More Aggressive Fraud Needs Stronger Response: IBC

IBC lobbies for joint task force; industry help in curbing fraud.

The driver making a left turn didn’t know what hit him. He had the right of way, a clear roadway, and ample time. But another car charged into him–“gunning” at him, according to the driver–and once the dust had cleared, everyone in the other vehicle claimed injury.

Incidents like that are part of the changing nature of insurance fraud–especially in Ontario–according to the Insurance Bureau of Canada (IBC), which is looking for help from the provincial government, insurers and brokers with its anti-fraud efforts.

The bureau wants the Ontario government to back a joint task force–one that includes police, insurance investigators and government representatives–to address more aggressive fraud rings that extend from accident stagers and planted witnesses to “medical mills” and dishonest rehab clinics. It also wants insurers and brokers to be more vigilant in looking for claim red flags–all in an effort to bring down the estimated $10 million fraud price tag.

Fraud rings are becoming more sophisticated, says Rick Dubin, the IBC’s vice president of investigative services. Where rings once kept staged collisions between their own members, they’re now purposely colliding with other, innocent drivers, he says. Though the volume hasn’t increased, he says the new tactics “are placing innocent drivers at risk.”

Beyond auto reforms

And though recent auto insurance reforms in Ontario will help dissuade some fraud rings, they won’t be enough to make a real dent. “Governments need a more aggressive approach to clamp down on this,” says Dubin. “They [organized rings] are reactive, innovative and will find ways to get around new regulations.”

He also points to long delays in bringing fraud cases to court as another hurdle. “Too many cases are getting thrown out.”

The bureau wants a joint task force modeled on ones at work in Massachussetts and New Jersey, where the approach has closed down ring-related rehab clinics.  “It’s been effective,” Dubin says. “We want this to take place in Ontario.”

A role for brokers

In a recent memo to insurers, the bureau warns insurers of more aggressive fraud tactics–there were eight to 10 suspected staged accidents in the Greater Toronto Area (GTA) alone in recent months–which are often part of larger crime rings dealing in drugs or guns. “We want insurers to be more aware,” says Dubin.  “It might look like someone’s at fault, but there might be something else going on.”

He points out that both insurers and brokers can look for certain signs: many staged accidents involve relatively new policies, older, rented cars and many occupants claiming injury. Brokers are in a unique position, he says, since they often get the first report of a claim.

“There are things they could quickly ask insureds, [and the answers] would raise red flags,” he says. “They can [then] highlight areas for insurers.”

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