Ontario auto insurance industry could be tougher on fighting fraudulent claims: lawyer

Ontario’s auto insurance industry isn’t in as bad a situation as than many may think, but it should take a much tougher stance when taking on fraudulent claims, according to one Toronto lawyer.  

“I think with the last reforms for Ontario auto in September 2010, (the industry is) almost there in terms of a dream product,” John McLeish, a partner with personal injury firm McLeish Orlando LLP said during a panel discussion on the issue at the National Insurance Conference of Canada in Quebec City on Oct. 1.

In the first half of 2011, accident loss benefits have improved over the previous year, as has the industry financial loss ratio, he said, citing data from a Financial Services Commission of Ontario’s report to a government committee earlier this year.

Still, the auto insurance has admitted problems, with the highest average premiums in the country and high costs for insurers, according to an August 2012 report commissioned by the Insurance Bureau of Canada. 

Studies suggest that 10% to 15% of costs in Ontario auto product relate to fraud, said George Cooke, CEO of The Dominion and another panelist at the NICC. Much of that fraud is concentrated in the Greater Toronto Area (GTA), he said.

“In Ontario, an infrastructure for fraud has developed,” the IBC report notes, with health professionals and legal professionals among those defrauding the system. Exaggerated claims behaviour is something McLeish said he has seen, and he noted that those people unfortunately often do find lawyers to work on their behalf.  

The insurance industry, though, needs to fight harder against exaggerated claims, according to McLeish. “In a way the insurance industry is (its) own worst enemy,” he said. “I think that the P&C industry in auto in Ontario could take a much tougher line than they do.”

He said he has spoken to insurers who know from their own investigations that exaggerated claims are being made, but pay out “nuisance claims” anyway to avoid the larger legal costs of a trial. “I think that’s a huge mistake.”

He pointed to the Canadian Medical Protective Association (CMPA), which represents physicians, as an example for fraud being fought successfully. “If you start a lawsuit against a doctor, you have to absolutely assume that case is going to go to trial,” he said, which can be costly for defence lawyers and plaintiffs.

“They will spend two dollars to save a dollar,” if they don’t think a claim is right, he said. “It’s worked wonderfully well for them.”