The problem of auto insurance fraud in Canada

Did you know that March is Fraud Prevention month? As such, we thought that it would be fitting to talk about a major fraud issue in Canada: auto insurance fraud. Fraudulent auto insurance claims are costing Canadian insurers and individual consumers millions of dollars each year, which only serves to increase auto insurance premiums. In the long term, this kind of activity will have a negative effect on all parties who buy or sell insurance.

How auto insurance fraud happens

You might be wondering; how do people or organizations commit fraud through their auto insurance? There are a number of ways, all of which seize the opportunity of an accident to pump undeserved money out of an insurer. For instance, people may include damage to their vehicle that was present before the collision. Make no mistake, this is fraud. Claiming that this damage, however minor or severe, took place in the accident when it didn’t means that you are tricking or attempting to trick your provider into paying for damages they aren’t responsible for. Another even more malicious form of fraud happens when vehicle owners inflict even more damage to their vehicle after the crash to inflate the value of their claim.

As far as personal injuries go in an accident, people sometimes exaggerate their pain in an attempt to falsely enhance the amount of their settlement or recovery costs. This is technically called personal injury fraud. Receiving payments for lost income while one is fully capable of returning to work, making claims for unnecessary medical expenses, etc., are all forms of fraud in this category.

A common problem

These examples may sound foreign and unlikely to you, but they are more commonplace than we sometimes realize. In fact, claims that an estimated 15%(!) of insurance premiums go toward to cost of covering fraudulent auto insurance claims. That equates to millions of dollars every single year. Wouldn’t it be nice if that cost suddenly vanished? There are ways that we can fight this problem, but it starts with you.

How can you help?

What should you do if you are aware of auto insurance fraud? Contact the insurance provider and provide them with details. It’s okay to be a whistleblower if you’re preventing a crime. If you’re someone who has considered making a fraudulent claim, stop and think about what you’re doing. You’re about to commit a crime, and you are costing other people money by not telling the truth. It’s a serious matter.

In 2017, let’s work together as brokers, insurance providers and customers to prevent auto insurance fraud in Canada and strengthen the insurance industry. This is a problem that we can solve if we are all willing to work together!

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