We hear a lot about insurance fraud and how it costs the insurance industry in Ontario $1.6 Billion annually. How does fraud affect insurance premiums? Insurance is the pooling of money by the many to pay out the claims of the few. But, with fraud those few claims could be more costly than they should be and this results in higher premiums for everyone. People are frustrated with the high costs of insurance and here’s our way of showing you what the insurance industry and the Ontario Government are doing to fight insurance fraud.
Tow Trucks – There are a few tow truck operators who taint the whole industry. These operators collude with vehicle storage and body shop operators and intimidate or coerce those in accidents into allowing them to tow the damaged vehicle. They gouge consumers by storing the vehicles for excessively long periods and charging exorbitant amounts for said storage and sometimes without revealing where the vehicle is located. The Government of Ontario has passed a bill to curb towing costs and to enforce licensing and service standards on all tow truck operators.
Rehabilitation Clinics – There a number of clinics who take advantage of the auto insurance system in Ontario. These clinics file huge amounts of paperwork to insurance companies alleging treatments for fictitious injuries. The Insurance Brokers Association of Ontario has long pushed for a crackdown on these kinds of fraud and now we’ve begun to see results. One clinic was found guilty of participating in staged auto collisions and was ordered to pay $200,000 in fines and another was ordered to pay $609,000 in restitution. Click here for a Globe and Mail article.
Staged accidents – Unfortunately car crash scams are not going away. These incidents may be faked entirely or choreographed to look real, but not result in any real injuries. Often times these fake crash perpetrators work with rehab clinics to further bilk the system out of money. The sophistication of this kind of fraud is increasing dramatically – forged doctor’s signatures, organized crime activity, and kickbacks to those involved in an accident to claim more severe injuries. How is the insurance industry fighting this kind of crime? There is now a dedicated team of 50 investigators who focus on auto-insurance crime. And now courts are fighting back with longer prison times and bigger fines. Here’s a great CBC article which also talks about the warning signs, or red flags, of a scam.
Related Read: Think You're Safe From Fraud?
What can you do?
If your car is damaged in an auto accident find out where your insurance company’s preferred collision shops are located. These repair shops already have an excellent relationship with the insurance company and usually provide guarantees on their workmanship. Simply call your broker and ask about your insurance company’s preferred repair shops.
Related Read: Why is Your Car a Write-Off? And What Happens Next?
Report any suspicious incidents. When you speak with your adjuster make sure you tell them as much as possible about the accident. They are there to help and defend you in case of a trial. But, when in doubt call the police and have them come to investigate if you suspect a fraudulent crash.
Have any comments? Do let us know below. Thanks for Reading.
Click Here to go back to the Fall 2014 ProvErb Newsletter.