Insurance fraud affects everyone. You’ve no doubt read that before or heard it, but what does that actually mean?
When a person deceives an insurance company, through deliberate means, to get money they would otherwise not be entitled to get, that’s insurance fraud. Unfortunately, fraud can involve clients, companies such as auto body shops or third party suppliers, clinics, or even insurance company employees.
While very few people actively attempt to defraud the insurance system the costs from that fraud, even attempted, increase the insurance costs for everyone else. Increased costs to insurance companies unfortunately mean they have to raise premiums to consumers.
How do We Fight Fraud
The insurance industry tackles fraud with four different strategies – Prevention, Early Detection, Investigation and Deterrence.
Insurance companies have broadened their anti-fraud departments. Many of the largest insurance companies have increased their in-house investigations teams with investigators coming from policing and adjusting backgrounds. As well, insurance companies have digital teams who work through the internet to uncover fraud. These analysts come from many different career backgrounds.
Insurance companies also work closely with the Insurance Bureau of Canada, the federal and provincial governments to help make changes to fraud laws.
Together, brokers and insurance companies promote consumer awareness of insurance fraud so that we can reduce its costs to the rest of insurance consumers.
An Example of Fraud Fighting
Increasingly, insurance companies are making headlines with some of the fraud cases they’ve tackled. Aviva Insurance recently revealed a campaign in which they worked, undercover, to discover how much fraud is taking place in certain auto body shops. Read more here on this CBC news article. The sting operation uncovered how some auto body shops installed used parts, billing for new parts, invoiced fictional repairs, and even deliberately damaged vehicles in their care to inflate costs.
Property Insurance Fraud can include intentionally setting of fires, both for commercial and personal buildings. The goal to committing arson is to profit from a claim payout by inflating value and condition of a property or the contents of the buildings. This kind of act can coincide with other criminal activities. Even just saying your belongings are worth more than they actually are can be fraud.
Automobile Insurance Fraud can include faking collisions to claim injury benefits from the car insurance company. This can include dealing with unscrupulous health clinics who make fake claims of treatment for said ‘victims.’
Fictitious car thefts also mean increased costs for both insurance companies and their consumers. An insured claims their car was stolen. When the vehicle is recovered there is found to be substantial damage to it, so much so, that it is written off as un-repairable. Sometimes there are vehicle theft rings which steal cars to ship overseas.
What Can You Do to Fight Insurance Fraud?
If you’re in an accident and feel something is amiss, tell the adjuster at your insurance company. Tell your broker about any misgivings you have about a claim situation. We in turn can alert the insurance company to be vigilant in their investigation.
Have any questions about fraud? Please leave it below.
Thanks for reading.
Back to the Spring 2018 Newsletter.