Canada’s home, car and business insurers announced the launch of a national insurance crime TIPS line to make it easier for Canadians to report auto theft, insurance fraud, staged auto collisions and other crimes related to insurance. These are reportedly extremely costly crimes that are committed every day – both by organized theft or fraud rings and by ordinary policyholders exaggerating a claim. Either way, the crimes drive up the cost of insurance for everyone.
The recent discovery of a $1 million insurance scam is reportedly proof that tips from the public can make a difference.
It started with an e-mail from one Good Samaritan. Insurance Bureau of Canada (IBC), which will administer the new TIPS line, received a message listing the names of some individuals whose insurance applications allegedly contained false information.
An IBC investigation uncovered a scheme being run out of more than 22 Ontario businesses, including several car dealerships. This scheme involved about 1,800 policies and potentially cost innocent policyholders more than $1 million. Individuals were offering potential customers discounts on auto insurance – in some cases as an incentive to buy a car – and were making customers pay a one-time up-front fee of $300-600. The individuals would then acquire insurance on the customers’ behalf, using bogus information to get lower rates.
Now that the scam has been brought to light, authorities are investigating the individuals involved. Meanwhile, the 1,800 victims, who are each out the $300-600 up-front fee, will probably lose the discount they were expecting.
“But it could have been much worse for these folks if not for the consumer tip we received,” said Rick Dubin, vice president, Investigations, IBC. “Unbeknownst to the victims, their applications contained false information. Had any of them made claims, this could have bogged down the claims process unnecessarily. As innocent victims of this scheme, it’s most likely that they would be covered in the end, but it would take time to sort out the discrepancies on the forms.”
Insurance crime costs insurance companies and policyholders approximately $3 billion a year. This is a conservative estimate. Furthermore, far from being victimless, insurance crimes like auto theft cost lives. Every year in Canada, 20-30 people lose their lives as the result of car thieves trying to evade the authorities; often driving too fast, while under the influence of drugs or alcohol, and showing no regard for the safety of others.
“Most people know that stealing a car or setting fire to a house is a crime,” said Dubin, “but they may not know that lying on an insurance application, exaggerating a claim or faking a car accident are also serious crimes. If you have suspicions that someone is involved in insurance crime, you can make a difference by taking the time to call the national insurance crime TIPS line and providing whatever information you know. In the case of what was happening at these dealerships, you can see that by providing even as little as a name or an address, you can make a big difference.
“When you submit a tip, IBC will work with its member companies and the authorities to make sure the wrongdoers are brought to justice,” he added. “If you are sick of standing by and watching other people cheat while you pay for it, now you have a way to fight back.”
Canada’s home, car and business insurers want Canadians to take the time to report insurance crime. Anyone with information about a possible insurance crime can call the toll-free TIPS line at 1-877-IBC-TIPS (422-8477) or submit a tip on-line at www.ibc.ca. All tips are kept confidential.