What’s on Dec? | Episode 13 | Auto theft summit

In February, the federal government heeded auto insurers’ call for a summit to address the rising rates of auto theft across the country. In 2022, Canada’s P&C industry paid out $1.2 billion in auto theft insurance claims, the first time ever it crossed the $1-billion mark.

Bryan Gast, vice president of investigative services with Équité Association, gives his impression of the national summit. The federal government has committed to a detailed action plan this winter, and Bryan suggests what should be included in the plan as it’s being developed.

He will also discuss what happens if there’s a change in the federal government next year, and how 2024 could shape up from an auto fraud perspective.

Audio transcript

Intro: You’re listening to What’s On Dec?, the Canadian Underwriter podcast, focusing on the hottest topics in the P&C community, featuring insights, analysis, and interviews with subject matter experts throughout the year.

Pete Tessier:

Hey everyone, welcome to another edition of What’s On Dec?, the Canadian Underwriter podcast. I’m Pete Tessier here with Curt Wyatt from the Insurance Podcast, and we are dealing with a hot topic today in this episode because we’ve got Bryan Gast from Équité on and we’re going to talk about auto theft. And Curt, that has been a huge topic of discussion for months and months now.

Curt Wyatt:

Pete, auto theft, I think it goes back for decades even, right?

Pete Tessier:

Oh yeah, even longer.

Curt Wyatt:

With respect to this event that we’re going to talk about on today’s interview, but also looking back, I remember when CLEAR came out and auto insurers were really brought up to speed on how the insurance companies were tracking, and now reporting back, where are the things happening? I remember being in the office and having these conversations with clients. They came in and they could grab the CLEAR brochure and take it with them.

Pete Tessier:

Yeah, there’s been tech initiatives and things that go on for a long time, and Bryan’s going to talk a little bit about what happened with the national auto theft summit. We’re going to bring him on, ask him a little bit about what’s the action plan out of this and things that could change with politics. This is a political issue as much as it is an industry issue because there are things at play that are out of industry’s hands, whether the insurance industry or the auto industry, and that’s how these vehicles are getting out of the country, as well. And we will talk a little bit about that kind of thing, too. Curt, the other thing I think is, what’s the future look like? How are they going to address some of this stuff?

Curt Wyatt:

There’s no question. We want things to be tech-friendly. We want life to be easy. We don’t want to have to think about reaching out to unlock our car like we used to, especially when the lock’s frozen in Canada. And are some of these things now becoming an insurance nightmare and are going to drive up rates? And there’s a story to be told, and I think we’re going to get smarter as an industry and everyone who puts these products together, obviously waking up to the reality that some of these, let’s call them, tools we have in our toolbox to make our lives easier, are sometimes costing us more than we realize.

Pete Tessier: 

You know what, Curt? We got so many great questions and things to talk with Bryan about. Let’s bring him in now and get into the meat of this.

Hey, so now Bryan Gast, who is the VP of investigative services for Équité is joining us, as you heard in the intro. That’s our guest in this episode of What’s on Dec? Bryan, thanks for sitting down with us and having a chat.

Bryan Gast:

Thank you very much for having me.

Pete Tessier:

Hey, let’s get into the big topic, and that is the national auto theft summit that just happened. What was your impression? What were the thoughts? What was discussed there? Because this is a burning issue when it comes to auto theft that’s happening essentially across the country.

Bryan Gast:

Yeah, it was great to see, really, a unified discussion with the right players, the right participants. You had all levels of government, you had all levels of law enforcement, you had the manufacturers, you had exporters, you had the insurance industr,y all coming together. I went in fairly optimistic and I came out blown away at the fact that there was that unified approach to not just talking about it but actually making concrete actions to do something about it. So I remain optimistic that good things are ahead.

Curt Wyatt:

That’s super-interesting, it’s Curt here, and there’s no question. We can’t pick up the news and not see something relating to auto theft. Just today I actually read an article where someone tracked their own vehicle with an air tag all the way across to a country in Europe. Knowing that and knowing that you guys are taking this head on, what are some of the things that we should include in the auto theft action plan when it’s being designed? What do you guys see as being sort of the up-front issues?

