Aviva Fraud Report 2018: Majority of Ontarians believe 25% of claims are fraudulent

Ontarians, who pay among the highest auto insurance rates in the country ($1,428 per driver), are aware of insurance fraud and supportive of initiatives to fight it, according to the second annual Aviva Fraud Report, released today.

The report contains new polling data on public awareness about insurance fraud in Ontario and shows that drivers are aware of the severe problem. In fact, over 50% of Ontarians believe that 25% of claims are fraudulent. It further shows that the driving public is supportive of actions to combat fraud.

In 2017, it was estimated that Canadians were paying $2 billion per year out of pocket for costs associated with different types of fraud perpetrated against the auto insurance system. Over the past year in Ontario alone, consumer awareness on insurance fraud has grown. For example:

  • 88% of Ontarians think that auto repair shops inflate the cost of vehicle repairs, compared to 77% in 2017.
  • 86% of Ontarians support government and law enforcement agencies investing more resources to investigate and prosecute fraudulent claims, compared to 78% in 2017.

“Dishonest claimants and service providers continue to cheat consumers. We are seeing a troubling and egregious form of fraud that includes the fraudulent sale and issuing of auto policies,” said Colm Holmes, President and CEO, Aviva Canada. “We need to do better for honest drivers. That’s why Aviva is fighting fraud. Honest drivers pay higher premiums because of criminal fraud. They know it. We know it. And the time has come to fight back.”

Key findings of the Aviva Fraud Report 2018

  • 86% of Ontarians feel that more needs to be done to combat fraud.
  • 82% feel the increase in their auto insurance premium is due to fraudulent vehicle repairs, to vehicle theft or to personal injury claims.
  • 73% agree that cracking down on fraud would reduce their current auto insurance premium.

Support of new actions to fight fraud
The results show clear support from Ontario drivers for new actions by government and the insurance industry that can help address situations where:

  • people exaggerate claims,
  • automotive, healthcare and legal suppliers resort to fraudulent practices, and
  • opportunists fraudulently sell policies online and distribute policies.

To effectively tackle auto insurance fraud

  • 74% support a new set of provincial insurance fraud offences.
  • 70% feel that insurance companies need to invest more resources to combat fraud. 60% support an online fraud intelligence database that consumers can access:
    • 72% would use it look up an auto body shop following a car collision
    • 58% would use it to look up a healthcare practitioner for treatment of injuries following a car collision

To help lower insurance rates

  • 59% believe that insurance companies should be mandated to invest in an insurance fraud management model and a clear set of penalties and fines for those convicted of fraud.

To protect consumers

  • 53% feel that government, insurance companies, other organizations fighting fraud, and police all need to take responsibility for warning consumers about insurance fraud schemes.
  • 77% feel that insurance companies that have uncovered fraud schemes should make the information available to the public in real time.

We urge consumers to be alert of any suspicious activity that may lead them to become a victim of fraud. For tips on what to look for, please visit avivacanada.com/fightfraudAviva Canada customers who suspect they may be a victim of fraud can contact our 24/7 fraud hotline 1-855-332-5255 or email us at fraud.canada@aviva.com.

Notes to editors

  • The Aviva Fraud Report 2018 is available digitally here.
  • The survey was conducted by Pollara Strategic Insight through online interviews with 1,500 Ontarians, 18 years of age and older, with a current auto insurance policy. The interviews were carried out from October 15 – 24, 2018. The results are considered accurate within plus or minus 2.5 percentage points, 19 times out of 20. For a full copy of the survey results contact Aviva.
  • As part of our commitment to combat fraud, Aviva Canada:
    • Released the first annual Aviva Fraud Report in 2017 to increase consumer awareness about fraud.
    • Undertook an undercover investigation called “Project Bumper” to highlight the extent of fraud by auto body shops and tow truck operators in Ontario.
    • Issued an update to the undercover investigation codenamed “Project Duffy” into fraud carried out by healthcare professionals and a paralegal.
    • Continues to invest in identifying and investigating fraud to protect honest policyholders.

About Aviva Canada

Aviva Canada is one of the leading property and casualty insurance groups in the country, providing home, automobile, leisure/lifestyle and business insurance to 2.8 million customers. A subsidiary of UK-based Aviva plc, Aviva Canada has more than 4,000 employees focused on creating a bright and sustainable future for their customers and our communities.

Aviva Canada invests in positive change through the Aviva Community Fund, Canada’s longest running online community funding competition. Since its inception in 2009, the Aviva Community Fund has awarded $9.5 million to over 400 charities and community groups nationwide. Aviva Canada, bringing over 300 years of good thinking and insurance solutions to Canadians from coast-to-coast.

SOURCE Aviva Canada Inc.

$95,000 Non-Pecuniary Assessment For Chronic Pain with Psychiatric Overlay

Reasons for judgment were published today by the BC Supreme Court, Vancouver Registry, assessing damages for chronic pain symptoms with psychiatric overlay caused by a series of collisions.

