Insurance Bureau of Canada urges action to stop auto insurance fraud in Ontario

Published: October 5, 2015

Updated: July 24, 2018

Author: Luke Jones

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The Insurance Bureau of Canada has detailed the fraudulent auto insurance activity in the Greater Toronto Area and Ontario as a whole, explaining how fraudsters go about their business and how this epidemic may be stopped. The Bureau also said that brokers and lawyers can play a major part in stopping rife auto insurance fraud in the province, while consumers can also play a part too.

Ontario is home to the most auto insurance fraud in Canada, and in fact the province is famed for it even outside of the country. It is a major contributor to drivers in Canada’s most populated area paying vastly higher premiums than those in other provinces. However, while single driver fraud is high, authorities are particularly concerned about fraud rings that are building up, especially in Toronto.

Indeed, it is thought that a high percentage of the auto insurance fraud in the country stems from crime rings, and not necessarily a single consumer deciding to do wrong. The Ontario Superior Court recently found a police officer from Peel guilty of forming a ring where he was paid to create at least nine false auto insurance accident reports. With his tow truck driving friend he paid people to claim they were occupants of cars that had been involved in an accident.

Of course, the cars had never actually been in a crash, accept for when the officer and his partner in crime would crash them into each other at night. In total this mini crime ring stole $916,000 from insurers and the IBC is warning that there are much larger schemes in operation. As for the Peel officer, he was sentenced to five years in jail.

The Insurance Bureau of Canada says that consumers can help by opening up their personal insurance records so that they can be shared:

“Organized crime, unfortunately, is very creative,” says Rick Dubin, vice president of the Insurance Bureau of Canada’s investigations unit.

“They keep changing their approach over time. But insurers are also getting better at fighting fraud. With the recent passing of Bill S-4, an amendment to the Personal Information Protection and Electronic Documents Act, insurance investigators can share information with other insurers if they have reasonable grounds to believe that there is fraud. Luckily, we have some effective new tools at our disposal.”

These days’ people do not take kindly to having their details shared, but Dubin says that consumers may be more accepting when they know it can drive down fraud and make premiums more affordable in the long term. Some analysts says that the auto insurance industry is losing up to $2 billion per year on fraudulent claim payouts, money that ultimately comes from the law abiding driver who ends up paying more on their premium.

The Insurance Bureau says that lawyers need to be more vigilant when representing companies and need to look for signs that fraud has taken place. Prison is rarely used for mere insurance fraud cases (the Peel case was a more elaborate issue), which means the only way a case reaches trial is if a lawyer for the defense pursues it. That rarely happens so many cases simply disappear.