Aviva Canada seeks damages against broker employee it says conspired with policyholders for cheaper premiums

Aviva Canada announced Thursday it has begun litigation against a former Mississauga, Ont. brokerage employee who was allegedly conspiring with policyholders to misrepresent themselves to get cheaper premiums.

The owners of KMI Brokers Inc. are cooperating fully with Aviva’s investigation, the insurer noted. It has also endorsed the submission of complaints about their former employee’s business practices to the Registered Insurance Brokers of Ontario (RIBO).

Aviva alleges that the policyholders were coached to provide incorrect addresses and not disclose poor driving histories and that the former employee also provided them with discounts they did not qualify for.

“It is unfortunate that we have to look within our industry for this type of activity,” Gord Rasbach, vice president of anti-fraud management at Aviva Canada said in a press release Thursday.

“But providing insurers with false information, also known as underwriting fraud, is a real issue, and in some cases it is being perpetrated or assisted by those in, or connected to, our industry.”

After investigating two questionable automobile claims submitted under policies written by the former employee, Aviva’s anti-fraud management team detected a number of inconsistencies and anomalies in the applications for insurance.

Together with KMI Brokers, Aviva Canada audited all policies written by the former employee while employed at KMI. All together, Aviva conducted 40 investigations and uncovered 27 policies with misrepresented information.

In total, 19 policies were voided and five policies were cancelled. On average, policyholders were only charged 54% of their accurately calculated premium, Aviva said. If properly underwritten, policyholders should have been paying on average $2,393 more in premiums, according to the insurer.

Aviva Canada has issued a statement of claim against the former employee and  is seeking damages of approximately $200,000, including punitive damages and recovery of its investigative costs.