In today’s case (Sandhu v. Bates) the Plaintiff was injured in three collisions.  Fault was admitted by the Defendants.  The Plaintiff suffered injuries which developed into a myofascial pain syndrome.  She further developed somatic symptom disorders.  Her prognosis for full recovery was guarded.  In assessing non-pecuniary damages at $95,000 Madam Justice Winteringham provided the following reasons:

[137]     In summary, I make the following findings of fact respecting Mrs. Sandhu’s injuries:

a)    Mrs. Sandhu sustained moderate soft tissue injuries to her neck, lower back, buttock, right hip, right ankle, and right knee in the accidents.

b)    Rather than following a typical course of recovery after the accidents, Mrs. Sandhu experienced chronic low back pain affecting her buttock and pain down the right leg and associated numbness in the left buttock. Her chronic pain worsened in the first and second years following the accident and persisted at the time of trial.

c)     I accept Dr. Squire’s opinion that the diagnosis for her physical injuries is most consistent with myofascial pain syndrome of the lumbopelvic area and that the intermittent exacerbations are likely episodic acute muscle spasms and the right leg pain is likely referred pain from the myofascial pain syndrome. I also accept that she continues to experience intermittent neck pain.

d)    Dr. Joy, Dr. Anderson and Dr. Suhail all agree, and I find, that Mrs. Sandhu developed somatic symptom disorders. I note that though their diagnoses were not identical, Dr. Anderson and Dr. Suhail report that she meets the diagnostic criteria of somatic symptom disorder with predominant pain, following the accidents.  In addition, I accept Dr. Anderson’s opinion that following the accidents, Mrs. Sandhu suffers from a generalized anxiety disorder.

e)    I find that, as Mrs. Sandhu’s psychological condition deteriorated, her ability to cope with pain was poor. Dr. Suhail’s opinion, with which I agree, was that “as here pain would trigger her anxiety, her subsequent psychological problems would reduce her ability to cope with pain. Whenever she would be stressed and anxious, her back pain would increase.”

f)      Dr. Joy, Dr. Anderson, Dr. Suhail, Dr. Chapman and Dr. Kashif all agree that Mrs. Sandhu suffered from anxiety after the accidents. They disagree about prognosis. I find that the first accident, and aggravated in the second and third, caused Mrs. Sandhu’s generalized anxiety disorder. The medical experts are all of the opinion that Mrs. Sandhu’s prognosis is guarded, particularly if she is unable to address her anxiety disorder. Dr. Suhail indicated some recent improvement and, with ongoing cognitive behavioral treatment, there is some reason for cautious optimism.

[153]     I have reviewed the cases referred to by the parties. On my review of Mrs. Sandhu’s cases, as her counsel admits, the injuries suffered in some of those cases were more serious than what I have found in the present case. Similarly, I have found the cases relied on by the Defendants involved Plaintiffs with lesser injuries than those I have found in Mrs. Sandhu’s case.

[154]     In all of the circumstances, and taking into account the authorities I have been referred to, I am satisfied that an award of $95,000 will appropriately compensate Mrs. Sandhu for her pain and suffering and loss of past and future enjoyment of life, for which the Defendants are responsible.

Tomec v Economical Mutual Insurance Company – Limitation …

Article by Michael J. Henry and Daniel Fisher

Recently, the Divisional Court released their decision in Tomec v Economical Mutual Insurance Company, 2018 ONSC 5664. This Appeal concerned the issue of whether the limitation period set out in the Insurance Act and the SABS is a “hard” limitation period, such that the limitation period begins two years from the date of denial of a benefit, or a “soft” limitation period, such that the limitation period only begins to run when the insuredʼs right to claim the benefit is discovered.

In Tomec, the insured submitted an Application for approval of an assessment for a file review to evaluate the issue of Catastrophic Impairment (CAT). On August 26, 2010, the insurer responded. In the insurer’s response, the following was noted:

In accordance with Section 18(2) of the Statutory Accident Benefits Schedule, no attendant care benefit is payable for expenses incurred more than 104 weeks after the accident unless you have been determined to have sustained a Catastrophic Impairment as defined by the Statutory Accident Benefits Schedule.

In accordance with Section 22(3) of the Statutory Accident Benefits Schedule, no payment for housekeeping and home maintenance benefits are payable for expenses incurred more than 104 weeks after the accident unless you have been determined to have sustained a Catastrophic Impairment as defined by the Statutory Accident Benefits Schedule.

Please note that should you disagree with our assessment of your claim and wish to dispute it, mediation must be commenced within 2 years from your receipt of this letter.

On November 4, 2015, the insured was deemed CAT. The insurer subsequently denied payments of past benefits owing, and denied ongoing attendant care benefits and housekeeping benefits on the basis that these benefits had been denied at the two-year mark and the insured did not mediate this denial within two years.

A LAT application was filed in relation to the denials. The Vice-Chair determined that the insured was barred from proceeding with her application for attendant care and housekeeping benefits, despite having a Catastrophic Impairment, because she did not dispute the stoppage of those benefits within two years of the denials.

