Toronto, ON (Dec. 18, 2002) – The Canadian Coalition Against Insurance Fraud (CCAIF) has released this year’s top ten insurance frauds — the annual list that features some of the most offbeat and oddball insurance schemes on record. All of the examples included in the list actually happened, but the identities of the fraudsters have been changed to protect the dimwitted.
Insurance fraud costs Canadian policyholders over $1 billion each year. To the average citizen, that means at least ten percent of their total insurance premiums are used to cover the cost of fraud.
“In terms of insurance fraud schemes, we’ve seen everything from exaggerated medical treatment claims to staged auto accidents,” says Mary Lou O’Reilly, executive director of CCAIF. “When somebody submits an exaggerated or false insurance claim, we all end up paying more for insurance.”
“We compile the top ten frauds list every year as part of our commitment to generate public awareness about the seriousness of insurance fraud and how it affects everyone, no matter how insignificant it may appear,” Ms. O’Reilly says.
“By talking about insurance fraud schemes and paying closer attention to claims, the Canadian insurance industry continues to be proactive in its efforts to employ new methods to assist in actively detecting and preventing insurance fraud.”
This year’s top ten frauds include such wacky claims as the car owner who was caught on videotape, paying someone to vandalize his vehicle so he could collect from his insurance company; and another incident in which two brothers — with a need for speed — who blamed a “phantom” blonde woman for smashing up their car.
The Canadian Coalition Against Insurance Fraud was founded in 1994 to develop, foster and implement solutions to prevent and detect insurance fraud through a variety of concrete initiatives. CCAIF members represent the full spectrum of stakeholders concerned about the cost of insurance fraud, including the private insurance industry, medical and rehabilitation professionals, consumer advocacy groups and public auto insurers.
Top 10 Canadian Insurance Frauds of the Year
- The man’s basement had been flooded causing extensive water damage. The insurance adjuster arrived on the scene and took some pictures for the record. The photos showed a television set, a stereo, and a few bags of clothes that would all have to be replaced. A contractor arrived the next day and he also took some photos before starting the cleanup. But his pictures told a different story. There were now three television sets instead of one, two stereos — not one — and the bags of clothing had multiplied overnight to more than 40. When the adjuster and the contractor compared their photos they told a story worth a thousand words but the insurance company only needed two. Claim denied.
Caught on Tape:
- It seemed like such a clever plan and an Ottawa man couldn’t resist boasting. He was going to arrange for the theft and vandalism of his own car then collect on the insurance. He thought people would be impressed so he told someone, who told someone else who, in turn, told the insurance company what was about to happen. Surveillance was arranged and the car owner was caught on videotape handing over the keys to a thief. The thief was then seen faking the theft by damaging the ignition system. He also removed the stereo and returned it to the owner. The owner pretended to be upset at his loss when he filed his claim. However, he became genuinely upset when he was told about the video and charged with fraud.
Garden of Greed:
- The thieves must have been avid gardeners. A woman said they’d cleaned out her garage and she produced a list of the stolen items that included a riding lawnmower, a garden tiller, chainsaws, shovels and whole range of tools. In all, it added up to a $10,000 claim. But she was a little vague about some of the details and descriptions so the adjuster decided to dig a little deeper. Three neighbours told investigators that they had purchased some of the items from the woman. Her ex-husband told them he’d taken some of the tools with him when he left. And finally, it turned out a few of the things on her list never even existed. Following the investigation, the woman called the adjuster and said she wanted to discontinue her claim.
Mom and Dad’s Idea:
- A man was going through a messy divorce and decided he needed some friendly female companionship. That’s what the ad in the paper promised and apparently delivered. She proved to be a great friend, at least that’s what her insurance claim said. She claimed she was helping him home after just meeting him in a bar because he’d had a little too much to drink. She also claimed she’d never been in his house before and that as she came in the door she didn’t see the basement stairs when she tumbled down and broke her leg. She made a claim against the man and his liability insurer. However, the doctor who lived nearby and had come to treat the woman, told a different story. He said he found her, scantily clad, in a heap at the bottom of the stairs. Other neighbours said they’d seen her at the house before the accident. The man confessed that he’d teamed up with his new friend to file a false claim and defraud his insurer, adding it was his parent’s idea. There’s no word on the reaction of his soon-to-be ex-wife.
- It was a run of the mill accident. A man was moving into his new house when he dropped his television set and it tumbled down the basement stairs. He filed a claim and the insurance company replaced the television with a new one. He was obviously impressed with the prompt and efficient service and he told a co-worker about it. She too was impressed and a little while later her husband called the insurance company to report that he’d dropped his television set and that he’d taken it to the dump. But the scheming couple had the misfortune of dealing with the same adjuster who had handled the other claim. He went to the dump and discovered that the make, model and serial number of their television set were the same as the one in the earlier case. Coincidence? He thought not.
- Two brothers were camping in the mountains of British Columbia when they ran out of beer. They hopped into their Mustang and roared off to a local tavern to restock. While standing at the counter waiting for their order they bragged to another customer about how fast they’d made the trip. But on the drive back their luck ran out. The Mustang spun out of control at 150 km/h and crashed into a ditch. The two brothers were thrown out of the car and landed about 50 metres away. When the police arrived, one of the brothers told them that a blonde was driving the car and she ran away after the accident. The brothers filed insurance claims totaling $1.3 million. Perhaps they were imagining how they would spend it when investigators concluded that the mysterious blonde was also a product of their imaginations. Claim denied.
Just the Fax:
- She must have been a very shy woman. Or perhaps she was just too distressed by the loss of her $72,000 diamond earrings to talk to the insurance adjuster. Whatever the case, she insisted that all contact with her be made by fax machine. Her husband, however, was a little more forthcoming. He told an investigator he knew nothing about the earrings, where they came from or where they went. His wife continued to pursue her claim until one day the insurance company received her final fax. It read, “Unless I hear from you shortly, I will expire my file”. Her file is now archived in the no payment section.
- The massage therapist had been busy, but an insurance adjuster thought she had been a little too busy. Investigators interviewed more than 40 of her patients and reviewed the bills she had submitted to the insurer. It turned out she was offering a kind of two for one deal in reverse. The therapist was billing for two massage treatments for every one she actually performed. She was also billing for treating patients while they were out of the country and out of reach. In the end, the massage therapist was touched by the long arm of the law, ordered to make restitution, pay a fine and perform community service.
- A mechanic had suffered a devastating accident. His back and legs were so badly injured that he claimed that he was unable to work. He applied for and received income replacement benefits. For 18 months, the cheques arrived until one day the insurance company received a tip. An investigator armed with a video camera was sent to investigate. Sure enough, the mechanic was seen changing the transmission of a car. A car transmission is a very heavy piece of equipment, however, the mechanic had no difficulty pulling out the old one and lifting a new one into place. When the gavel came down, he was convicted of fraud and ordered to repay almost $17,000 in benefits.
Pull the Other One:
- The injury was real enough. A man’s foot had been badly cut and his story seemed plausible. He’d arrived home, he said, and was getting out of his car when a family member accidentally ran over his foot with a lawnmower. He submitted an accident benefit claim to cover medical expenses and lost income. An investigator went to the man’s house and discovered the driveway had high curbs running down both sides. A tape measure and a little math revealed that the man’s explanation was impossible unless he had a leg that was ten-feet long. The man withdrew his claim and went back to work without telling anyone what really happened to his foot.