Bryan Gast:

And one thing that came out loud and clear that although this is a financial burden, $1.2 billion dollars of vehicles stolen in 2022, the resounding theme was the public safety element as well. So people are concerned, they’re concerned with their safety, the crime, organized crime is alive and well in this space, they’re using these crimes to further their criminal organizations and operations, whether it be drugs or firearms. So, it’s a complex problem, and that’s what’s unique about the summit. There was a lot of good discussion as to, it’s not a simple fix, it’s not one organization that’s going to be able to resolve this. So, it’s everybody coming together and that starts right with the vehicle. The vehicles, in my opinion, they need to be harder to steal. It’s been since 2007 when Canada first had immobilizers mandated in all vehicles sold and manufactured in Canada. That standard has not been modernized since.

So the modern techniques of technology that criminals are using to steal vehicles is really antiquated, outdated technology in the vehicles. That’s not to say some manufacturers aren’t definitely taking steps to protect their vehicles, but we can see from other countries when they did a concerted effort where they made the standards some of the toughest in the world, U.K. would be a good example. From a period of time between 1993 and 2016, it dropped significantly and that’s because of the security package that was designed for that particular country. So again, that’s not going to be the silver bullet, that’s just one element. I would say having the vehicles harder to steal would be a great step forward as well as making the vehicles harder to get out of the country where these organized crime groups are profitting from the sale of them.

Pete Tessier:

So, I’ve got some questions about that, Bryan. One of the things that we have in Canada is a thing called I-Press, which is an actual registry of vehicles. So if you’re importing a vehicle into a different province, your insurer registrar can do an I-Press check to find out if there’s any hits on that vehicle. How come we’re not doing that on export? Where’s the holdup there? Because it seems to me… I’ve imported a vehicle that I purchased in the United States, getting it out of the United States is harder than getting it into Canada. Are we doing anything on that front?

Bryan Gast:

Yeah, and that’s a really good point. And there’s been some really good discussions between the United States and Canada to really harmonize and mirror what happens in the states as far as requirements for export, mirroring those in Canada just so we’re not seeing, okay, now we’re going to tighten up in the states, so now they’re going to start shipping vehicles out to Canada and vice versa, making it harder for criminals across the board to get the vehicles out of the country through the whole process. And then yes, they’ll mask their containers and they’ll say it’s not a vehicle that’s contained in the [container] and it’s other merchandise, and there are obviously investigative avenues to pursue that as well. So really a holistic approach when it comes to export.

One of the… Well, not one of the, the biggest reason for stolen vehicles, especially in Ontario and Quebec, but now we’re starting to see in the western provinces, vehicles being stolen and containerized and put on the rails or through trucking lines to the eastern ports. So stopping that flow is a very significant issue and it’s great that you raise that. So, there is work being done to identify the gaps and look for the opportunities to make it harder for these criminals to succeed.

Curt Wyatt:

And you’re building a plan. So Step 1. Getting the plan in action, Step 2, right? But in that timeframe, you’re building out this strategy to get things, like you say, tightened up so that we don’t let these cars leave the country so easily. But what are you seeing as far as rates these days in auto fraud? Are things jumping in the numbers or has it been fairly static as far as, they’re happening, but is it going opposite or getting worse?

Bryan Gast:

Yeah, so when I talked about the 2007 numbers were significant and then when they did implement that technology or the anti-theft devices, immobilizers, to be onboard all new vehicles, it did drop considerably. And then now if you fast forward from 2007, say a decade ago, numbers started to increase. Bit by bit, criminals were finding a technology that could look for vulnerabilities and opportunities to steal the vehicles. That continued year-over-year, and it has for the last decade across Canada. And then you have COVID, you have the supply chain issue, you have the chip shortage, and organized crime found vehicle crimes to be very lucrative. They entered into the space like they’ve never been before, and now you see a significant jump, especially in the last two to three years.

So even from 2021 to 2023, roughly 50% in Ontario, 50% in Quebec, and the West is a little bit different. The reason why the vehicles are stolen out there is different. But again, that trend is changing too. Now we’re starting to see those vehicles that are being stolen for exports. Numbers are still increasing and that’s what’s very timely about all the action that’s being taken right now.

Pete Tessier:

Bryan, I’m an opinionated person at the best of times and I’ve got a whole host of opinions about this. How is law enforcement looking at this? Because there’s a lot of stories right now, and I actually personally know someone in Ontario, in the GTA area, who literally had an air tag in their vehicle and basically pleaded to the police, “Go catch them. Here’s your evidence. Here’s where it is.” And they just didn’t really have the appetite to do anything. Where’s law enforcement’s role in this, and are they going to sort of step up and re-prioritize things where there is a bigger impact on society than, say, handing out speeding tickets?

