How to prevent auto insurance fraud

There are honest drivers on the roads. In fact, a 2021 survey by ValuePenguin indicates that 78% of consumers say they’ve never lied to their auto insurers.

However, 8% have “misinformed” their insurers about the drivers in their households, and 8% have lied about their home addresses. And a 2017 Ipsos poll found that 3% of Ontarians have lied on their auto insurance applications.

“In Ontario, specifically, there’s a lot postal code fraud,” said Chantel Bandura, personal lines account executive with Leibel Insurance Group in Edmonton. “If you live in the [Greater Toronto Area] vs. Hamilton, your rates would be double. People just say they live somewhere else and then they get cheaper rates.”

Clients may also lie about their claims experience, the number of additional drivers and their traffic tickets.

“Tickets are a big one, especially now, because in Alberta we have the distracted-driving ticket, which is now considered a major ticket,” Bandura said. “It’s a decline with a lot of companies — or, if they write it, it’s a really high premium.”

In fact, Bandura had one policy in which the client did not disclose a ticket, despite Bandura asking him several times. Unfortunately for him, the ticket was discovered and his annual premium increased by $1,100.

“The insurance company is the one that pulls the driver abstract once the application is signed — so oftentimes clients will think they got the quote, which means they ‘got away’ with the undisclosed ticket,” she said. But “the insurance company ultimately makes the final decision on premiums once they review everything that has been submitted to them.”

Some clients will call several brokerages. “The next call they make, they don’t tell us about an accident or a suspension they’ve had,” she said. “They learn what to say and what not to say.”

But Bandura has a process to uncover clients’ “non-disclosure behaviour.” First, she collects all the information from the client. “I can get a really good sense of someone telling me things that are probably not factual. It also depends on how quickly they’re telling me this information, or what kind of elaborate story they give me around the question I’m asking.”

Next she’ll cross-reference that information with the client’s AutoPlus report, which provides comprehensive driver information: policies, claims, tickets, cancellations and additional drivers.

Another of Bandura’s clients wanted a quote for his two vehicles. “I asked if he had any other drivers in the home and he said his wife had her own insurance.” However, when Bandura checked the AutoPlus report, there was a third driver, his son.

And, if a driver’s AutoPlus report indicates a cancellation status, ensure you investigate. “Make a call to that [insurance] company to find out if the client owes money. Or ask the client to get a claims experience letter from that company so we can get a full picture of what happened on that policy.”

However, if brokers are simply providing clients with a quote, “there really isn’t a centralized database for brokers to share information back and forth, because it’s just a quote,” said Bandura. “That’s why it’s important that brokers have lots of training, but they also need to listen as much as they talk. Sometimes clients are telling you more by what they’re not saying,” she said.

With 15 years in the insurance industry, Bandura knows what to ask and what to listen for. As for new brokers? “They do get caught on stuff,” she said. “But it only happens once.”

Feature image by iStock.com/SolStock