Why an insurer invites mandatory fraud reporting

Insurers in Canada should have no choice but to report to fraud to law enforcement and to industry peers, be it is claims for healthcare services that were not provided or bills for repairs that were never done, an Aviva Canada official suggested Thursday.

“The provincial regulators of insurers need to compel the insurers in their province to act on fraud and that includes the reporting of data on fraudulent activity for the industry’s benefit,” said Gordon Rasbach, vice president of fraud management at Aviva Canada, in an interview.

“Insurance companies are under no oblation to do anything about fraud,” Rasbach added.

Aviva released Thursday Crash, Cash and Backlash: Aviva Fraud Report 2017, which includes results of a survey in which two in three respondents said they “feel that cracking down on fraud would reduce their current auto insurance premiums.” That survey is based on interviews of 1,502 Canadians conducted in October by Pollara Strategic Insights.

The report estimates auto insurance fraud up to $2 billion every year.

“Each [insurance carrier] decides on its own what it’s going to do about the fraud problem,” Rasbach told Canadian Underwriter. “So, the regulator needs to follow the models which are in many other countries, but do not exist here, where they need to regulate insurers to do something about fraud.”

Regulation would help the industry understand that for all the honest consumers out there, there may be dishonest ones who start skipping from company to company, Rasbach says.

Aviva said Thursday that 77% of survey respondents “are supportive of government agencies and law enforcement allocating more time and resources to policing and prosecuting Canadians who have submitted fraudulent claims.” The results are considered accurate within plus or minus 2.5 percentage points, 19 times out of 20.

The provincial governments need to provide more resources to “the public investigation, the public prospection of these frauds when they become known,” Rasbach suggested. “Insurance companies out there investigate fraud. Quite often they will bring them to different public agencies and they are not always resourced appropriately.”

In its report released Nov. 23, Aviva suggested some healthcare facilities “coach claimants to exaggerate injuries to take advantage of accident benefits that they then take a percentage of for their services.” Other healthcare providers “have unwitting patients sign blank treatment orders that they then submit to insurers to obtain payment for services that were never provided.”

Meanwhile, some auto repair firms “exaggerate the damage to vehicles or even create it themselves, allowing them to pad invoices and bill for parts that were not required or used,” Aviva said.