Insurance coverage fraud is on the rise, with greater prices of residing, organized crime threats, and geopolitical instability among the many key causes, says Aviva Canada.
Aviva Canada’s claims fraud investigations rose 76% in 2024, in line with new information cited by the corporate. Auto-related incidents accounted for practically two-thirds (67%) of these investigations. And that seemingly isn’t going to sluggish in 2025, the insurer suggests.
“Many components have contributed to the rise of fraudulent exercise in 2024,” Jamie Lee, Aviva Canada’s head of monetary crime and fraud tells Canadian Underwriter. “Financial pressures like inflation and worries a few recession, mixed with geopolitical instability, can create an atmosphere the place fraud is extra widespread.”
Organized crime teams have additionally performed a big position in auto-related incidents, Lee tells CU. “They’re turning into extra prevalent and complicated, and using AI and expertise is making it simpler to falsify info in each staged claims and opportunistic fraud. Finally, fraud shouldn’t be a victimless crime, impacting Canadians who’re already going through rising meals costs and price of residing challenges.”
In spring 2024, practically half (45%) of Canadians reported that rising costs have been drastically affecting their capability to fulfill day-to-day bills, 12 share factors greater than the outcomes of the identical survey confirmed two years in the past (33%), in line with Statistics Canada.
Nevertheless, whereas some actors might select unlawful methods to drive down their private prices, insurance coverage fraud is costing the common Canadian extra on their insurance coverage invoice.
“Fraud prices everybody and drives up insurance coverage premiums,” Lee says within the firm’s press launch. “Insurance coverage fraud prices Canadians $1 billion per 12 months in added premiums. It’s very important for Canadians to remain educated on the rising traits to higher shield themselves.”
5 fraud traits are rising within the Canadian market, in line with Aviva’s information. Auto claims fraud, specifically, is predicted to persist.
Claims fraud to count on in 2025
First, car theft and ReVINing remains pervasive, Aviva says. The insurer’s automotive theft investigations elevated 58% within the second half of 2024.
Typically, stolen automobiles are exported to abroad markets (LINK), or their car identification quantity (VIN) is altered and the automotive is resold to unsuspecting consumers. To fight auto theft, authorities and legislation enforcement have tightened the Canada-U.S. border in current months, and which will result in a rise in reVINing, placing Canadians in the marketplace for a used car in danger.
Second, staged auto accidents are on the rise. Aviva noticed a 47% improve of such incidents in 2024 This fall. “Any such rip-off might be linked to organized crime groups working in Canada,” Aviva suggests.
Related: The spreading tentacles of staged collision operations
Third, Aviva is looking forward to AI-enabled or solid paperwork. The insurer says it already sees AI being utilized in each staged collision claims and opportunistic fraud. In opportunistic fraud circumstances, AI “is used to create false claims or inflate authentic claims, comparable to private and business property contents claims, by supporting them with false invoices.”
Aviva expects this pattern to be on the rise in 2025.
Fourth, look ahead to the rise in ghost brokers.
In 2024, Aviva warned customers and shoppers to watch out for an Alberta-based ghost broker claiming to be affiliated with Aviva, however was as a substitute promoting faux insurance coverage insurance policies. The ghost dealer had been promoting its rip-off on social media websites as “Allcoveredbrokers” or “AllcoveredAviva.”
Some shoppers have been issued faux pink slips for auto insurance coverage after being requested to switch cash for insurance coverage premiums, whereas others by no means heard again, the corporate stated on the time.
The insurer expects this to be a rising concern in Canada.
“Customers must be extra-vigilant when buying insurance coverage. They’re inspired to test their provincial registries to make sure the particular person they’re coping with is correctly licensed and ensure proof of insurance coverage straight with the insurer,” Aviva says.
Fifth, coverage misrepresentation is rising within the Canadian market.
For instance, customers might try and misrepresent or omit necessary info from their insurance coverage insurance policies — be it their true tackle, their intended use of a vehicle or property, or non-disclosure of main renovations or constructions they’re conducting.
The intention is to accumulate decrease insurance coverage prices by leaving out info which will impression their premiums. However in doing so, “sincere clients” might consequentially pay “disproportionately greater premiums,” Aviva says.
Function picture by iStock.com/Olivier Le Moal
