Auto fraud getting worse, insurer says

Manitoba Public Insurance Corporation (MPI) is reporting an increase in auto insurance fraud, including false claims for income replacement benefits.

“Disturbingly, the corporation’s special investigation unit is seeing an increase in fraudulent activity,” the province’s public auto insurer reported Friday.

In one case, a claimant said he was unable to work. But it turns out the claimant was actually working full-time in construction and has since been ordered to repay $35,056 in insurance benefits paid after pleading guilty to making a false statement in court.

“While some frauds may be elaborate and highly planned, such as staged collisions or intentional vehicle arson, auto insurance frauds can also be less overt,” MPI noted. “Examples may include exaggerating personal injury, claiming income replacement indemnity when able to work, claiming unrelated or pre-existing vehicle damage, or providing a false or misleading account of how a crash happened.”

Auto insurance fraud is estimated to cost the Canadian industry up to $2 billion a year, Aviva Canada said in a report released in 2017. In that report, the insurer 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.”

Part of the problem is that no law compels insurers to report specific incidents of fraud or data on fraud for the benefit of other carriers, says Gordon Rasbach, vice president of fraud management at Aviva Canada.

Rasbach made his comments during an interview this past March about an undercover investigation conducted by Aviva Canada. The insurer’s investigators posed as motorists who asked for help from tow truck operators and collision repair centres. They claimed their hidden cameras caught some collision repair centres deliberately causing additional damage in order to inflate the charges.

In Ontario, the government recently set up the Serious Fraud Office (SFO), a team that includes investigators and prosecutors. The scope of the SFO includes but is not limited to auto insurance fraud.

That office has great potential to reduce auto insurance costs in Ontario, wrote Kim Donaldson, the Insurance Bureau of Canada’s vice-president, Ontario Region, in a contributed article to Canadian Underwriter this past February.

Auto accident benefits fraud is “a huge business,” IBC senior analyst Kate Ryan said during a presentation at Insurance Analytics Canada Summit in 2017. Ryan noted staged collisions continue to be used to defraud insurers.

A lot of the time people will pay money to get a seat in a car being used in a stage collision, Ryan said at the time. “They will pay the recruiter $200 or whatever to be physically placed in the car because now they can open up an accident benefits claim and basically drain the insurance company out.”