MONTREAL, Jan 10: It starts with a seemingly courteous gesture behind the wheel: an innocent driver signals to turn left, and a driver in an oncoming lane waves for him to go ahead — when another vehicle speeds up and crashes into the turning car.
Unbeknownst to the person just hit, the collision was staged in order to collect hefty insurance payouts under provincial no-fault insurance programmes.
The scammers first collect insurance for their car's replacement value then submit bogus injury claims at health clinics.
Ken Bowman, vice-president of RBC Insurance, said the growing trend of staged accidents involves buying vehicles, often luxury cars such as Mercedes, and having “seat sales”, in which fraudsters “pay 1,000 dollars for every person recruited to be in the car”.
In some cases, four people will agree to participate in a staged accident and will go on to submit multiple injury claims, billing for costly healthcare assessments and treatments.
Sometimes, legitimate injuries arise from accidents — especially if an innocent person is involved — but in many cases, the accidents are simply “bump and runs, and quick stops”.
“It's a billion dollar business,” Bowman said. “And there is minimal deterrence for criminals. I think it's quite obvious that there needs to be stiffer penalties and consequences for those who commit insurance fraud.”
Industry experts say automobile insurance fraud rings have become a booming business in Canada. The rings are sophisticated, highly profitable, and almost untouchable, thanks to poor government regulation, weak law enforcement and the absence of a national database to track suspect claims.
Insurance companies themselves are seen as partly to blame for not sharing information in a collective data base.
Bowman said there have been concerns in the past around “privacy and data that insurers may conceive as a competitive advantage”.
Insurance companies have long found it cheaper to settle a suspicious claim rather than investigate and prosecute. But faced with more complex schemes to bilk insurance companies — and the hike in premiums passed onto consumers — the industry is now calling for greater regulation of health clinics and a task force comprised of insurance investigators, police officers and lawyers to tackle the problem.
In 2009, insurance fraud accounted for between 10 and 15 per cent of premiums — or an estimated $1.3 billion, according to the Insurance Bureau of Canada (IBC), the industry watchdog.
The scams are most rampant in Toronto, where at least 30 staged collision rings have been identified.
The IBC said in a number of cases, individuals have come from New York to Ontario to open clinics because provincial oversight is so lax. In Ontario a person does not have to be a medical practitioner to own or operate a clinic.
Desperate for reform: The fraud commonly involves identity theft in clinics operated by fraudsters. “They are taking ownership of a medical clinic and that's where we're seeing this organised activity taking place,” said Rick Dubin, vice president of Investigative Services at IBC.
On average the IBC gets three calls a week from bona-fide medical practitioners such as chiropractors or physiotherapists who are worried that their registration numbers are still being used or their signatures are being forged at clinics where they formerly worked.—AFP
