Ontario drivers pay significantly more for auto insurance than other Canadians, in part because the average cost of accident injury claims is five times higher than in other provinces, auditor general Jim McCarter reported Monday.

Auto insurance fraud cost the industry about $1.3 billion a year in Ontario, but the province "does not have significant measures in place to combat fraud," McCarter warned in his annual report.

The number of people killed or injured in auto accidents in Ontario fell 25 per cent in a decade, but the government still guarantees insurers a "reasonable rate of return" of 12 per cent. That figure was last adjusted in 1996, when the long-term bond rate it was based on was 10 per cent.

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"The long-term bond rate now is about two or three per cent and they're still being allowed to earn 12 per cent," McCarter told reporters. "We think that rate should be reviewed, but on the other hand, because of the very high claim costs in Ontario, they're paying out a lot more claims."

Finance Minister Dwight Duncan said the Ontario government would look at McCarter's recommendation to lower the 12 per cent guaranteed rate of return for insurers, but made no promises to cut the rate.

From 2005 to 2010, the total cost of injury claims rose 150 per cent, even though the number of injury claims in the same period increased only 30 per cent. The number of personal injury claims in 2009 was 20 per cent higher than the number of people who reported having been injured in an automobile accident that year.

"The commission that oversees the auto insurance sector does not know whether insurers are handling claims judiciously and paying out the proper amounts, and it needs better information on the impact of fraud on claim costs," McCarter wrote.

New Democrats said the province must do a better job over overseeing auto insurance providers.

"We've been saying for some time that insurance rates are over the top, unaffordable," said NDP Leader Andrea Horwath. "This report simply reinforces the fact that the auto insurance industry needs to be overhauled."

Agencies ignored in Samsung deal

McCarter also found the Liberal government has restricted the Ontario Energy Board's ability to protect consumers from higher prices because the agency now has no say over charges that comprise half of a hydro bill.

He also said the province allowed green energy projects to proceed without the usual planning, regulation and oversight and complained two key agencies were ignored when the Liberals signed a $7-billion green energy deal with Korean giant Samsung.

"On the Korean-Samsung arrangements, the Ontario Energy Board and the Ontario Power Authority were not in the loop and that did surprise us," McCarter said.

The Liberals failed to do an economic benefit or cost analysis of their "secret" deal with Samsung, Progressive Conservative Leader Tim Hudak complained.

"I mean come on, this is a scam, a rip off for families that's driving up our hydro bills and it should come to an end," Hudak said.

The Liberals' green energy policies will add about $220 million a year to the cost of electricity, he said. "There should be more underlying analysis, more business case assessment, looking at the net jobs figure," McCarter said.

The Tories said the Liberals' "expensive approach to energy" is killing jobs in the broader economy.

McCarter's report also takes the Liquor Control Board of Ontario to task for failing to use its massive buying power to negotiate lower wholesale prices.

However, the Liberals said Ontario residents pay more for booze to help fund social programs such as universal health care.

"The infant mortality rate in Detroit, where you might buy a bottle of wine for $6 that you'd pay $18 for here, is much higher, with some things that can easily be cured," Duncan said. "I choose our system, I choose social responsibility, and I note that our [liquor] prices are the lowest in the country."

The auditor also said the province paid family doctors $123 million to enrol nearly two million patients in their practices in 2010, and yet almost half of those patients visited other doctors that year who billed the health plan as well.

NDP scorns excuses

Ministry officials said they had research to show the incentives were working, but couldn't find it, McCarter said.

"The ministry had done virtually no work to determine whether we were getting the benefits we're supposed to be getting for paying out this extra money," McCarter said. "That's really information that you would want to have when you sit down across the [bargaining] table from the Ontario Medical Association [but] they just don't know."

The NDP weren't buying the "dog ate my homework" excuse from the Health Ministry.

Family physicians who switched to alternative funding to take more patients are paid at least 25 per cent more than their fee-for-service counterparts, but there's no evidence people have better access to a doctor, McCarter said.

"A survey found that patients generally indicated that the wait times to see a physician had not changed significantly over the last few years," he said.

The Ministry of Natural Resources should do more to oversee private forest companies to make sure they successfully replant areas where they've harvested timber, the report said.

"Oversight is especially critical given that forests take upwards of 70 years to regrow so these companies have little immediate financial incentive to carry out appropriate reforestation activities," McCarter wrote.

The auditor also reported Ontario spends more on legal aid than any other provinces but provides the fewest number of people with dedicated legal representation.

And he found the Social Services Ministry doesn't know whether 400 local agencies are delivering an appropriate level of service for the nearly $500 million they get in annual funding.