Insurance Fraud in Ontario
Insurance fraud is a big problem in Ontario. In particular, car insurance fraud. It's one of the leading causes of high vehicle premium rates. It is estimated that $236 of each premium goes towards the cost of fraud in Ontario. Statistics Canada estimates there are approximately 9.7 million vehicles in Ontario. That's approximately $2.3 billion per year to cover the cost of Auto Insurance fraud.
"So there's different types of fraud, there's premeditated fraud, there's also opportunistic fraud. So that whole fraud bucket ends up costing drivers in Ontario $1.6 billion, which translates to each and every one who has an insurance policy on average, about $236 a year, that's going to fraudsters. Over the past five years, claims have gone up 21 per cent, and the payout on claims has risen 22.1 per cent." March 2, 2018, interview, Pete Karageorgos (of IBC). (3)
Four common types of insurance fraud
- Inflated Towing Costs, Storage and Vehicle Repair
Dishonest towing companies, vehilce storage facilities, and auto repair shops intentionally over bill Insurers, driving up insurance premium costs. Towing costs are padded, daily storage costs are between $60 and $70+ per day, and in some cases repair shops will create additional damage to vehicles which did not occur as a result of the accident.
- The Blank Form
Disreputable medical clinic staff ask claimants to sign blank accident benefit forms and then charge Insurers for services that were not provided. Or, the clinics might forge the signatures of medical practitioners on forms to bill Insurers for services never rendered.
- Exaggerated Personal Injury Fraud
Unscrupulous Personal Injury Lawyers exaggerate the extent of legitimate injuries, use a previous injury as the basis of a new injury, file false insurance claim information, and file frivolous lawsuits. Common injuries that are faked are whiplash, shoulder injuries, and spinal injuries.
- Staged Collision
In a staged collision, a driver intentionally causes an accident with an unsuspecting driver and makes it look as if the innocent driver is at fault.
How Prevalent is Auto Insurance Fraud in Ontario
FSCO(1) estimates that:
- 10% of people from Ontario ask body repair shops to add additional repairs to a car damaged in an accident.
- 11% of people from Ontario believe it's okay to sign a blank insurance form for medical practitioners.
- 9% of people from Ontario believe adding extra medical treatments is also okay.
- 10% of people from Ontario inflate the value of contents stolen from their vehicle.
7 Ways SIS Can Help You Reduce Auto Insurance Fraud
- Secured Vehicle Storage:
All vehicles involved in an accident where the total damage to all involved vehicles exceeds $2000 require an accident report. During regular working hours, the vehicle owner will be directed to take the vehicle to the designated Collision Reporting Centre (CRC) for the area where the accident occurred. If the vehicle can be safely driven, it must be taken to the CRC within 48 hours after the accident. If the vehicle cannot be safely driven, it must be towed to the designated CRC. If the accident occurs after the CRC has closed, the accident will be attended by a Police Officer who will fill out the accident report at the accident scene. The insured should contact their Insurer or broker immediately after the accident. If the vehicle cannot be safely driven, the Insurer should advise the Insured to have the vehicle towed to the nearest SIS Impound, where it can be stored until the insurance claim is settled.
- Fraud Reduction:
By controlling the final destination of the towed vehicle, SIS prevents fraud by limiting exposure of the insured and their vehicle to unscrupulous tow operators, repair facilities and storage compounds. By limiting contact with this group, there is less chance that the Insured can be given recommendations for fraudulent health care practitioners and personal injury lawyers.
- Reduced Storage Costs:
The average cost per day for vehicle storage has risen dramatically over the last few years. It's common to be charged $60 to $70+ per day. SIS offers daily storage at a reduced rate.
- Easy Access to the Vehicle:
SIS provides easy access to the accident vehicles by the insurance appraiser/adjuster and the Insured (with the Insurer's permission) during regular working hours (8:00 am to 5:00 pm). The Insurer can simply log into our website and make an appointment for themselves or their client to view the vehicle.
- Reduced Rental Vehicle Costs:
SIS reduces the number of days the vehicle will be held in storage. Indirectly, fewer days in storage will result in a reduced number of days the Insurer will be charged for a rental car.
- Better Returns for the Insurance Company:
If the vehicle is determined to be repairable, the insurance company can have it towed at the Insurer's discretion. If the vehicle is a total loss, SIS auctions the vehicle directly from the location of impound with no need for an additional tow.
- Quick Damage Assessment:
When the vehicle arrives at the SIS Impound, pictures are taken of the exterior (four corners), interior and engine compartment. The pictures will be uploaded to our website and will be available to the Insured within 24 hours or less.
Insurance companies need to be tough on fraud in order to deter future schemes and attacks. Secured Impound Solutions has efficient and effective processes in place to accomplish this. The benefits of having a secure system in place that can manage the storage of the insured vehicle can fast track the claim process.
Customers will get their vehicle back quicker, with less hassle, and fraudsters will be deterred due to our company's strong capability to prevent fraud that happens as a direct or indirect result of a motor vehicle accident.
Contact Secured Impound Solutions to schedule an in house or remote presentation to explain this in more detail.
- Fighting Auto Insurance Fraud: What You Can Do
- Insurance Fraud: What You Need To Know About Auto Insurance Fraud In Ontario
- Pete Karageorgos from IBC talks about how to report auto insurance fraud (Mar 2, 2018)