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Auto insurance fraud is everyone’s problem

by Frank Romeo
This post originally appeared on the Trillium Automobile Dealers Association website ( and the Toronto Star

Last month was Fraud Awareness Month in Canada, which shone the spotlight on an issue that continues to frustrate provincial governments, insurance companies, law enforcement agencies and consumers.

Auto fraud is big business in Canada, particularly in Ontario where $1.6 billion per year is paid by insurance companies to cover fraudulent claims.

While insurance companies pay for fraud, it is consumers who ultimately underwrite these costs in the long run with increased insurance premiums.

One of the most prevalent and costly forms of auto insurance fraud is staged accidents. The staging of accidents is often part of sophisticated a criminal ring involving salvaged vehicles, phony medical clinics, towing companies, and complex paper trails.

Efforts to combat auto insurance fraud are working. According to the Insurance Bureau of Canada (IBC), there have been notable successes of late. The Financial Services Commission of Ontario (FSCO) has issued 84 charges relating to false insurance claims.

York Regional Police have issued charges against individuals identified as “current or former owners, principals, managers or key medical or legal service providers…or facilities alleged to have generated suspected false insurance claims.”

Several years ago, the Toronto Police Service, IBC and crown prosecutors formed a task force called Project 92 to investigate a staged auto collision ring. Project 92 eventually led to the dismantling of a large criminal ring and led to dozens of charges and convictions.

In 2001, the Ontario government formed the Ontario Auto Insurance Anti-Fraud Task Force so that stakeholders and governments could review issues and recommend solutions.

Last fall, the Task Force issued a Report that contained recommendations meant to reduce auto insurance fraud in Ontario. The recommendations included the licensing of health clinics that treat auto insurance claimants; the licensing of the towing industry; educating consumers about fraud; and enhanced resources for FSCO for investigating and combating fraud and abuse.

These recommendations are certainly a step in the right direction.  The Anti Fraud Task Force and other high profile initiatives are important in addressing this perennial problem through education and awareness campaigns.

As effective as education and awareness campaigns are, however, I believe that all consumers – car owners and operators – have a role to play in combating auto insurance fraud. The FSCO website contains some specific recommendations for consumers in protecting themselves from auto fraud.

These include:

·   Use a licensed insurance company, agent or broker when buying auto insurance.

·   Collect as much information as possible at the scene of an accident using a camera or cell phone if it is safe to do so without confrontation.

·   File an accident report with a Collision Reporting Centre – even if the accident is minor – to ensure there is a legally documented description of what happened.

·   Be suspicious of any referrals at accident site. Fraud collaborators often recommend auto body shops, storage facilities and health and legal professionals.

·   Refuse to sign blank forms in advance of receiving any services or health care treatment related to your accident.

·      Demand detailed repair and medical bills for any goods and services related to an accident and review them carefully.

If anyone suspects a case of insurance fraud, they can report it to Crime Stoppers at 1-800- 222-8477.  If a tip helps police or an insurance company charge someone who is committing insurance fraud, the person providing the tip may be eligible for a cash reward.

Fighting auto insurance fraud and lowering auto insurance premiums is a laudable goal that will continue to require time, money, resources and commitment at all levels of government, law enforcement agencies and from the private sector.

With greater involved on the part of car owners and operators, we can put a dent in this fraudulent activity for the benefit of all Ontarians.

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