A new report has detailed why and how much auto insurance fraud is costing Canadians. And the numbers are not pretty. A report by Aviva Canada studied drivers to determine how much fraud is being committed and how it impacts the average Canadian driver. The result is that drivers are being forced to pay an extra $2B annually because of people who commit auto insurance fraud.
The way that insurance works is that every consumer pays a smaller premium to a community pot. As accidents occur infrequently, everyone chipping in a bit covers the costs of those accidents. But when people commit insurance fraud, they extract money from the system unnecessarily. Because of this fraud, it causes honest policy holders to experience increases on their car insurance.
How do Insurers Handle this?
To address this issue, insurance companies go to great lengths to verify claims to the best of their ability. But, the study found that the most common way that auto insurance fraud is committed is through personal injury. When someone is injured in a crash, they can make a claim as a result. The extent of those injuries can sometimes be exaggerated and as such cause such a dramatic fraud upon other Canadians.
What is Ontario doing about Auto Insurance Fraud?
Recognizing the issue with auto insurance fraud, Ontario’s Finance Minister announced reforms. To tackle the issue, they are setting up a new task force called the Serious Fraud Office, which should be up and running by Spring 2018.
He outlined several changes that the Serious Fraud Office will be addressing, and some plans on how to do that. For starters, any accident victim with injuries will be required to visit an “independent examination centre.” There, their injuries will be examined, and a treatment program will be developed. This will prevent people from using the insurance industry as a long term pay cheque when they’ve exaggerated injuries.
The Insurance Act will also be modernized to add “teeth”. Those teeth will protect consumers from fraud, and as such, unnecessary rate increases.
What about the Legal Aspects?
Back in Early December, the Law Society of Upper Canada announced plans for new protections for consumers. If you’re in an accident, and you need a lawyer – in some cases, lawyers overcharge their client. This updated law will help to crack down on these types of lawyers by setting a contingency fee system. It will also be more transparent and fair to consumers.
The changes to the auto industry will benefit consumers and start to tackle this $2B auto insurance fraud. When money is unnecessarily drained from the system, it hurts everyone – and fraud is a crime.
That said, if you believe you’re already paying too much for auto insurance, consider requesting a quote with isure. We can help you compare the rates of dozens of top insurers to get you the best policy, for the best price. Submit an auto insurance request right now and see how much you could save!