New tool launched to combat Canadian insurance fraud

CANATICS, a not-for-profit organization created by the auto insurance industry to help fight fraud, launched a tool to help identify suspicious claims on Wednesday.

CANATICS, or Canadian National Insurance Crime Services, analyzes pooled auto insurance industry data using state-of-the-art analytical tools to identify suspicious claims that individual insurers can then investigate, CANATICS said in a press release.

The system was up and running as of Wednesday morning and had begun sending alerts to member insurance companies, which includes Allstate, Aviva Canada, belairdirect, The Co-operators, Desjardins General Insurance, Intact Insurance, Pafco, Pembridge, The Personal, RBC Insurance, TD Insurance, Travelers and Wawanesa Insurance.

“Organized crime rings that stage collisions and fraudulently bill insurance companies should be very nervous right now,” said Ben Kosic (pictured below), CANATICS president and CEO, in the release. “For years many of these criminals have eluded detection by spreading their behaviour across multiple insurers. As of today, they can run but they can’t hide.”

Organized insurance fraud reduces road safety and drives up premiums for everyone. A single staged collision can result in more than $100,000 in fraudulent pay-outs, according to the Insurance Bureau of Canada. A government-commissioned report from KPMG in 2012 estimated that insurance fraud overall costs as much as $1.6 billion a year in Ontario.

CANATICS was created following the release of the 2012 report of the Ontario Anti-Fraud Task Force, which said that “insurers should move aggressively to establish an organization that would pool and analyze claims data in order to identify potential cases of organized and premeditated fraud…”

George Cooke, former task force member and current chair of CANATICS, noted in the release that “organized fraud is an expensive and complex problem that has plagued the Ontario auto insurance system for decades. It was clear that a solution like CANATICS was needed. I’m pleased that through the hard work of the industry, our member insurers, the regulator and government, that the vision has become a reality.”

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Kosic added that organized crime rings routinely involve medical facilities, body shops and tow truck operators. “In one recent case there was even a police officer involved, which demonstrates just how far-reaching and sophisticated these groups can be. We now have an industry-wide solution that is equally sophisticated,” he said.

At the time of its launch on April 1, CANATICS’ membership represented 75% of the auto insurance market share in Ontario. “This critical mass is what makes CANATICS so effective. It provides an industry-wide view that individual insurers could never achieve on their own.”