IBC and CPKN sponsor initiative aimed at disrupting the criminal network and defending against organized insurance scams

TORONTO, Feb. 1, 2012 /CNW/ – Insurance Bureau of Canada (IBC) understands the frustration of consumers in Ontario who face the highest auto insurance premiums in the country.

For the remainder of 2012, IBC and the Canadian Police Knowledge Network (CPKN) are sponsoring free access for Canadian frontline police officers to the Identifying Staged Collisions online training course. This will help police across Canada learn more about the tactics of highly sophisticated and widespread auto fraud rings and associated service supplier fraud.

“Insurance fraud is a serious problem right across Canada and we all pay for it in the form of increased premiums.  In terms of staged collisions, at times, innocent drivers are drawn into these dangerous situations and we hope this initiative will help police deal with the crime,” says Rick Dubin, Vice-President, Investigative Services, IBC. “The more informed police officers are on this issue, the more we can disrupt and disable these types of criminal operations.”

Staged collisions, where accidents are orchestrated in order to collect hefty insurance payouts, are becoming increasingly common in Canada’s urban centres. These activities not only put public safety at risk but also contribute to skyrocketing insurance premiums for Canadians.

Insurance fraud is often linked to organized crime, the proceeds of which are believed to fund other illegal activities within and beyond Canadian borders.

Ontario’s insurance industry, which has been hit the hardest, has initiated measures to counteract auto-related fraud.  In addition to recent reforms that have been put into place by the Ontario government to tighten auto insurance loopholes, IBC partnered with York Regional Police to develop online training to educate frontline officers on how to identify and investigate staged collisions. Identifying Staged Collisions is a 45-minute online course that uses videos to illustrate common types of staged collision scenarios and provides information on the various signs, indicators and behaviours that may characterize a staged collision.  It also describes techniques to properly investigate suspected incidents that have links to service supplier fraud from towers to medical clinics.

“More and more, our officers are called out to suspect collision scenes,” says Sergeant Tony Cummins, York Regional Police Training and Education Bureau. “In cooperation with IBC experts, we’ve developed this course to address a growing problem in our region. But it also provides practical information that any responding officer, in any part of the country, can use to recognize and investigate a staged collision.”

“This course is just one line of defence against a litany of organized insurance scams,” adds Dubin. “But we believe that making it accessible to a national police audience will significantly improve the detection and conviction of fraudsters.”

“These types of partnerships lend incredible value to CPKN and the Canadian police sector,” says Sandy Sweet, President of CPKN. “By taking advantage these types of learning opportunities, police officers gain knowledge on topical issues, police services save on training costs, and Canadians in general benefit from a more informed policing sector.”

About Insurance Bureau of Canada
Insurance Bureau of Canada is the national industry association representing Canada’s home, car and business insurers. Its member companies represent 90% of the private property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 114,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $40 billion.

To view media releases and information, visit the Media Centre of IBC’s website at www.ibc.ca.

For further information:

Erika Bennett at 416-362-2031 ext. 4312.

