Car insurance fraud is around a $2 billion per year problem in Canada and growing annually. As it continues to grow the insurance governing bodies like the Insurance Bureau of Canada (IBC) continue to urge the public for more awareness through programs like fraud prevention month, as they seek to seek out support in the fight against fraud.
Provincial governments have made recent strides in combating the issue. For instance, in 2018, Ontario launched their Serious Fraud Office, but consumers are still bearing the brunt of the cost of fraud.
Insurance companies aren’t required to report fraud anywhere outside Ontario, according to Ashish Bhargava, vice-president of fraud and analytics at Aviva Canada. And even in Canada’s biggest province, only an attestation (or proof) is mandatory.
IBC reports that Canadian drivers end up paying an average of $125 annually in to combat car insurance fraud. Ontario drivers pay an average of $236 every year to cover the cost of insurers getting defrauded.
There are many ways Canadians drivers may fall victim, starting with phoney auto insurance offers and ending at the body shop, or even a healthcare facility, should the collision warrant it.
How to prevent insurance fraud after a collision
In the immediate aftermath of an accident, it’s difficult to know if you’re the newest victim of fraud. You can, however, prevent fraud by following a series of steps after any collision:
- Stay calm and don’t confront or argue the conditions of the crash with the other driver. Save your story for the police and the insurance adjuster.
- Take pictures and notes of all vehicles following the accident, location of the collision, weather conditions, license plates, and insurance policies. Take note of any passengers and get their names.
- Make a note of any witnesses and get their contact information. Additionally, scan the area for security cameras that may have recorded the scene of the accident.
- Take pictures of your vehicle immediately following the repairs.
For more information check out our blog: “What to do after a car accident in Ontario”
How to report car insurance frauds
To make sure the insurer has the correct licensing, every province has an online directory. The government expects you to report an insurance agent or broker who does operating without a license. Every insurance broker in Canada is required to have a license. The Registered Insurance Brokers of Ontario has an online directory. Other provinces mostly rely on the Insurance Brokers Association of Canada to list all of their licensed professionals. If you can’t find your broker or insurance company on those directories, something is amiss.
If you you believe you’re the victim of fraud either by a scam driver, a tow truck, a mechanic, speak with your insurer. Your discomfort is understandable, so know the Canadian Anti-Fraud Centre and the Insurance Bureau of Canada’s anonymous online tip forms are there for you to report suspicious behaviour.
NOTE: No legitimate insurance company in Canada accepts e-transfers or money wiring services to pay premiums. Never sign a blank document, thieves can work wonders with a signature.
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How auto insurance fraud pays its criminals
Auto insurance fraud on the road is where the criminal element becomes very dangerous. It begins with a recruiter finding a team of participants to stage an accident, according to a video produced by the Insurance Bureau of Canada.
Following the accident, a tow truck company who’s in on the scam will come and tow your car. Later, they charge the insurance company an excessive amount.
The tow may take your car to an auto body repair shop, also in on the fraud,. There additional damage could be done to your car, which increases the size of your claim. That auto body shop will then charge the insurance company for additional repairs.
While all this is going on, the participants in the fake accident go to a private rehab clinic. The clinic coaches on how to show signs of injury. The co-conspiring clinic will assist the injured to make an insurance claims under the accident benefits portion of their insurance. Accident benefits covers services like medical care (e.g physiotherapy), housekeeping, caregiving and income replacement.
The recruiter in charge of this entire process, gets kickbacks from the tow truck, the mechanic, and the rehab clinic, the Insurance Bureau of Canada says.
The Bottom Line
Being scam conscious is our only hope.
Car insurance companies are there to protect you from risk and care for you and your car. They also provide coverage for the not-at fault driver and their car should you be found at fault. Remember, no fault only means you deal with your insurer, you only worry about your rate increasing, and not the increasing costs of fraudulent claims.
Many Canadians may be under the impression that the police or insurance companies are there to protect them against auto insurance fraud, but it’s quite the opposite.
Insurers and law enforcement, for better or worse, rely on drivers to catch to fraudsters and then report them.
Ordinary drivers knowing how to spot fraud and document evidence of it occurring is one of the few lines of defence Canadians.