Are Auto Insurers Using Cost Control Tools Properly?

I noticed an interesting section at the end of a recent bulletin issued by FSCO regarding recent regulation changes that I reviewed in a recent post.  Thrown in with the announcement of regulatory changes is a discussion on mileage expenses by health care providers.

The bulletin goes on to state that FSCO is aware that some health care providers are submitting mileage expenses to insurers to travel to an injured accident victim to provide services. Insurers are reminded that “authorized transportation expenses”, as defined in the SABS, are intended to apply to expenses incurred by the insured person and not health care providers.  Details of what can be claimed by insured persons are subject to the Superintendent’s Transportation Expense Guideline.

The bulletin also reminds insurers that hourly fees in the Superintendent’s Professional Services Guideline include all administration costs, overhead, and related costs, fees, expenses, charges and surcharges. Insurers are not liable for any administration or other costs, overhead, fees, expenses, charges or surcharges that have the result of increasing the effective hourly rates, or the maximum fees payable for completing forms, beyond what is permitted under the Professional Services Guideline.

My guess is that these aren’t just friendly reminders.  More likely FSCO has become aware that health care providers are submitting for mileage and other expenses related to treatment of insureds, and insurers are paying them.  While the industry is lobbying government to reduce costs in the system, insurers are paying for expenses that do not fall under the SABS.

Having worked for the government for many years I am fully aware of the amount of lobbying in which stakeholders partake.  Insurance companies are not shrinking violets when it comes to lobbying efforts.  There is a constant list of suggested changes presented to government officials to reduce the cost of auto insurance.

It was frustrating to work on endless changes to the system that will never be fully utilized. We now have a complex set of rules, many proposed by the insurance industry, that are not always being used. It is a system that is too complex for many to properly understand and use.

Yet the government keeps churning out more regulation and rule changes to drive down costs.  But growing red tape and complexity likely have the opposite affect.  Transactional costs keep going up for insurers, health care providers and legal representatives which ensures that the price of auto insurance in Ontario remains high.

As the service provider licensing system is rolled out and soon to be followed by a new minor injury protocol I wonder which direction costs will go – up or down.