2012-01-20

The Ontario Court of Appeal has found that in a priority dispute between insurers, the first insurer to receive a claim for accident benefits cannot claim it did not receive a “completed application” if it was not diligent in investigating the missing information.
In Ontario (Finance) v. Pilot Insurance Company, an unidentified motorist hit an uninsured cyclist. Since no insurer could be identified, the injured cyclist filed a claim for accident benefits with the Motor Vehicle Accident Claims Fund. Administered by Ontario’s Finance Ministry, the Fund provides compensation to people injured in motor vehicle accidents when no insurance exists to respond to their claim.
If, after receiving a claim, the Fund discovers that another insurer may be liable, it can dispute its obligation to pay benefits. But the Fund cannot dispute its obligation to pay benefits unless it gives written notice to the insurer it believes responsible for paying the benefits within 90 days of receipt of a “completed” application for benefits.
In this case, the court had to consider when the Fund received a “completed” application for the purpose of triggering the 90-day notice period.
The injured cyclist did not include a police report of the accident along with his application. This may have indicated the name of the driver and the driver’s insurer. Instead, based on a discussion with the cyclist, the Fund sought to obtain the records of a 911 call the cyclist said the unidentified motorist had made to the police.
The police informed the Fund that it could only obtain the 911 call information in one of two ways: a Freedom of Information (FOI) request or a court order.
The cyclist applied to the Fund for benefits on Mar. 7, 2007. The Fund twice tried to obtain the 911 call details through FOI requests. Its second and final request was denied on Jan. 17, 2008.
Subsequently, on Sept. 4, 2008, the Fund obtained an unopposed court order to provide particulars of the 911 call. Four days later, using the 911 records, the Fund determined the identity of the driver and that Pilot Insurance Company was the driver’s insurer.
The Fund argued before the court that it had a “completed application” only after it had received the 911 records in September 2008. Only at that point did the Fund have enough information to determine Pilot was the insurer, thus triggering the 90-days notice period.
But the Ontario Appeal Court restored the decision of the original arbitrator, finding that the Fund should have applied for the court order for the 911 records in February 2008 at the latest, just after the second denial of its FOI request.
Had the Fund not delayed in this step until September, the 90-day notice period would have been triggered in February instead, the Appeal Court found. At that point, the Fund would have had enough information to notify Pilot, since at that time the Fund would have received a “functionally adequate” (i.e. completed) application.
“The arbitrator indicated that he was relying on [R. v. Lombard Insurance Company of Canada] for the principle that the first insurer should be treated as receiving a completed application when it does not act diligently in attempting to obtain missing information,” the Court of Appeal wrote, in restoring the arbitrator’s initial decision.
The full case can be found at:
http://www.ontariocourts.on.ca/decisions/2012/2012ONCA0033.htm

2012-01-30

The Insurance Brokers Association of Ontario (IBAO) has launched a new website tool, MyInsuraceShopper Know Your Stuff-Home Inventory, a free online home inventory software for consumers.
The application was designed to help consumers create and update their home inventory easily and efficiently, all within the digital space. It includes free, secure online storage, so consumers will have access to their inventory anywhere, any time.
“Many people receive or purchase new expensive items and neglect to inform their broker and update their policies,” stated IBAO CEO Randy Carroll. “Items such as expensive jewelry should to be added to your insurance policy to ensure you are properly covered in case of any future claims. You never know when a disaster may strike, but you can be prepared with an up-to-date home inventory.”
The MyInsuranceShopper Know Your Stuff-Home Inventory tool allows consumers to list home contents, including a brief description or photograph and an estimate of the replacement value of each item. They could also make a video of their rooms, cupboards and shelves and store it off-site.
“A home inventory will help you itemize your property if you need to make a claim, and it is a good way to test if your overall policy limits are adequate,” added Carroll.
Visit http://knowyourstuff.org/ for more information.

