December 20, 2005 by Canadian Underwriter
Canada’s home, car and business insurers recently released their annual Top Ten Insurance Crimes list, which includes: too many encores; pirate shipping; fender bender fraud; the chop shop king; field of schemes; phantom injuries; too good to be true; persistence doesn’t pay; the invisible workers; and, very bad advice.
The annual list highlights the year’s strangest and most audacious insurance frauds and auto theft cases uncovered by insurance investigators.
According to the Insurance Bureau of Canada (IBC), the list is intended to raise awareness of the most ridiculous crimes concocted by insurance criminals.
“Insurance crime is serious and costly and makes victims of us all.” Rick Dubin, vice-president, investigations, (IBC), says. “A conservative estimate is that insurance crime costs Canadian insurers and their policyholders about $3 billion a year.”
Canada’s P&C insurers have launched a national insurance crime TIPS line in order to make it easier for Canadians to report auto theft, insurance fraud, staged auto collisions and other crimes related to insurance. Tips can be delivered by calling the toll-free TIPS line at 1-877-IBC-TIPS (422-8477) or submitted on the website at www.ibc.ca.
“Too Many Encores” is a scam where a man would step behind a car reversing out of a parking space, bang the trunk with his fist and fall to the ground in apparent pain. Insurers initially settled his first 11 claims, but eventually an adjuster caught the act and after a subsequent investigation, and appearance in court, he was ordered to repay his victims.
“Pirate Shipping” involves one of Canada’s fastest growing exports stolen cars, with around 20,000 being sent overseas every year. The insurance scheme involved a man who tried to cash-in on both import and export ends by arranging to export his brand new high-end vehicle to his home country in Europe and then 90 days later, filing an insurance claim in Canada reporting his car stolen. The plan was foiled as his car had already been seized at a port in Belgium along with two other stolen Canadian cars found in the same container. Investigators, suspicious of a theft report concerning a vehicle that had already spent weeks impounded in Belgium, wondered why it had taken him so long to realize it was missing. So did the insurer and so the claim was denied.
“Fender Bender Fraud” involves the over-billing of repairs to a car that has only relatively minor damage. In this case a car that incurred a scrape to its left front quarter panel came with a bill from the body shop that listed replacement parts including a new front grill and cooling system. The bill was sent to the car owner’s insurance company but the insurer was skeptical. An investigation ensued and an appraiser recognized that the damaged parts that the body shop employees claimed had been removed from the man’s car were actually from another vehicle. The body shop is currently being investigated by police.
“The Chop Shop King” involved a wealthy man who owned a car dealership and body shop. Insurance investigators and police looked into his operations and discovered two chop shops – illegal garages where stolen cars are stripped for parts – and a side business that altered vehicle identification numbers. Police seized 40 stolen vehicles with a cash value totaling $1 million. The owner of the illegitimate businesses was sent to jail to serve a six-year sentence and ordered to pay a $774,000 fine.
“Field of Schemes” was a scheme where a man reported his high-end pickup truck stolen, and subsequently collected $68,000 from his insurer. However, insurance investigators received a tip that led them to a farm owned by the man’s mother and it was there that they found the dismantled truck. The man was selling parts of the truck after receiving his insurance claim. The man was charged with public mischief, fraud and obstructing a police officer.
“Phantom Injuries” is a scam were no victims were actually involved in a car crash, but the owners still filed injury claims totalling over $200,000. The fraud artists had been instructed and recruited by a paralegal. The clinic the “victims” were sent to a clinic for
assessments and treatment of injuries that didn’t exist. The claims were sent in and the scam was panning out until a “victim” confessed.
“Too Good To Be True” involves salespeople at a few car dealerships and other businesses that were offering an insurance special. They were charging $500 – a “finder’s” or “consulting” fee – to arrange insurance with a broker they claimed would save the car owners lots of money on premiums. The scam artists were intentionally putting bogus information on the applications so that customers would be put into a cheaper rate group. However, because the policies were purchased under false pretenses, they were invalid. IBC received a tip that led to the discovery and dismantling of this scam, which involved hundreds of policies and finder’s fees amounting to about $1 million. The insurance company has since offered new policies, based on the correct information, to the duped customers.
“Persistence Doesn’t Pay” involved a women recruiting individuals to stage car accidents and filing false claims. She began signing up neighbours for the fraud but eventually someone she approached with the scam secretly recorded her pitch and she was turned into police and had to face Crown attorneys.
“The Invisible Workers” involved a paralegal who was filing staged accidents to boost the compensation of non-existent workers from a particular firm. These employees who had reportedly been injured and in numerous car accidents were fictional, the paralegal had forged their employment forms.
“Very Bad Advice” is a scheme were a man injured in a collision decided to get some cheap legal advice and assistance from a paralegal. The man signed legal forms without being told what they meant and, subsequently the paralegal negotiated on the man’s behalf with the insurance company without telling the client. The paralegal then forged the man’s signature on the resulting cheque and cashed it. When confronted by the client, the paralegal denied wrongdoing but a trial was mounted and a conviction was made.