March 12, 2018 by Staff
In 2017, the insurer bought 10 cars that undercover investigators deliberately crashed and damaged. The cars were then placed in random locations near provincial highways within the Greater Toronto Area while the investigators waited for assistance.
The investigation recorded the entire process that ensued—from the time assistance arrived at the scene to the repair of the vehicle—and found that fraud was committed in 90% of cases.
An average of 57% of the total invoiced repair costs were found to be fraudulent. Hidden cameras uncovered auto body shop employees intentionally damaging vehicles, billing for new parts when used parts—or no parts—were installed, and invoicing for parts that weren’t damaged in the first place.
In addition, Aviva found tow truck operators billed for services that never occurred, and engaged in other questionable business practices with drivers—such as asking them to sign blank work orders or discouraging them from using Aviva’s accredited auto body shops.
Aviva estimates that auto repair fraud in Ontario costs consumers $547 a year, and that auto insurance fraud as a whole costs Canadians $2 billion annually.
“This amounts to a national scandal,” Gordon Rasbach, Aviva Canada’s vice-president of fraud management, said in a news release. “However, we recognize that not every tow truck operator or auto body shop is fraudulent. As for those who are taking advantage of the system, government and the insurance industry must collectively act against auto insurance fraud by tackling the root causes that have led to a broken and dysfunctional system.”
To address the issue, Aviva is calling on provincial regulators to ban referral fees, prohibit blank work orders, allow discounts to customers who use an insurer’s accredited repair network, force insurers to report all identified fraud and investigation outcomes, and increase penalties for suppliers of goods and services to insurance claims who abuse customers or defraud insurance companies.
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This story was originally published by Canadian Insurance Top Broker.