Canadians paying more than $2 billion for auto insurance fraud: Aviva

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Canadians are on the hook for over $2 billion each year thanks to auto insurance fraud. This discovery comes courtesy of a new Aviva investigation designed to determine the impact of auto repair fraud on insurance consumers highlights the urgent need to reform the auto insurance system.

Through this investigation, Aviva estimates that auto repair fraud across Ontario costs consumers approximately $547 million annually. A year-long secret operation by Aviva’s fraud investigation team set out to discover what really happens during the auto repair process when auto body shops and tow truck drivers encounter vehicles involved in collisions on Ontario’s roads.

Throughout 2017, Aviva purchased ten cars which investigators and automotive experts deliberately crashed and damaged. Experts retained by Aviva carefully examined and assessed each car to calculate the actual extent and cost of repair.

Equipped with hidden cameras, the damaged cars were positioned near provincial highways at random locations in the Toronto area to simulate collisions. Undercover investigators posing as drivers equipped with recording equipment waited for assistance. The investigation recorded and tracked the entire process from the time assistance arrived at the collision scene, until damaged cars were repaired, and invoices submitted.

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An average of 57% of total repair costs invoiced to Aviva were fraudulent.

Here’s what was discovered:

• Additional deliberate damage: Hidden camera footage caught auto body shop employees deliberately causing damage to cars.
• Wrongful billing and repairs of car parts: Auto body shops billed for new car parts, but installed used parts, or did not replace the parts at all. Additionally, parts that were not damaged were itemized on the final invoice as repaired.
• Billing for services not provided: Tow truck operators invoiced Aviva for towing and storage services that did not occur.
• Consumer abuse: Tow truck operators offered incentive for tips on accidents requiring towing services, discouraged drivers from using Aviva’s accredited auto body shops, towed vehicles without proper permission and asked a driver to sign a blank work order.

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In Ontario, Aviva is pleased to see progress on implementation of The Marshall Report and the Serious Fraud Office, but more needs to be done.

For years, insurers have suspected fraudulent activity coming from the automotive repair industry. Aviva believes provincial regulators should have a clear mandate to regulate the insurance industry to identify, deter and prevent fraud.

To that end, Aviva is calling for a 5-point action plan from government to:

1. Ban referral fees to take unnecessary cash out of the system (these fees benefit third party suppliers but not consumers).
2. Prohibit blank work orders to ban any supplier from asking consumers to sign them.
3. Allow discounts to customers who agree to use an insurer’s accredited repair network.
4. Force insurers to report all identified fraud and investigation outcomes so that data is shared.
5. Increase penalties for suppliers of goods and services to insurance claims who abuse consumers or defraud insurers.

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Insurance fraud is helped by many drivers who see the financial incentive when auto body shop owners tell them they will absorb the deductible, that is just part of the fraud.

In many instances, the insured can collude with not just auto body shop owners but with massage therapists and physiotherapists who go on to make claims on their behalf. -CINEWS

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