Florida is one of the most expensive states for car insurance, according to the Insurance Information Institute. A fender bender can cost an insurance company tens of thousands of dollars.
Listen HereWalt Dartland was targeted in a staged accident years ago in Miami, but he knew immediately what was up. Dartland is a former Florida D deputy Attorney General and is now executive director of the Consumer Federation of the Southeast.  “All of a sudden they just plain stopped,” said Dartland, “and because I was going so slow, I basically hardly touched them. They immediately got out of the car, and I tried to tell them we better call the police department and get a report on this. They said no. They pulled the car across the highway and walked right into a chiropractor’s office.”
The way this works is a clinic owner will recruit a group of people to stage a minor accident. No one is actually hurt, but the passengers go straight to the clinic. No treatment is given, and claims of $10,000 per person are filed under the driver’s PIP coverage. The money is split between the passengers, clinic operators, and lawyers.
Florida’s No-Fault Law was supposed to cover economic losses and medical treatment for crash victims without the need for a lawsuit to establish who’s to blame. But in the last five years, the state has seen a 275 percent increase in PIP related lawsuits.
Gov. Rick Scott calls PIP fraud a billion dollar tax on Florida’s citizens. He told a crowd gathered for a PIP rally at the Capitol, “You are sick and tired of a billion dollars a year in fraud. You’re tired of it. You’re tired of scammers taking advantage of you.”
Cydnee Knoth lives in Tampa and came to Tallahassee to complain about her premiums. “PIP is the biggest thing I pay for on my insurance, more than liability,” said Knoth. “I carry $100,000 worth of liability and that is cheaper than carrying $10,000 of personal injury.”
Tampa and Miami are among the top 10 most expensive cities for car insurance because of staged accidents.  Chief Financial Officer Jeff Atwater says moving to one of those cities can increase your monthly insurance payment 50 to 100 dollars. He said, “The average family in Miami-Dade County with a teenage driver is now paying over $3200 a year for the value of coverage that is only worth $10,000.”
Atwater said Florida lawmakers mandated no-fault coverage and they are the ones who must fix it. But he doesn’t want PIP to go away. “I would say there is value in a no-fault system, that someone can get quick care and coverage when they have access to no other healthcare,” said Atwater. “For us in Miami- Dade, there is well over 25% of our population that has no other healthcare other than what’s offered in PIP.”
The Florida House and Senate have two competing bills for PIP reform. Atwater likes the House version. So does the governor as welll as the business and insurance industries. The bill requires accident victims to seek treatment at a hospital, not a clinic, within 72 hours. It also puts a cap on attorneys’ fees. The bill has passed one committee so far.
The Senate version is supported by attorneys, chiropractors and some consumer groups. It requires police to use long form reports at accident scenes. It provides for more regulation of clinics and creates a fraud task force. It has not been taken up by any committees.
Both versions would force insurance companies to eventually lower their rates. Changes in the bills are expected, but Atwater thinks some kind of reform will pass. “I believe there’s one last good fight in us and I believe it’s this year,” he said.
Gina Jordan, WLRN-Miami Herald News
Posted by Gina Jordan on January 29, 2012 in WLRN Session | Permalink

Read more here: http://miamiherald.typepad.com/nakedpolitics/2012/01/pip-insurance-fraud-explained.html#storylink=cpy

That amount of fraud was changed to read $1.5 billion, not million. We apologize for the error.

If the insurance industry’s performance is a curling match, it’s throwing bad rocks and not scoring points with consumers.

Home and auto policies are less affordable largely due to an unstable world economy and rise in fraud, although the insurance industry is partly to blame for losing consumer confidence, says the head of one of the country’s oldest insurers.

“As an industry, we’ve not done a very good job of keeping the public well informed on these matters and helping each insured understand what their part of the solution is. We haven’t even told them what the problem is,” said George Cooke, president and CEO of The Dominion of Canada General Insurance Company.

The company announced this month it’s the title sponsor for a men’s national curling skins game. The Haileybury native brought his love of the sport and knowledge of the insurance industry to North Bay on Thursday to address more than 100 independent brokers, educators and students about the industry’s push to give consumers meaning behind rate increases.

Insurance fraud costs the industry $1.5 billion every year in the province — about $150 per driver — from unscrupulous body shops, tow truck operators and health care professionals, said Bernie Robertson, president of the North Bay and Area Insurance Brokers Association and a commercial risk manager at Knox Insurance.

He said insurance companies have formed special investigation units to handle fraud and raise these issues with consumers, while the province created an Auto Insurance Anti-Fraud Task Force last year.

Cooke sits on that steering committee on behalf of the insurance industry and expects its final report to be ready by the fall.

He’s hopeful the industry can reduce fraud and give consumers a break on their policies.

Other issues are out of their control.

The debt crisis in Europe is hurting insurance company investments needed to pay claims. The U.S. Federal Reserve announced this week it plans to hold down interest rates until 2014 to stimulate its economy as the country braces for a presidential election in November.

