Canadian Underwriter

This percentage of consumers believe auto insurance fraud is an “accepted practice”

May 28, 2018   by Jason Contant

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Nearly half of customers polled for an Insurance Corporation of British Columbia (ICBC) survey believed that committing auto insurance fraud is an “accepted practice” in B.C., with most saying that claims contain an “element” of fraud.

The survey of 1,373 respondents, released late last week, found that 47% of customers felt that committing auto insurance fraud was an accepted practice in B.C. Seventy-nine per cent also believed that up to half of all claims made with the public auto insurer contain an element of fraud (14% thought the extent of fraud was more than 50% of all claims and 7% said that they don’t know the extent of fraud. Zero per cent said that fraud occurred in no claims).

As well, 54% of respondents said that they have heard stories from other people of someone committing fraud and 17% said that they personally know of someone who has intentionally committed fraud against ICBC.

Insurance industry studies estimate that fraudulent and exaggerated claims make up about 10-20% of all claims costs. For the government auto insurer, that is “potentially adding more than $100 to everyone’s annual ICBC auto insurance bill,” ICBC said in a press release.

Last year, ICBC’s Special Investigations Unit completed more than 16,000 investigations for suspected fraud, of which 54% were found to contain an element of fraud. Guilty individuals have served jail time, paid substantial fines, had their claim denied or reduced, paid for the other party’s repair costs, denied future optional coverage and entered into a restorative justice program.

According to ICBC, the most common examples of fraudulent claims it sees are: exaggerating the extent of injuries or damage to a vehicle, claiming old damage, claiming an inability to work (despite having fully recovered from a crash), excluding a previous medical condition and providing a misleading account of how a crash happened.

In one case, a claimant pursued a claim for injuries sustained in a crash that occurred in Vancouver in January 2017. The claimant provided a statement to ICBC alleging that another vehicle had rear-ended him at a gas station; CCTV footage showed the claimant had actually reversed into the other vehicle. The other driver was pumping gas at the time, and there were no passengers.

In March 2018, the claimant entered a guilty plea of providing a false statement. He was fined $2,000, ordered to pay a $300 victim surcharge and must repay ICBC for the cost of repairing the other driver’s vehicle. ICBC is also considering denying the claimant the ability to purchase optional coverage through ICBC in the future.