Canadian Underwriter

Insurer pushing for new auto fraud laws

December 5, 2018   by Greg Meckbach

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A major insurer is calling for new laws prohibiting various forms of auto insurance fraud in Ontario.

“As an industry we need a new set of provincial offences that will allow for the efficient and effective prosecution of fraud,” said Chris Lang, senior manager of fraud operations for Aviva Canada, in an interview. For example, the government should consider making it a provincial offence to knowingly present a false insurance claim, he said.

Fraud is already a federal criminal offence in Canada, but Aviva is calling for non-criminal provincial offences. Examples of provincial offences including Highway Traffic Act violations, workplace safety infractions and discharging contaminants into the environment.

In Ontario, most provincial offences are either absolute liability or strict liability offences. Unlike a Criminal Code offence (such as theft or assault), with a strict or absolute liability offence, the prosecutor does not have to prove to the court that the person accused of the offence had a “guilty mind.”

If a person is charged with a “strict liability” offence, the accused can defend himself or herself by proving that they took reasonable steps to avoid the act.

Aviva is not specifically saying new provincial fraud offences should be strict or absolute liability. But these new provincial offences could have “a burden of proof that is perhaps slightly lower or less sophisticated than the criminal burden of proof, which is quite high,” Lang told Canadian Underwriter Tuesday. “The idea is really to call out those willful and intentional acts to deceive insurance companies to obtain a financial advantage – and in so doing, to financially disadvantage the broader pool of consumers out there.”

Examples could include altering or forging a document in the context of an insurance claim, “perhaps to increase or ensure your entitlement to a higher settlement amount” Lang said.

Another example could be rate evasion, which is “using false information like a false address in your auto insurance application in order to lower your premium.”

The insurance industry needs to “get together to talk about solutions, how we can work with the government, work with regulators, work with the police and work with front line consumers to make meaningful changes,” Lang said.

Aviva estimates that auto insurance fraud costs the Canadian industry up to $2 billion a year.

It is not “realistic” that the criminal justice system can adequately deal with auto insurance fraud, Lang suggested. “Currently, only a handful of fraud charges related to insurance are laid by the public authorities – like the police – each year and perhaps only a subset of those actually result in a criminal sentence. The police and crown attorneys simply don’t have the resources to attack fraud on top of all the other types of crime on their plates.”

Three in four (74%) of respondents in a recent poll commissioned by Aviva said  they would support “a new set of provincial insurance fraud offences,” Aviva said Tuesday in a release.

The survey of 1,500 Ontarians with an auto insurance policy was conducted online in October by Pollara Strategic Insight. The results are considered accurate within plus or minus 2.5 percentage points, 19 times out of 20.

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4 Comments » for Insurer pushing for new auto fraud laws
  1. Piero Tiseo says:

    We should not forget that creating more laws does not make the criminals more responsible or less criminal.
    The article would have been much more credible with statistics and comparatives from different areas( US/Canada Australia elsewhere). Not to mention bodily injury versus property damage.
    There will always be those that try, any way they can, to defraud insurers. What should be closed looked as it repeat offenders. And, the system that supports them.
    Insurers are not completely innocent in the process, there are abuses. Not all insureds have the funds to go to the supreme court, yet all companies have the necessary resources to do so.
    There should be more third party independent mechanisms, we cannot rely on the IBC as it is a mouthpiece of the industry. And it does not speak with a clear independent voice.

  2. Scott says:

    The government could hasten the arrival of the promised crown attorneys to prosecute more insurance fraud!! In the meantime, an easy road to go down would be to follow in the same path as DUI charges, and family responsibility debts and publicly name with details, court actions against other drivers or homeowners. The courts are overwhelmed so most law suits are negotiated settlements and too many are nothing more than a shakedown pitting court costs vs the cheaper option of settling the matter. If a neighbour sues a neighbour, the neighbourhood should know. That may very well cut down on the number of ridiculous claims that would be an embarrassment if the plaintiff became publicly known. It also wouldn’t hurt to have some measure of accountability on the personal injury lawyers whose mantra of “you can sue anybody for anything” is not in the public interest. The legal approach of lets throw this against the wall and see if it sticks has very real costs and causes very real harm.

  3. Martin says:

    Well said Piero. Also, if I’m reading this correctly Aviva is pushing for criminal code offenses, wants the burden of proof to be lessened and mens rea to be thrown out of the window. It’s not like they have any vested interest in the claim….. hmmmm wouldn’t want to be a client of theirs.

    Law enforcement have to adhere to strict rules and regulation in how they perform their investigative duties and at a minimum have to ensure their compliance with the charter of rights which states every Canadian has a right to protection against illegal search and seizure. We all know fraud is being committed against insurers and if they follow the correct steps and procedures can bring their files to a law enforcement agency. The law enforcement agency can review the file to ensure its correctness and lay the charges necessary and if warranted. The law enforcement agency has no skin in the game and will only move forward if the evidence is bountiful.

    Currently the insurance contract is a civil one where insurers can use the contract to their advantage and deny an unmerited claim on the balance of probabilities. Perhaps Aviva should read the contracts before speaking out about changing the law in their favour

  4. Kal Haikola says:

    The gate swings both ways: What about insurance companies inflating mileage driven figures reported by insureds in order to increase premiums for their premium leakage/ premium enhancement initiative.
    This is done upon policy renewal , showing a higher annual distance driven than last year although nothing has changed. If you notice it and complain, they will say they got the figure from Carfax. whereas they did not even request a Carfax report. Once caught they adjust your premium to a pre-calculated figure, no argument. IF you don’t catch the scam you will be out the money. Check your policy to see if your kms. driven has been changed by the insurer. Is this fraud? or civil fraud?

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