The insured made two primary arguments:

  1. That the 2010 denials was not valid because at the time of the denials, she was not CAT and was therefore, not eligible to claim the attendant care and housekeeping benefits.
  1. That the limitation period could not have started to run as the insured had not discovered she was catastrophically impaired, such that she would become entitled to the increase levels of Attendant Care and housekeeping benefits.

The vice chair rejected both arguments. She found that the 2010 denials were clear and unequivocal and therefore sufficient to trigger the two year limitation period found in s. 281.1 (1) of the Insurance Act, which stated as follows:

A mediation proceeding or evaluation under s.280 or 280.1 or a court proceeding or arbitration under s.281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.

She found that this provision did not include the doctrine of discoverability. It is a fixed limitation period, triggered by a specific event (in this case, the denial letter).

The Divisional Court upheld the Vice Chair’s Decision. In determining when the limitation period starts to run, the Court compared the wording of s.281.1 (1) to that of section 38 (3) of the Trustee Act, which states:

An action under this section shall not be brought after the expiration of two years from the death of the deceased.

The Court noted that the two sections were analogous in that they were both triggered by fixed events. In the case of s. 281.1 (1), the event is the denial by the insurer, while with section 38 (3), the event is the date of death.

This decision is a tough pill to swallow for the Plaintiff’s bar. While one can understand the Court’s legal reasoning, it takes too restrictive an approach in its analysis. It ignores the fact that the insured had no claim to make until she was deemed CAT. The insured did not have a claim for the benefits that they simply needed to discover. Rather, the insured was not entitled to the benefits until the CAT determination was made. One wonders how a benefit can be denied before the insured becomes eligible for it.

Furthermore, this Decision ignores a vital aspect of the wording of 2. 281.1 (1) of the Insurance Act. The wording of the provision is that a proceeding must be commenced within two years after the insurer’s refusal to pay the benefits claimed. In this case, attendant care and housekeeping benefits were not claimed after the 104 weeks. What was submitted to the insurer for consideration was an application for a CAT file review. The insurer sent back a letter with a blanket denial of benefits that had not been claimed. As the benefits had not been claimed, how can these benefits fall within 281.1 (1)?

Regardless, the limitation periods under the SABS are now considered ʺhardʺ limitation periods, such that any denial must be mediated or disputed within two years. While this interpretation creates difficulties for insured individuals going forward, all lawyers must be mindful of this fact to ensure that no client is accidentally precluded from accident benefits entitlement.

Whether this decision will be appealed to the Ontario Court of Appeal is not known at this time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

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Insurance Covenant In Construction Contract

Article by Sean Tessarolo and Samantha Ip

Jacobs v. Leboeuf Properties Inc., 2018 ONSC 4795

Covenants to insure are common in commercial leases and construction contracts. The insurance covenant is a contract provision that requires a covenantor to obtain insurance against certain perils with the effect that the risk of loss or damage arising from those perils is transferred from the covenantee to the covenantor under the contract. In the event of a loss, the covenantee is released of its liability for the loss and the covenantor is assured that it will be indemnified for such loss. The benefit to the covenantee is often referred to as a waiver of subrogation or tort immunity.

Insurance covenants have been interpreted as extending tort immunity in favour of a covenantee in cases where the loss is caused by negligence, breach of contract,1 gross negligence2 and even intentional conduct.3

In Jacobs v. Leboeuf Properties Inc., 2018 ONSC 4795, the Court determined that a claim for breach of contract and negligence arising from faulty workmanship was barred by the terms of an insurance covenant contained in a construction contract. The plaintiff owned a residential property. The plaintiff contracted with the defendant contractor to, among other things, build a residence. Section 9.1 of the contract required the plaintiff to purchase insurance for the project and to add the defendant as a named insured under those policies:

The Owner shall purchase and maintain in property and third party liability insurance in a form acceptable to the Construction Manager upon the entire Project for the full cost of replacement as of the time of any loss. This insurance shall include, as named insureds, the Owner, the Construction Manager, Trade Contractors, and their Trade Subcontractors and shall insure against loss from the perils of…and damage resulting from defective design, workmanship or material. …

The Court determined that pursuant to s. 9.1 the plaintiff and the defendant contractually allocated the risk of loss or damage resulting from defective workmanship to the plaintiff and the plaintiff’s claim could not succeed on this basis.

Citing precedent from Ontario’s Court of Appeal, the Court held that even if the Plaintiff failed to obtain the insurance contemplated under s. 9.1, the requirement to obtain that insurance acts as a voluntary assumption of the risk of loss caused by perils that would have been insured against. In effect, the “covenant to insure effectively provides an allocation of risks reflected in the price to be paid for the demolition and reconstruction of the plaintiff’s residence.”

In the result, the Plaintiff’s claims in negligence and breach of contract were dismissed.

The decision of Austeville v. Josan, 2016 BCSC 1963, which extended the application of insurance covenants to intentional acts, will be proceeding to appeal this month.

Footnotes

1 Orange Julius Canada Ltd. v. Surrey (City), 2000 BCCA 467

2 Orion Interiors Inc. v. State Farm Fire and Casualty Co., 2016 ONCA 164

3 Austeville v. Josan, 2016 BCSC 1963 (under appeal)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

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