While fraud is a major problem for the Ontario and Toronto auto insurance market, sometimes prosecuting false claims is wrong. For example, criminal charges brought against a Toronto man accused of selling fake auto insurance have been dropped.
The Toronto Police Service brought charges against Min-Hoi Yau in April 9, 2015. The authority believes he had committed “fraud under $5,000, uttering a forged document and possession of proceeds of crime.”
Yau has now been cleared of all charges. Speaking to Canadian Underwriter, his legal team said that Yau had successfully proven that he was out of the country when the alleged incident was said to have taken place.
Auto insurance fraud in Ontario
Toronto is subject to the highest average auto insurance rates in the country, some 36 per cent higher than anywhere else. Aviva Canada said in April, 2016 that is has now discovered 50 different methods that can be used to defraud the company and along with other insurance providers in Canada promised to clamp down on fraud.
Companies have set up dedicated “crack teams” within their organizations whose sole purpose is to root out fraud and make sure that it does not go unpunished. It is a much needed step in the right direction as statistics show that at least 15 per cent of all insurance claims go to fraudulent behavior. This impacts normal premiums negatively as $225 of an average premium of $1500 is spent on paying out fraudulent claims.
While the police are taking more action, there is no specialist branch of law enforcement that deals with insurance fraud in Canada, so the private companies and Insurance Bureau of Canada are left to try and deal with the problem themselves.