The central bank’s decision could hurt trade if Canada raises interest rates, and that would put pressure on Canadians who are holding a record amount of debt, Cooke said.

“There will be some affordability issues … that weren’t there five or 10 years ago,” he said.

Closer to home, Ontario downloaded health care costs onto the insurance industry with its no-fault legislation, and the industry can’t change how it does business without the green light from its governing body; the Financial Services Commission of Ontario.

The province reformed auto insurance in 2010 by giving consumers an option for less coverage, but few policyholders have bought additional benefits, Cooke said, adding more would buy it if they understood it.

Cooke said he expects to see a lawsuit or class-action claim from consumers who didn’t buy enough coverage.

The Dominion created a website to explain auto reform in Ontario.

By MARIA CALABRESE The Nugget

A 38-year-old Scarborough man who staged more than a dozen crashes and defrauded insurance companies of $1.5 million pleaded guilty in a University Avenue courtroom Friday.

Uthayakanthan Thirunavukkarasu, also known as Max or Mano, admitted to participating in a criminal organization, proceeds of crime, criminal negligence causing bodily harm and fraud charges.

In 2007, Thirunavukkarasu’s organization cruised salvage yards for wrecked vehicles that had been written off. Then a licensed mechanic would supply fraudulent safety certificates and members would crash the cars into each other on city streets.

Insurance companies gave out cheques to replace the cars and provide medical benefits to 46 passengers, whose health assessments came from people who worked for Thirunavukkarasu.

“Aside from the money, which is substantial, the real problem is that these groups are orchestrating staged collisions on city streets … putting not only the people that are involved at risk but also general members of the public who could be in the area,” said Staff Sgt. Shawn Meloche.

“They’re tying up ambulances, fire and emergency wards unnecessarily, making those resources unavailable for people that legitimately need them.”

Police charged 34 people as a result of Project Green Light, their investigation into the crime ring.

Last month, Auditor General Jim McCarter slammed the Ontario government for not doing enough to curb auto insurance fraud — a problem he said costs about $1.3 billion a year.

Thirunavukkarasu will be sentenced in March.

With files from Marianne Boucher

01/13/2012  | Marcia Chen, CityNews.ca

http://www.citytv.com/toronto/citynews/news/local/article/180593–man-who-staged-crashes-admits-to-1-5m-insurance-fraud

TORONTO – A Scarborough man admitted Friday he was the criminal mastermind who staged more than a dozen car crashes and defrauded insurance companies of $1.5 million.

Uthayakanthan Thirunavukkarasu, also known as Max or Mano, pleaded guilty to instructing the commission of offences for a criminal organization, proceeds of crime, criminal negligence causing bodily harm and fraud charges.

While the now 38-year-old ringleader filed taxes for a total income of only $21,460 in ‘06 and ‘07, he cashed cheques for $1.2 million, said Crown attorney Jackie Garrity in reading an agreed statement of fact.

“Mano personally received over $1 million from cheques he cashed using an account in his name,” said Garrity.
She said in 2007, the ringleader’s henchmen cruised salvage yards for wrecked vehicles- some of them luxury vehicles – that had been written off. Then a licensed mechanic would supply fraudulent safety certificates so that these vehicles could be returned to city streets where ring-members would crash the cars. Crash drivers received a fee of roughly $2,000.

Insurance companies gave out cheques to replace the cars and provide medical benefits to 46 passengers, whose health assessments came from people who worked for Thirunavukkarasu.

One teenaged passenger-victim suffered “severe and permanent brain injury” as a result of a May 7, 2007 collision near Birchmount Rd. and Mack Ave.

“Those injuries have been deemed to be catastrophic,” said Garrity.

“Insurance fraud is a serious problem that we all pay for in the form of increased premiums,” said Rick Dubin, vice-president of investigative services for Insurance Bureau of Canada, which assisted Toronto Police Service in this investigation. The co-operation of member companies was also acknowledged as helping get this matter to trial.

