Insurer’s anti-fraud effort drives good customer away
Mississauga woman renewing her auto policy put through rigorous process that required car inspection, proof of address
I’ve been driving for a long time, and my insurance company has never asked to visit my house to check that the car I say I own is in the driveway. Nor has it asked to see my hydro bill to prove I live at the address I list on the policy.
But it can. And it did, to Jacinta Kanakaratnam, 31, whose insurance with Allstate Canada was up for renewal. Her story is an interesting look at how insurers try to fight fraud, but sometimes catch a good customer in the net. The consequence in this case is that Allstate may still have the bad ones, but it has also lost a good one.
Kanakaratnam had been an Allstate customer for a year. She received a policy renewal letter in early July, which included the standard questionnaire that updates policy information and is approved by Ontario’s insurance regulator. But she also got a second one, generated internally by the company, asking for more information.
Kanakaratnam was told the supporting documents on the second form had to be delivered in person to the Scarborough East office on Kingston Rd., where she purchased the insurance policy a year ago. This was even though she lives 50 kilometres away in Mississauga, and Allstate has offices that are closer to her home.
Allstate also wanted a report from the Ministry of Transportation outlining the driving history of every licensed household member. She would have to pay for this. The insurer wanted to visit her home and inspect her car. It asked for a copy of the car’s ownership and a utility bill to prove she lived where she said she did.
“When I received the letter, I was shocked and offended,” says Kanakaratnam. “I’ve had no claims in 10 years of driving, no late payments. Why would they ask me for this?”
As it turns out, Kanakaratnam was caught up in a broader initiative, and her upset was made worse by customer service in which common sense did not prevail. She got different answers from different people, including the head office.
The personal touch was completely absent and so, confused and angry, she came to the Star for help.
Her case now sits with the company’s ombud, but it’s a moot point. She’s taking her business elsewhere.
“We appreciate the customer’s concerns and confusion around the request and we apologize for that,” said Allstate Canada spokesman Nicole Watts. “The request is to protect our customers and ensure they have proper coverage.”
Kanakaratnam has never made an insurance claim and pays her premiums on time. She has owned the same car for a decade and has lived her entire life with her family in their Mississauga home. Why would she generate red flags on renewal?
Insurance companies are in the business of assessing risk; based on that, they set their prices. In the GTA, Brampton and Scarborough are higher-risk places to insure a car because insurance companies have a higher claims experience there. So you pay more for car insurance if you live there.
One way people who live in high-risk areas try to beat this system is to claim that they live somewhere else. Another common fraud is to insure a very old car, which then has an accident and is written off.
To an Allstate database, Kanakaratnam’s file could cause concerns. She lives in Mississauga but insures in Scarborough. She drives a 2004 Nissan Altima.
But a little human intervention would have reached a different conclusion.
Kanakaratnam bought her insurance in Scarborough because she met an Allstate broker who worked at the Scarborough East office at a social function. (He no longer works for the company, she says.) He convinced her to try Allstate and issued the policy there.
Kanakaratnam has lived at the same Mississauga address for more than 25 years, she said. She bought the Altima in 2007 and while it is getting older, she rarely uses it during the week, preferring public transit. She has been insured for a decade without a claim.
Allstate’s Watts said the company sends out the second request letters “when we have concerns based on trends or suspected instances so we can confirm the accuracy of our policies.”
She indicated the company had concerns about where some customers insuring through the Scarborough East agency actually lived. Many renewal letters sent via registered mail were coming back marked “return to sender,” indicating invalid addresses.
So the company initiated a wider request for information. Kanakaratnam’s profile added her to the list.
“When we send these requests to a broad group, there are customers with good history and accurate records who receive them as well,” Watts said. “This may be the case for Jacinta. She was not targeted and was simply part of a broader verification exercise.”
Insurance fraud costs all of us, and is one reason why Ontario has the highest car insurance premiums in the country. Allstate, and other insurers, should rightly go after it.
But Allstate couldn’t seem to distinguish a good customer from a bad one. Nor did it seem to make much effort to find out the difference. Adam Mayers writes about investing and personal finance on Tuesdays and Thursdays. Have a question? amayers@thestar.ca