THE PRICE OF FRAUD
False claims cost us all
What if I told you that between $116 and $236 per year of your insurance premium went to line some liar’s pocket?
It’s Fraud Prevention Month, and car insurance costs, especially in Ontario, continue to escalate. While the amount you pay is the usual calculus of where you live, the driving histories of those who drive your car, how difficult the car is to steal and how much it costs to repair, fraudulent claims remain a substantial portion of that bottom line you are charged each year.
Fraud rings are headline grabbers, as they should be. Sophisticated criminals often working from street level (those who stage crashes) on up through the ranks of tow-truck operators, lawyers and medical providers cost us all.
But what about that time you had the front-end collision and had the body shop take care of that older dent in your door while it was in the shop?
What if your neck wasn’t really that sore anymore, but you had the chance to keep going to massage appointments for just a few weeks longer?
When kids broke into all the cars in your neighbourhood and you suddenly “remembered” you left your camera in the car?
These opportunistic crimes also add a more substantial tally to insurance fraud than you might realize.
Dr. Yoel Inbar is an assistant professor of psychology at the University of Toronto, specializing in social and personality psychology. He focuses on moral decision making. What makes us tick. What makes us steal.
“There are several things at play,” he explains. “There’s an assumption this is a victimless crime. That the loss will be against a huge company, instead of against the collective, the other customers. We know, of course, that these costs all translate into higher premiums for all of us.”
People who would not steal a pair of boots from a retail outlet may not feel morally compromised tossing in a few older dings and dents to a larger repair job.
“There is an element of justification, in some cases,” Inbar explains. “You’ve been paying into this insurance pot for so long and not getting anything from it. Some people almost see it as a savings account.”
He also notes we take our cues from what is happening around us, what we come to perceive as norms.
“The idea can develop that everybody else is doing it, so I can, too,” he says.
The Financial Services Commission of Ontario (FSCO) states nearly 10 per cent of Ontarians admit committing auto insurance fraud, and 20 per cent know someone who has.
The Ontario figures show males are significantly more likely to participate in fraudulent behaviour, as are millennials. Baby boomers have a better grasp (83 per cent) of what constitutes fraud over millennials (56 per cent), which perhaps explains the gap — sort of. “I didn’t know any better” doesn’t pass the smell test for this one, though.
While scamming rings get a lot of media attention, they aren’t the nuts and bolts of the fraud infrastructure. A KPMG report put out in 2013 using 2010 figures estimates total fraud in Canada at between $768 million and $1.56 billion. That figure is broken out into three types of fraud: organized (those headlines), premeditated, and opportunistic.
The report pegs the organized crime fraud at between $175 million and $275 million. Premeditated fraud involves things like treatment programs that never take place. Opportunistic fraud is that phantom camera in the break-in or the additional mechanical claims.
Even if the organized component of that estimate is low, that still leaves a wide margin of insurance fraud paid out to elements that you and I have much control over. We are ripping off each other.
Don’t sign blank treatment schedules from health care providers, and make sure you understand just what is being proposed.
I’ve had this happen and didn’t even realize until months later. The (now gone) provider claimed treatments I’d never even heard of, much less received. In a post-crash fog, I’d just been desperate for someone to get me back to work.
Inbar notes human nature is flexible, and “possessing salient information can have a surprisingly large effect on the decisions we make.” Small tweaks can lead to big change. Insurance fraud is very much about who is watching. He notes studies have shown people react differently with something as basic as a pair of cartoon eyes attached to their monitor, or a mirror.
By now we’ve all grown used to the idea that we are constantly being monitored and filmed; maybe reining in insurance fraud will be an upside to that intrusion.
Make a plan for what you will do in the event of a crash, like where you’d have your vehicle towed. Demand detailed medical and repair reports. Don’t sign blank authorizations. And ask for help if you’re unsure.
You can anonymously report suspected insurance fraud. Call IBC (877-IBC-TIPS), or CrimeStoppers.