IBC, IBAO applaud fraud measures in Ontario budget; province proposes to establish administrative monetary penalties

Ontario announced new initiatives to crack down on insurance fraud in yesterday’s budget, which were welcomed by industry groups.

The budget also indicates the province intends to propose administrative monetary penalties, for which the industry has advocated over the past year.

In terms of auto fraud, Ontario finance minister Dwight Duncan outlined several steps to reduce fraud, including establishing an auto insurance anti-fraud taskforce, working with the industry on the Health Claims for Auto Insurance (HCAI) database to detect fraud and introducing new rules to ensure that medical/rehabilitation treatments are provided as invoiced.

The provincial government will also require insurers to annually attest that they have established effective compliance controls that protect the rights of policyholders and accident victims.

“Insurance fraud is a problem that affects all Ontarians who are concerned about crime, public safety and increased auto insurance premiums,” said Ralph Palumbo, vice president, Ontario for Insurance Bureau of Canada. “We appreciate the efforts of the government for taking these first steps to combat this escalating problem and hope more will be done in the future.”

“We commend Premier McGuinty and Minister Duncan on today’s budget,” added Randy Carroll, CEO of the Insurance Brokers Association of Ontario. “Insurance brokers are committed to protecting Ontario consumers and keeping them informed.”

The budget also notes the government intends to propose amendments to give the province’s superintendent of financial services the authority to impose administrative monetary penalties in the insurance sector. AMPs are monetary penalties viewed as a middle ground between a ‘slap on the wrist’ and quasi-criminal proceedings, enabling insurance regulators to issue a penalty proportionate to the infraction.