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Province tackling auto insurance fraud

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TORONTO—Ontario is cracking down on what it calls rampant auto insurance fraud, saying it will lead to rate cuts for the province's 10 million drivers.

Auto insurance rates are a thorny issue for the Liberal government, which still is trying to deliver on a promise it made to cut rates by 15 percent on average from 2013 levels.

The government said Tuesday it will develop standard treatment plans for common collision injuries such as sprains and whiplash, create independent and neutral examination centres to provide medical assessments for more serious injuries, and ensure contingency fees set by lawyers are fair and transparent.

The plan also would establish a Serious Fraud Office—staffed, in part, by officers from the OPP—to tackle abuse in the system.

Finance minister Charles Sousa, who announced the measures with Attorney General Yasir Naqvi, said the cost of auto insurance fraud is estimated to be as high as $1.6 billion a year.

By cracking down on abuse, and holding people accountable, the government can achieve a “substantive rate reduction,” he noted.

“Auto insurance fraud has become an industry," Sousa said. ”It's time to stop it.

“If you know someone who has been engaged in this crime, let the Serious Fraud Office know,” he added.

“They will pursue and investigate these fraudsters and bring them to justice.”

Sousa said the new measures will ensure accident victims receive appropriate care and are assessed independently by health professionals with no ties to an insurer.

He could not immediately say what the plan will cost taxpayers or if it sets a specific rate reduction target.

Sousa also urged insurance firms to take action against fraudsters.

“If an insurance company, if the industry is telling us that there's abuse, there's fraud in the system, then stop settling,” he said.

“Stop settling fraud cases, and let's start attacking the fraud and prosecuting the crime.”

A government-commissioned report earlier this year found Ontario has the most expensive auto insurance premiums in Canada despite also having one of the lowest levels of accidents and fatalities.

The average auto insurance premium in Ontario is $1,458, which is almost 55 percent higher than the average of all other Canadian jurisdictions, the report found.

If Ontario's premiums were closer to the Canadian average of about $930, it would save Ontario drivers almost 40 percent—or about $4 billion a year, it said.

Tuesday's announcement comes as the Liberal government still is trying to fulfill a promise to reduce rates by 15 percent on average from 2013 levels (rates have decreased on average by about eight percent since then).

The government missed its self-imposed deadline of August, 2015 to hit that target and Premier Kathleen Wynne has admitted that was a “stretch goal.”

Insurance company Aviva Canada said if the government implements its new measures, it will help lower rates.

The company estimates fraud costs the insurance system $2 billion a year, nearly half-a-million more than the government estimates, said vice-president Gord Rasbach.

“If you address the fraud piece, you will make an impact on rates,” he reasoned.

"Fraud, at the end of the day, someone has to pay for it.

“It really comes down to people who are milking the system [at the expense] of a lot more people who are paying and are honest,” Rasbach added.

The opposition Progressive Conservatives said the Liberals only are acting on insurance rates now because an election is less than six months away.

“Auto insurance premiums are still 55 percent higher than other Canadian jurisdictions,” PC finance critic Vic Fedeli said.

“Four years ago, this government promised a 15 per centcut . . . they have completely bungled this file,” he charged.

NDP finance critic John Vanthof, who noted the government plan to cut rates doesn't set a target, was doubtful the plan will result in a reduction of costs for Ontario drivers.

“They actually haven't talked about how much their new stretch goal for insurance going down [is],” he noted.

“They've talked about measures they want to take but there is no back-up documentation for that.”

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