Aviva Canada identifies collusion between broker employee and deceptive policyholders

Deception in the industry will not be tolerated

Toronto, ON (June 26, 2014) – Aviva Canada, one of the country’s leading providers of home, auto, recreational vehicle, group and business insurance, has announced that it has commenced litigation against a former employee of KMI Brokers Inc. of Mississauga, Ontario. The owners of KMI Brokers are cooperating fully with Aviva Canada’s investigation and endorsed the submission of complaints about their former employee’s business practices to the Registered Insurance Brokers of Ontario (RIBO).

The investigations uncovered a scheme that involved the broker’s former employee conspiring with policyholders to misrepresent themselves to Aviva Canada in order to obtain cheaper premiums. The policyholders were coached to provide incorrect addresses and not disclose poor driving histories. The former employee also provided them with discounts they did not qualify for.

“It is unfortunate that we have to look within our industry for this type of activity,” said Gord Rasbach, Vice President of Anti-Fraud Management at Aviva Canada. “But providing insurers with false information, also known as underwriting fraud, is a real issue, and in some cases it is being perpetrated or assisted by those in, or connected to, our industry.”

After investigating two questionable automobile claims submitted under policies written by the accused, Aviva Canada’s Anti-Fraud Management team detected a number of inconsistencies and anomalies in the applications for insurance. Together with KMI Brokers, Aviva Canada audited all policies written by the accused while employed at KMI. In total, 17 investigators from Aviva Canada conducted 40 investigations and uncovered 27 policies with misrepresented information.

In total, 19 policies were voided and five polices were cancelled. On average, policyholders were only charged 54% of their accurately calculated premium. If properly underwritten, policyholders should have been paying on average $2,393 more in premiums.

As a result of their investigations, and with full cooperation of KMI Brokers, Aviva Canada issued a Statement of Claim against the broker employee. Aviva also took steps to secure the former employee’s assets pending further order or final resolution by the Court. This matter is currently in legal process. Aviva Canada’s Statement of Claim is also seeking damages that amount to approximately $200,000 against the former broker employee, including punitive damages and recovery of its investigative costs.

Building on already strong capabilities, Aviva Canada has stepped up its tough approach to tackling fraud with more dedicated resources and an investment in technology that aims to identify fraud and even anticipate the potential for fraud before it happens. With an industry-leading anti-fraud team in place, plus solid public sector and industry collaboration, Aviva is well positioned to combat fraud better than ever before. The impact of Insurance fraud in Canada is estimated at over $1.6 billion dollars annually, and increases premiums for all policy holders.

Help protect affordable insurance premiums for all Canadians by reporting potential fraud to Aviva Canada’s Fraud Information Centre — open 24/7. Email anti-fraud_management@avivacanada.com or call 1-855-332-5255.

About Aviva Canada

Aviva Canada is one of the leading Property and Casualty insurance groups in Canada providing home, automobile, recreational vehicle, group and business insurance to more than three million customers. The Company is a wholly-owned subsidiary of UK-based Aviva plc and has more than 3,000 employees, 25 locations and 1,700 independent broker partners. Aviva Canada and its employees invest in positive change including through the Aviva Community Fund and Eva’s Initiatives, its partner in Aviva’s global Street to School program to help homeless and other at-risk youth reach their potential.

For more information visit AvivaCanada.com.