Following the controversial discovery that several Ontario body shops had committed insurance fraud, an industry expert is reminding both customers and insurers that scams can take many forms.
Insurance Bureau of Canada (IBC) national director of investigative services Dan Service stressed that the cost of fraud comes out of consumers’ pockets.
“It ends up in higher insurance premiums for everyone,” he told CBC News.
Service cited the recent fraud investigation conducted by Aviva Canada, which found that out of 10 auto body shops in Ontario, nine had committed some form of auto insurance fraud. For the investigation, the insurer had purchased 10 cars, which it had intentionally damaged, and then sent the cars for repairs to local body shops in the province. Aviva later found that about 57% of total repair costs it was invoiced for were fraudulent.
IBC’s investigative director stressed that insurance fraud is not an issue unique to Ontario, nor is it something that only happens with auto insurance. For instance, the healthcare and property insurance spaces are also susceptible to scams and overcharging, Service noted.
There is no quick fix for fraud, Service said, and it will continue to cost everyone, even as the authorities work to root out charlatans. He explained that insurance companies have to put their own money into investigating a claim it suspects to be fraudulent; this investigation process also slows down coverage for genuine customers, hurting them in the process.
Although insurers would ideally investigate each and every claim they invoice, they simply do not have the time and resources to do so every time – especially if they have to handle numerous claims.
“If they have to choose between looking at a claim that might be somewhat suspect and making sure that their customers are taken care of, they often will choose the second course of action,” Service pointed out.
Service advised that consumers can do their part in the fight against insurance fraud by keeping a close eye on claims made on their behalf by contractors.
“The more that people are aware that this type of behaviour happens, the more attention they pay to the bills that are submitted on their behalf, the less opportunity there is for this type of fraud to be undertaken,” he said.
