June 18, 2019

Working Together to Fight Fraud

It’s no secret that everyone would like to pay less for auto insurance. Yet, from 2017 to 2018, Albertans experienced the steepest increase in auto insurance throughout the country.

The increase is attributed to a number of factors including recurring instances of extreme weather and the rising cost of car repairs. With cars becoming more like a computer, the cost of repairs has increased significantly. For example, one back-up sensor on a car bumper costs approximately $500 and many vehicles have four; so, insurance companies are no longer paying to repair just the bumper any more. With healthcare costs also on the rise, treatments for injuries as a result of car accidents are an insurance company’s greatest expense. Add insurance fraud to those costs, and how much Canadians must pay for insurance premiums escalates.

How does insurance fraud affect me?

According to newswire.ca, auto insurance fraud costs Canadians over two billion dollars every year and honest drivers suffer the consequences. In fact, an estimated ten to fifteen per cent of insurance premiums go towards covering costs of fraudulent car insurance claims. Additionally, insurance crimes such as staged accidents and fraudulent insurance claims use up valuable law enforcement, health care, and legal resources. Not only do insurance crimes limit the number of resources available for people who actually need them, but they also cause increased taxes in order to fund the illegitimate use of public services. Thus, insurance fraud costs all of us, both personally and financially.

What does auto insurance fraud look like?

Some fraud is intentional and obvious, while other forms are more subtle. Some of the most common types of auto insurance fraud activities are these:

  • Staged accidents – An individual or a group of individuals may plot to orchestrate an accident in order to file or inflate an insurance claim.
  • Lying on a policy – Someone omits or lies about information when applying for an auto insurance policy. Some refer to this as ‘auto premium evasion.’ An example of this is failing to add another driver to a policy, such as a teenage driver. Omitting this information is fraud.
  • Lying about the loss – Reporting that a loss occurred in any way other than how it actually happened is fraud. Doing so is common when people don’t want to admit they were at fault and then adjust the details of the event.
  • Falsifying services or treatments – Falsification results from a health care provider, auto body shop or another related professional claiming that treatment was given or services provided that weren’t in order to inflate an insurance claim.

What can you do about insurance fraud?

Recognize. Reject. Report. The idea is simple. Recognize fraudulent auto insurance activities; reject participating in fraudulent activities; report suspicious auto insurance activities to the police and to your insurance provider.

If you are in an accident, always work directly with your insurance provider and only with body shops that you trust. Be wary of recommendations or referrals made on site by others involved in the accident and be sure to report this activity to your insurance provider.

By working together to inform ourselves, to protect ourselves, and to apply the right kind of pressure, in the right kinds of places, we can effect meaningful change to control the costs that drive up the rates of insurance.

If you have any questions about your car insurance, be sure to call your insurance broker.