Many find that driving a car is essential to how they live. Whether it’s because they need to drive themselves to work or to complete errands, many have grown extremely dependant on their vehicle. But, to legally drive on Ontario, each driver must have valid Auto Insurance. Whether the sole purpose is to protect their financial liability if they’re involved in an accident, to help them cover expenses if their car is damaged or even to provide financial support if their car is stolen, there are many reasons for why it’s mandatory to have auto insurance. But what would happen if you’re using your coverage to repair damage, and you notice there may have been some fraudulent activity happening with the auto body shop you used? Recently Aviva Canada was notified of a situation like this and wanted to look further into the claim.
What Aviva Found
Aviva Canada’s investigation began with a simple customer complaint from a Toronto driver. The driver claimed that the auto body shop who was responsible for repairing his minor fender bender deliberately caused more damage to the vehicle so they could charge the insurance company more. As fraudulent claims account for $2 billion per year in Canada, Aviva decided to look into the complaint more and eventually began an investigation.
Project Bumper was a carefully documented investigation that was carried out throughout 2017 and involved ten vehicles that Aviva purchased. Each car was intentionally damaged and randomly left on the side of highways around the Toronto area to appear as if they were just involved in an accident. Undercover investigators and hidden cameras in the cars were used to see what was happening within the industry and behind the closed doors of auto body shops.
Fraud was identified in 9/10 cases. This not only included tow truck drivers invoicing insurance companies for services they didn’t provide, but also auto body shops that caused intentional damage to increase invoices, wrongful billing for repairs or installation of car parts, and billing for services that did not occur. In fact, 57% of the total repair costs that were billed to Aviva were deemed fraudulent.
How Does This Affect You?
Auto repair fraud costs Ontario $547 million per year. With higher invoices for insurance companies to pay and a number of those claims being fraudulent, it’s clear to see that it could force many insurance companies to increase their premiums for everyone. In fact, many drivers in Ontario have seen their automobile insurance increase up to 13% this year. Apart from the financial strain that auto fraud puts on insurance companies and consumers who have to find ways to afford the rising costs, it also brings distrust for drivers who are looking for legitimate businesses to repair damages.
What Can Be Done?
Fraudulent claims have always been a concern for those within the insurance industry, but with Aviva’s investigation becoming public, it’s clear to see that auto insurance fraud is a more significant problem than anyone anticipated. Luckily, Aviva has created a 5-point action plan for insurance companies to use to proactively fight against the root causes of fraud;
Ban referral fees as they benefit third-party suppliers rather than consumers.
Prohibit suppliers from asking consumers to sign blank work orders.
Provide discounts to consumers who agree to use an insurer’s accredited business for repairs.
Force insurers to report identified fraud and share data regarding it.
Increase the penalties for those who are accused of insurance fraud.
While it’s necessary for insurance companies to be aware and fight against insurance fraud, there are still things that consumers can do to help;
If you suspect fraudulent behaviour, report it to your insurance company.
Keep an eye on the claims that are sent to your insurance company by your auto body shop.