Sonnet Insurance tackles insurance fraud with new campaign

With the goal of preventing Canadians from falling for harmful insurance scams, Sonnet Insurance has launched a new awareness campaign which discusses seller fraud.

Citing a 2017 survey by the Financial Services Commission of Ontario, Sonnet reported that while insurance seller fraud is common throughout Canada, 83% of auto insurance seller fraud takes place in the Greater Toronto Area. The results reflect how a good number of people do not understand the process of purchasing home and auto insurance.

To combat this ignorance and prepare customers, Sonnet has produced a helpful graphic that offers tips on how to avoid seller fraud.

“Sonnet is committed to making insurance easier for Canadians to understand,” said Sonnet SVP Roger Dunbar in a statement. “Fraud impacts all Canadians and especially those who don’t understand local insurance regulations, so we want to educate the public on seller fraud.”

The company explained in a release that unlike claims fraud – wherein customers use fake accidents or reports to claim on insurance – seller fraud can leave victims vulnerable to a high degree of personal risk.

Sonnet has identified two types of seller fraud behaviour that customers should be on the lookout for:

• Ghost brokers – take money for insurance upfront, then offer a pink slip (usually a forgery) showing proof of insurance, then quickly disappear before the customer finds out.
• Fake brokers – they may have actual physical addresses, or even have legitimate businesses, but these types of brokers purchase insurance policies while using incorrect information (such as unlisted high-risk drivers, or the wrong address in terms of home insurance) to help customers get better rates; this could backfire on customers once insurers discover the misrepresented information.

“In Canada, auto insurance is mandatory and highly regulated by the government,” warned Dunbar. “Generally, if a deal looks too good to be true, it probably is. That is because insurance rates are based on pooled risk - companies need to collect enough money to pay out claims in a given year.”