Insurance fraud is adding directly to what Canadian consumers pay for coverage every year – and the cost is not small, according to Laura Doddington (pictured), executive vice president of retail at Zurich Canada.
"The industry estimates suggest that fraud's adding more than a billion dollars a year to premiums in Canada," Doddington said. "That's a real cost that ultimately gets felt by customers, which is why tackling it matters so much."
She said the problem is being compounded by a vehicle repair landscape that is becoming more expensive, more specialized and harder to staff.
Doddington said the fraud runs across every level. Organized crime drives auto theft and staged collisions. Individual policyholders misrepresent information on applications. And ghost broking – where fraudulent intermediaries sell fake or invalid policies to unsuspecting consumers – continues to be a persistent challenge across the industry.
"There are all sorts of those things both at the organized fraud ring level and also at the individual level," Doddington said. "And you add them up and it comes to a really large number."
But fraud is only part of the cost pressure. Doddington said the vehicles being insured today are fundamentally different from those on the road a decade ago, and the economics of repairing them have changed with it.
"Just think about how much more complicated a car is today than it was 10, 20 years ago," she said.
What used to be a straightforward repair has become an expensive, time-consuming process that requires specialist equipment and training.
"A minor thing like some bumper damage, for example, that used to be very cheap to repair and now it's full of sensors," Doddington said. "All of a sudden this repair becomes expensive and complicated and needs specialists and takes time."
She said that inflation – both the general economic kind and the structural kind driven by vehicle technology – is running through the auto insurance system and pushing costs up for insurers and policyholders alike.
The less visible but potentially more disruptive problem is whether the industry has enough people who can actually do the work. Doddington said there is growing concern that the repair workforce is not keeping pace with the vehicles it is being asked to fix.
"As vehicles get more complex, it becomes a very specialist skill set," she said. "So there's concern around just having enough people in that space."
She said the consequences are circular. If vehicles cannot be repaired appropriately, claims take longer to resolve, costs stay elevated, and customers are left without their vehicle for extended periods – all of which feeds back into the affordability problem.
Affordability is already under pressure from multiple directions. Doddington said consumers are feeling the cost of living across every part of their household budget, and insurance is no exception. That is driving price sensitivity and pushing more policyholders to look for ways to reduce what they pay.
"Today, customers are feeling the pinch everywhere," she said. "That means they are absolutely going to be looking at the cost of their insurance because it's a large amount of the money that they spend each year."
With Ontario's auto reform taking effect on July 1 and giving drivers more choice over what coverage to keep or drop, that price sensitivity takes on a new dimension. Doddington said consumer choice is broadly positive, but only if policyholders understand what they are giving up when they reduce coverage to save on premiums.
"The concern I have is making sure that customers are really aware of the choices that they're making and what that will mean for them if the unfortunate happens and they have to make a claim," she said. "Particularly as we increase customer choice, that becomes even more important."
Looking further ahead, Doddington said the personal lines risk landscape will continue to shift. Condo construction quality and aging infrastructure are emerging property concerns. The question of where liability sits in a world of autonomous and semi-autonomous vehicles remains unresolved. And the gap between what vehicles cost to repair and the industry's capacity to repair them is not closing.
