, false injury claims, and claiming pre-existing damage as part of a current collision. Every time an insurance company pays out more money that it needs to on a fraudulent claim, rates for all drivers are affected. Less money wasted on fraud means insurance companies won’t need to charge as much for premiums.
How Can Insurance Fraud be Reduced?
There are a number of ways to cut back on insurance fraud costs. Careful investigation of accidents and regulations placed on collision repair shops, towing companies, and medical providers who treat insurance victims are all part of the equation. Additionally, insurance companies rely on honest drivers to report insurance fraud to be aware of its many forms so that they can recognize the signs. Improving Ontario’s large insurance fraud problem is a big task, and it will take a multi-faceted approach to make it happen successfully.
Ontario’s Plan for Insurance Fraud Reduction
Among the many initiatives outlined by the government for reducing Ontario is insurance premiums by 15% are several aimed at stopping insurance fraud. These initiatives are aimed mainly at the industry surrounding auto insurance claims – those handling injuries and repairs for which the insurance companies are paying.
Licensing of Health Care Clinics
Among the initiatives proposed for the 15% rate reduction are plans to place some controls on the medical clinics that are billing insurance companies for injuries related to car accident claims. The government is looking to license these health care clinics and allow the Financial Service Commission of Ontario the power to oversee them and ensure that claims are being processed appropriately and legitimately. Inflated and false injury claims are one of the easiest frauds to perpetrate, and it is not only the alleged victims but also often also medical clinics who participate and taking more money than is really necessary to care for the injuries incurred. Licensing and oversight of these medical clinics would allow the government tighter control over injury claims.
Overseeing of Towing Companies
Although there is not a set plan for this area, the government is investigating ways to oversee towing companies as well. Towing companies may participate in fraud by responding to accidents and towing damaged cars to repair shops with whom they many have a deal regarding receiving payments from insurance companies. This goes hand in hand with the need for oversight of repair shops.
Oversight of Repair Shops
Submitting an inflated bill to an insurance company for repairs to a vehicle is another very common fraud scenario. Repair shops declare the damage to have been greater than it actually was, or overcharge for the repairs. Tighter regulation of repair shops could reduce the amount of insurance fraud in Ontario. This is another one of the areas the government plans to explore to reduce insurance costs.
Other Fraud Prevention Tactics
While it’s unclear at this time what else the government means to do to combat insurance fraud in Ontario, it is clear that this is central to the 15% rate reduction. The ability to bring down the amount of insurance fraud will reduce wasteful spending and pass savings on to the customers.
How You Can Reduce Fraud
Every Ontario driver has a responsibility to help prevent fraud and keep insurance rates in check. There are a few simple things you can do to help keep fraud down in Ontario:
- Never bring your car to a repair shop you don’t know, especially if the other driver in the accident is insisting.
- Check the reputation of any repair shop you select
- Report suspicious behaviour on the part of the other driver or signs of a faked accident
- Report all claims accurately and immediately