Bryan Gast:

Yeah. I do applaud law enforcement for the efforts that they’ve taken, and let me explain that. So up until two years ago, many police services in Ontario had re-allocated, re-purposed their dedicated auto theft units, really leaving York Regional Police and Peel Regional Police with the only dedicated auto theft units in the province of the 46 or so police services. And then you have last summer with the solicitor general’s announcement, the government of Ontario, announcing the creation of the provincial auto theft team, which is going to be led by the OPP and participating municipal and regional police services. And I think this is one of the most significant elements of that team, is now they’re going to have the dedicated prosecutors. So they’re not going to be looking at just the individual that’s caught behind the wheel of a stolen vehicle, but the organized crime group that’s facilitating it.

I can say, especially in the last two to three years, I’ve never seen the collaboration and cooperation…We have investigators across the country. We have a team in Ontario, a team in Quebec, a team in Alberta, or in the west, and team in the Atlantic, and they are very collaborative with law enforcement. So to answer your question about the air tags, those are unfortunate. A lot of it comes down to the volume of thefts. There’s thousands of vehicles being stolen, and working to work together through multiple jurisdictions, whether it be at a rail yard or in the CBSA jurisdiction or regardless of what the police jurisdiction is, is identifying those opportunities to work together. And it’s a learning process. I mean, like I said, a lot of it has to do with pure volume. And now, there is a concerted effort to combat auto theft because as I said before, it’s not just a victimless crime. This is not just a property crime, these are serious offences, serious crimes, and again, the stolen vehicle tends to be the gateway to more criminality.

And again, law enforcement’s not going to solve this on their own, manufacturers won’t solve it on their own, the insurance industry won’t, the exporters won’t, but coming together and working together, that’s where the solution is.

Pete Tessier:

So Bryan, one thing I wanted to ask about is you mentioned before there’s some technology that was existing in Europe and that we haven’t updated the immobilizer technology since 2007. From your standpoint with Équité, what would you like to see changed and how fast can it be deployed? Meaning, how fast can the industry, automobile manufacturers, deploy this in their vehicles? And then what do we do with the vehicles that are already out there?

Bryan Gast:

Yeah, I think it’s a combined solution. It’s going to be a solution with combined aftermarket products and OEM. The manufacturers, when I referred to United Kingdom, they had designed and requested and ensured that their security package that went to the vehicles in the U.K. up until that time period, ’93 to 2016, was the strictest in the world. And it made a significant difference. I think it dropped from 600 and some thousand vehicles to 70,000 vehicles, so a significant decrease through that period of time. And that’s the unfortunate part. So now, we do have the older standard. Now it’s up to each manufacturer to decide what they want to put in a particular vehicle. And now you have vehicles that are easier to steal in some jurisdictions than another, and technology hasn’t kept up. So really, there’s three primary methods of theft, and I won’t get into the details of them other than I think it’s important to make people aware of what the methods are just so they can help protect themselves. But it’s really reprogramming thefts, relay attacks, and CAN bus attacks.

So currently, those methods of theft, and really, they’re all susceptible to push-to-start, the keyless entry, keyless ignition vehicles. Those vehicles, under the current standard, aren’t protected. So one would have to go to the aftermarket immobilizers. Again, I always recommend, do your due diligence, do your searching, make sure that the one that you do is extremely reputable, professionally installed. You don’t want to void your warranty in any way. But look for one that does protect against relay attacks, CAN bus attacks and reprogramming attacks. So to answer your question, the older ones is probably going to be a fix through aftermarket, and then I’d like to see some of that same technology put into the new vehicles that makes it harder for the criminals to steal. Right now, 15 to 20 seconds, it can be done, so it’s just too easy to steal a new vehicle right now.

Curt Wyatt: 

And brokers make up the frontline for insurance companies. They’re often the voice that consumers hear when they want to go to and gather information on ways to lower premium, find solutions for better coverage, and what have you. What could you say that the broker channel and the distribution channel in Canada could do to help curb some of these numbers that we’re seeing?

