Canada

Fraud 'prevalent' in auto insurance claims: study

A study by the Canadian auto insurance industry and consumer groups has found "elements of fraud" one in four personal injury claims. Insurance companies warn this has meant higher premiums for drivers.

The Canadian Coalition Against Insurance Fraud commissioned the study by the business school at St. Francis Xavier University in Antigonish, Nova Scotia.

"We know that the number of personal injury claims has been rising in Canada even though the number of serious automobile collisions has been falling," said Nancy Tibbo, Director of the Canadian Coalition Against Insurance Fraud, in a news release.

According to the coalition, there were 75 bodily injury claims per thousand collision claims in 1991.That figure had soared to 163 in 1998.

The CCAIF was formed in 1994 by private and public auto insurers and consumer groups.

Fourteen public and private insurers in the Atlantic provinces, Ontario, Manitoba, Alberta and Saskatchewan took part. Researchers investigated 4,066 insurance claims that had been paid out.

They found:

  • 26 per cent of personal injury claims had "elements of fraud"
  • opportunistic fraud was the most prevalent exaggerating the extent of one's injury
  • premeditated fraud was less prevalent staging an accident
  • fraud was more widespread in major cities and towns

The study also found the cost of fraudulent claims was the highest in Ontario and lowest in Alberta.

"In Alberta, between seven and 12 per cent of personal injury claims paid out by insurance companies are fraudulent, whereas in Ontario, the rate rises to between 21 and 31 per cent," said Barry Wright, one of the researchers for the study.

Wright says that's because there's a lower ceiling for benefits in Alberta.

Tibbo says the study gives credence to what the insurance industry had suspected for some time but didn't have the evidence to back up.

"Increasingly, automobile accidents are becoming more expensive for the insurance industry," Tibbo said.

"Because we now know that fraud is prevalent in the system, we can use this information to work towards reducing the insurance industry's costs."