April 30, 2003 by Canadian Underwriter
Insurers need to stand up to paralegals, tow truck operators, rehabilitation clinics and claimants who attempt to defraud the auto insurance system, Kingsway Financial Services CEO Bill Star told attendees at an industry luncheon today. At the Insurance Institute of Canada’s (IIC) Spring Luncheon, Star said that too many insurers are sitting back, waiting for implementation of Ontario’s Bill-198 to correct dismal results in the province’s auto insurance market. “I think many people feel this [Bill-198] is going to be our salvation,” he notes, but the legislation only addresses part of the problem.
Certainly there are restrictions being placed on paralegals, as well as a ban on cash settlements in the first 52 weeks of a claim, which should reduce paralegals’ ability to force quick settlements from insurers.
However, Star says action is needed now, not when the regulations are in force, which will likely not be until July. Insurers may be afraid of turning off brokers and claimants by taking a hard line on fraud, but Star insists companies are not doing brokers any favors sending their loss ratios higher by paying suspect claims.
As for clinics, Star’s own companies have been sending out investigators to all clinics in the past eight months and have refused to pay those clinics on suspicious claims. While many clinics have protested, not one has taken legal action against the company after being cut off. This is because legal action would mean the clinic has to open its books to the insurer.
He hopes more insurers will step up to the plate and stop paying on claims where fraud is seriously suspected. “Insurers have to say no,” he says. “If we work together in this industry, we can all do much better [in terms of financial results].” With the current hard market, insurers should be making good money and could be if they deal with the fraud issue.
Star says the actions taken by his company have reduced its combined ratio for Ontario auto and he expects this to drop to 95% or less by the end of this year.
And he also has his sights set on lawyers, specifically those who have a financial interest in clinics where they may be sending clients.