A former employee of Mississauga, Ont. brokerage is now facing legal action following an investigation that revealed an alleged conspiracy to hide poor driving histories provide incorrect addresses for cheaper auto insurance.
Aviva Canada, announced that it has commenced litigation against a former employee of KMI Brokers Inc., following investigations uncovered a scheme that involved the broker’s former employee conspiring with policyholders to misrepresent themselves to
Aviva Canada in order to obtain cheaper premiums.
“It is unfortunate that we have to look within our industry for this type of activity,” said Gord Rasbach, vice president of anti-fraud management at
Aviva Canada. “But providing insurers with false information - underwriting fraud - is a real issue, and in some cases it is being perpetrated or assisted by those in, or connected to, our industry.”
The policyholders were coached to provide incorrect addresses and not disclose poor driving histories. The former employee also provided them with discounts they did not qualify for.
According to Aviva Canada, the owners of KMI Brokers are cooperating fully with the investigation and endorsed the submission of complaints about their former employee’s business practices to the Registered Insurance Brokers of Ontario.
After investigating two questionable automobile claims submitted under policies written by the accused, Aviva ’s anti-fraud management team detected a number of inconsistencies and anomalies in the applications for insurance. Together with KMI Brokers, Aviva audited all policies written by the accused while employed at KMI.
In total, 17 investigators from Aviva Canada conducted 40 investigations and uncovered 27 policies with misrepresented information. Of those 27 policies, 19 were voided and five polices were cancelled. (continued.)
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It was uncovered that on average, policyholders were only charged 54 per cent of their accurately calculated premium. If properly underwritten, policyholders should have been paying on average $2,393 more in premiums.
Aviva Canada has issued a Statement of Claim against the broker employee, and has taken steps to secure the former employee’s assets pending further order or final resolution by the Court.
Aviva is also seeking damages that amount to approximately $200,000 against the former broker employee, including punitive damages and recovery of its investigative costs.
The impact of Insurance fraud in Canada is estimated at over $1.6 billion dollars annually, and increases premiums for all policy holders.