Bryan Gast:

And I think another element that we haven’t talked about yet is the awareness piece is, making consumers aware, making them aware of what vehicles come with a greater risk of being stolen. Make the consumer have the choices to say, you know what? There’s another similar brand that isn’t as susceptible. So not only making them aware of the types of vehicles and the insurance that’s associated to a particular vehicle, but also some of the preventative measures. Because not all of them…We call it a layered approach. Not all of them cost a lot of money. Some do, but again, it’s just a matter…The intention is to slow the criminal down, make it harder for them to steal with different layers.

Pete Tessier:

Bryan, this is awesome stuff. I think you’ve hit on a whole bunch of areas where people in the insurance sector can look at this and help give advice to clients. They can actually have meaningful conversations with their carrier partners and discuss some of the issues in a more sort of level-headed thing as opposed to, how do I keep explaining to my clients why I can’t ensure their automobile or whatever. They’ve got an avenue here to have some better dialogue and then be a part of the solution. So, hey, thanks so much for joining us and we’re really glad to have Équité sort of working with all the different stakeholders in this and sort of being a centralized point to help, basically, vehicle owners feel a little more secure about the purchase that they want to make and already have made.

Bryan Gast:

Yeah, absolutely. It’s a huge investment and that’s our goal. We’re here and designed and mandated to investigate all insurance crime and vehicle theft, vehicle crime, is one of those things so we’re trying to change the curve. Right now it’s going upwards, we’d like to at least flatline it or get it on a downward trend. That’s the goal.

Pete Tessier: 

Yeah, upward trends in insurance are never good. Thanks so much for joining What’s On Dec?

Bryan Gast: 

Thank you very much.

Pete Tessier:

Hey, Curt, that was really interesting stuff from Bryan. And the area I really want to focus on is the awareness piece at the end because I think he makes a really good point. Consumers have to be aware of what’s going on in this and they are, but they also have to be aware of making sound choices with their vehicles about what’s likely to be stolen versus what isn’t, and I think that could be a big play in the future.

Curt Wyatt:

Hey Pete, as mentioned in the intro, CLEAR, which is the Canadian Loss Experience Automotive Rating that’s put out by the Insurance Bureau of Canada, does that. And oddly enough, it’s been around for a while, but yet it, sort of, like anything, these reports kind of fall out a fashion. They become stale and here we are today, bringing it back to the attention of brokers, underwriters, and the industry so that we can start educating the consumer on where the risk is.

Pete Tessier:

Yeah, I think for the brokers and people at the distribution front, and the ones taking on the claims as well, which are brokers too in a lot of cases, there’s some very interesting value proposition conversations to have with clients here around their vehicles and what they’re doing. And again, consumers have to wake up a little bit. You’ve got to start thinking about these things before you buy the car, not after. And if you do have one of these high-theft vehicles, Bryan’s probably given a few things that you can consider when it comes to technology and how to be safe when it comes to protecting your asset, but I think he also really talks about the fact that this action plan, while there, it’s going to take some time and people need to be aware of the threats around them, too.

Curt Wyatt:

For sure, and it’s great to hear that there is now more buy-in on a political level, municipalities, all the various groups that are controlling the safety of our communities have to be aware that this isn’t going away. I mean, we could point fingers and say, ‘This fob did this,’ or, ‘This insurer should cover that,’ but the fact is, we’ve got to be active in our community, as you’re saying, Pete, and do all sorts of things to mitigate loss, whether it be having more response times to bring together, where are these cars going? How are they being shipped away? And he touches on that, and it’s great to hear that it’s at a point now there’s critical mass on this and there’s some attention being given to it.

Pete Tessier:  

Yeah. Conversations are going to have to keep going forward, and it’s nice to know that we have some unification and some direction with industry across the board — law enforcement, political entities, national and regional, manufacturers and insurance — and hopefully we can see a dent in the amount of thefts going forward, as people realize proactive measures really add up to preventing theft.

Curt Wyatt:

As Canadians, we’re a smart bunch. We should be protecting ourselves with smart tools and they’re out there. Let’s get the message out. Let’s use the industry that we have to broadcast this information. And hopefully in the end, see our insurance rate stabilize around things relating to theft. We just need to continue to do a better job and cut those costs so that the premiums don’t continue to go up.

Pete Tessier:

And thanks again everyone for listening to another episode of What’s On Dec?

Outro: Thanks for listening to What’s On Dec?, the Canadian Underwriter podcast.