Fraud Prevention


Insurance Fraud is a ‘Hidden’ Crime

Few people talk about it & strongly disapprove of arson for profit and bogus claims.  Less aggressive fraud, such as inflating a claim gets mixed reactions. To qualify as a fraud, a claim usually must be grossly exaggerated.

Extent of Fraud

10-15% of insurance claims in Canada are fraudulent. Insurers pay more than $1B a year in fraudulent claims. 85% of consumers pay extra premiums to cover fraudulent claims. This does not include other possibly fraudulent transactions that cannot be quantified. e.g., cost of improper rating because underwriting information has been withheld. True costs can never be precisely determined.  Insurance fraud has attracted professional criminals & opportunists.

Effects of Fraud

It is often said that insurance fraud is acceptable because there are no victims. The “victimless” crime is the wrong way top look at things. Fraud affects everyone, by:

  • Death or physical injury to innocent victims, firefighters, police, etc.
  • Indirect economic consequences from higher premiums.
  • Emotional and psychological effects of fraud on victims.
  • Economic loss through direct physical damage.
  • Economic loss as fire departments, police and other public services are used.
  • Indirect economic losses to enterprises because their clients have suffered damages.

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