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How the industry is tackling insurance fraud


April 12, 2019   by Jason Contant


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Insurers need to work with regulators and other carriers to help fight the growing problem of insurance fraud, industry professionals say.

Industry statistics show that insurance fraud costs $1.6 billion each year in Ontario alone.

“As government reflects on the challenges within the auto insurance policy and the prices charged to Ontario drivers, we would reinforce that tackling fraud could lead to meaningful savings to customers,” said Tracy Laughlin, deputy senior vice president of claims, Ontario and Atlantic, with Intact Financial Corporation. “We are very supportive of a review of the current regulations that would allow more broad sharing of data between insurers for the purpose of detecting and preventing fraud. The current regulations do not allow for that free sharing of data.”

Laughlin offered her comments on Apr. 8, days before the provincial government released its 2019 Ontario Budget. Among the initiatives announced was that the government would work with the Financial Services Regulatory Authority and the newly established Serious Fraud Office to develop a fraud reduction strategy and modernize the systems that improve the delivery of healthcare benefits, including:

  • Strong anti-fraud measures, such as enhanced data analytics to detect fraud, and new rules on unfair or deceptive acts or practices; and
  • A modern online claims process that lets consumers see how their auto accident benefits are being used, to make the claims process more convenient and help detect and discourage fraud.

Laughlin also spoke to Canadian Underwriter about collaboration between insurers on fraud, several weeks after Aviva Canada and Desjardins collaborated on a fraud case. There are many benefits that come from collaboration, she said, but two in particular stand out. One is that some fraud schemes are quite elaborate and difficult to detect when an insurer simply looks at their own portfolio.

“By reviewing the collective impacts, it allows us to more quickly identify the trends and collective impact,” Laughlin said. “It also allows us to use the knowledge that is available across companies to create strong action plans to deal with these challenges. When companies work in isolation, what tends to happen is that the fraudsters just stop the behaviour with one insurer, which shifts the problem onto the next insurer, rather than solving the problem.”

There are definite challenges around sharing of information, Laughlin noted. “We need to work with government to define regulation around how to share information to allow for proper investigation, while respecting privacy laws,” she said. Laughlin added that she believes there needs to be more focus on fraud prosecution and penalties, as there are “just not enough prosecution resources available to make this a priority.”

Like some other insurers, Intact works with the Insurance Bureau of Canada (IBC) and other members of Canada’s insurance industry. It is one of nine carrier members (some with more than one brand) of CANATICS.

In addition to its in-house dedicated investigative services unit, Travelers Canada is also a member of CANATICS, or Canadian National Insurance Crime Services, said the insurer’s president and CEO, Heather Masterson. The not-for-profit organization uses pooled data analytics to facilitate investigations into suspicious claims, Masterson said. Travelers Canada also works closely with the investigative services division of IBC.

“Insurance fraud is a pressing industry issue that we are monitoring, working with local authorities, and collaborating with industry partners to address,” Masterson said. “We continue to evaluate industry collaboration opportunities where we can add value.”

Laughlin agrees collaboration is essential. “We strongly believe that the industry needs to work collaboratively to address what continues to be a growing problem within the industry.”