March may have been fraud month, but the battle against fraud needs to be waged year-round.
Insurance industry figures show fraud drains about $2.6 billion from insurers each year, and costs the average Canadian an extra 10 to 15 per cent in increased premiums. And it isn’t just insurance that is being targeted by fraudsters. According to the RCMP’s commercial crime branch, mass marketing fraud costs Canadians $10 billion each year.
But for insurance, the creeping toll of fraud on business can quickly add up to tens of thousands of dollars for just one accident.
According to a short video on the
Insurance Bureau of Canada website,one simple fender bender turned into a whopping $65,749 through exaggerated claims. A simple accident ballooned in claims costs, with $231 for towing; $691 for car rental, $2,424 on collision repair, $6,000 for housekeeping; $9,275 for health care; $17,328 for rehab; and $29,800 for income replacement benefits.
A lot of money, for what started out as a minor accident with minor damage.
The latest trick used by fraudsters is what is now known as ‘synthetic fraud,’ with thousands of driver’s licences with fake names currently circulating in Ontario alone, costing up to $1 billion a year. It is a scheme that procures new and genuine credit and identification cards using false names.
Can it be stopped?
As soldiers on the front lines against fraud, brokers need to be ever-vigilant to detect fraudulent claims before they are passed along to the insurer. Although fraudsters are becoming more intricate and clever in how they bilk the industry, these scams can be revealed through new technologies. (continued.)
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“A few simple additional questions by a skilled insurance broker can deter fraud from occurring,” says Alex Walker, director of claims relationships at RSA Insurance. “If something doesn’t look right when you get a claim, take the time to ask the extra questions that need to be asked. Insurers still need brokers to vet their clients and watch for irregularities.”
Although fraudsters are becoming more ‘tech-savvy,’ brokers have better tools at their disposal to detect and uncover fraudulent claims.
Tools like the one being developed by RSA both speed up the identification and investigation of fraud, and help to prevent insurers from paying fraudulent claims.
“The tool RSA is bringing online creates complex sophisticated networks among people and entities; it will then search those networks for indicators of potential fraud,” says Walker. “An indicator that something is wrong might be revealed when the same claimant is liked to multiple claims, or there are a high number of similar claims within the same network of people and entities.”
But the first line of defense is the broker – and it is only through vigilance and asking those questions that will uncover and deter a lot of the fraud that hurts everyone.
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