October 17, 2001 by Canadian Underwriter
A newly-released study suggests personal injury fraud could be costing Canadian insurers more than $500 million each year. The study, commissioned by the Canadian Coalition Against Insurance Fraud (CCAIF), estimates that last year insurers paid over $500 million for personal injury claims that contained some form of fraud.
The claims included accident benefit (AB), bodily injury (BI) and personal liability claims under auto and home policies. More that 4,000 claims were assessed and 26% were tagged as probable frauds.
“Opportunistic” fraud, such as overstating the extent of an injury, was the most common form, while “premeditated” acts, such as staged or deliberate accidents, only made up about 1% of the fraudulent cases. Of the provinces included in the study, Ontario had the highest level of fraud at 21-31%, while Alberta was the lowest at 7-12%. Researchers speculate this is due to the low ceiling on personal injury claims in Alberta.
The study was commissioned in light of rising personal injury claims, despite a drop in the number of serious auto collisions, notes Nancy Tibbo, director of the CCAIF. Statistics show that between 1991 and 1998, the number of personal injury claims in Canada doubled.
“Because we now know that fraud is prevalent in the system, we can use this information to work towards reducing the insurance industry’s costs by helping to reduce the number of fraudulent claims,” says Tibbo.
Among the CCAIF’s plans are claims handler training and revisions to its fraud indicator manual.