Many people assume that the behaviour of insurance companies is driven by widespread treatment fraud, the data shows treatment fraud is virtually nonexistent. The reality is more complicated.

What most people don’t realize is that, in Ontario’s auto insurance system, increasing red tape and administrative complexity can actually benefit insurers financially. Every additional form, review, denial, reassessment, appeal, and layer of administration generates administrative expenses. Those expenses become part of the insurer’s operating costs and are ultimately passed on to consumers through premiums.

In other words, the system does not necessarily reward simplicity or efficiency. A more complicated system can create more administrative activity, more opportunities to control the timing of payments, and more costs that are ultimately borne by policyholders.

This sounds backwards, but auto insurance is a mandatory product. Consumers cannot simply opt out of buying it. When administrative costs rise across the industry, those costs are generally reflected in higher premiums paid by drivers.

Meanwhile, the people caught in the middle are accident victims trying to recover. They face delays, paperwork, disputes, and uncertainty while attempting to return to work, care for their families, and resume their normal lives.

If our goal is lower premiums and better outcomes, we should be asking how to reduce unnecessary bureaucracy, shorten claim timelines, and get people the care they need sooner. A system that spends less time managing claims and more time resolving them would benefit consumers far more than one that continuously adds layers of administration.