by Rebecca Root and James Middleton
Pursuing auto insurance fraudsters through the civil courts appears to be an increasingly common, and effective, tactic used by insurers both in Canada and the US.
It emerged this week that instead of seeking criminal prosecution for fraudsters, Geico has in the US been suing the local businesses involved, achieving a usually quicker and more effective result. And the practice is also common here.
A spokeswoman for
Allstate told
Insurance Business Canada that the company is making a point of cracking down on insurance fraud, “and bringing the fight directly to fraud perpetrators”.
By way of an example, Allstate said that in 2012 it issued claims directly against the owners of three clinics located in the Greater Toronto Area – Assessment Direct, Fairview Assessment Centre and Pacific Assessment Centre – over the submission of false or unauthorized claims for health care services.
“These criminals went to great lengths to defraud our industry and Canadians everywhere. Putting a stop to their activities means better services for customers who actually need it,” said Kevin McConkey, of Allstate Canada.
Auto insurance fraud is big business in Ontario, costing the province’s consumers as much as C$1.6 billion every year. Ultimately this leads to higher premiums for all drivers. The Ontario government acknowledged the seriousness of the issue in appointing an Auto Insurance Anti-Fraud Task Force in 2011.
A spokeswoman for
State Farm, which operates in both the US and Canada, said the company does not pursue criminal action as a matter of course “as this isn’t within our span of control,” but “may pursue civilly based upon the merits of the claim”.
Fraud not only adds significantly to insurance costs but also puts innocent drivers at risk. Organized fraud rings reduce road safety and endanger innocent drivers by staging collisions to fraudulently collect claims money.