“In term of staged collisions, at times, innocent drivers are drawn into this dangerous situation. It’s a safety and security issue and there have been innocent victims before,” said Dubin.

Staff Sgt. Shawn Meloche said the crime jeopardizes the public at large, since false collision calls deprive people of vital services when genuine emergencies occur. Fraudsters involve the police to legitimize their collisions, court heard.

“They’re tying up ambulances, fire and emergency wards unnecessarily, making those resources unavailable for people that legitimately need them,” said Meloche.

Police charged 34 people as a result of Project Green Light, their investigation into the crime ring. The ringleader is the 27th accused to be convicted in this case.

Thirunavukkarasu will be sentenced on March 1 by Justice John McMahon.

Toronto Sun Link

First posted: Friday, January 13, 2012 05:57 PM EST | Updated: Friday, January 13, 2012 07:14 PM EST

A romantic trio from Vermont has pleaded guilty to arson charges after attempting insurance fraud.

Ralph Brown, Jr., 41, of Bennington, pleaded guilty to second degree arson for torching the house in which he, his wife, and her boyfriend lived in. The state agreed to reduce a first degree arson charge Brown faced and drop additional charges of first degree arson, insurance fraud, conspiracy and second degree aggravated domestic assault.

The insurance money collected, Brown told police, was to go toward a medical procedure that would allow his wife to become pregnant.

His wife, Stacy Brown, 34, pleaded no contest in July to lying to police and was given a suspended sentence of 6 months to a year. Charges of arson with the intent to defraud an insurer, conspiracy and accessory before the fact, were dropped by the state.

Stacy’s 26-year-old boyfriend, Joseph Thomas, pleaded guilty to second degree arson and was given a suspended sentence of one to five years. The state agreed to drop a second arson charge and charges of conspiracy and insurance fraud.

Both Ralph and Thomas were both local volunteer firefighters.

The Browns and Thomas devised and executed the plan in February 2010. Before spreading the flames, the men removed valuables such as family photos and pet birds worth $1,800.

According to authorities, Thomas went into the basement and twisted two electrical wires together, making them spark. Stacy picked up the pair in a get-a-way car as the wires sparked merrily away.

The blaze caused about $40,000 in damage. The monies, however, were not enough to cover the medical procedure. So Ralph and Thomas went back to the charred home to attempt total destruction. Ralph first tried a propane torch in the basement, authorities report, but that didn’t work. Finally, he ignited a child’s play room on the second floor. Stacy again picked up the pair and drove them away.

After they were busted, Stacy denied knowing about the plot even though she was in the same room when Brown and Thomas hatched the scheme. She again drove the get-a-way car.

By Melissa Stewart

January 6, 2012

The New Brunswick Court of Appeal has handed down a smoking hot decision that will leave insurance companies scrambling to confirm that clients have informed them of material changes?—??including the installation of woodstoves.

In Thomas v. Aviva Insurance Co, [2011] N.B.J. No. 371, the court found that the insurer could not cancel a contract with its client by relying on Statutory Condition 4, which obligates an individual to notify the insurance company in writing of any change material to the risk within their control.

Aviva was denied this use because the appeal court determined it had treated the information in question as insignificant prior to a claim being filed and, therefore, breached its duty of good faith.

The decision is believed to break new ground in Canada.

“Before Aviva v. Thomas, this issue does not appear to have been addressed by any court of appeal,” said Brenda Lutz, a partner with Canty Lutz Delaquis Grant in Saint John, who represented the insured client.

“Insurers no doubt reading this decision will be motivated to review their applications for insurance and renewal notices to ensure the questions or statements reflect their underwriting guidelines,” she added. “If insurers consider the installation of a woodstove to be a material change in risk, then that fact has to be communicated to their insured. This is particularly important for insureds living in rural areas where heating with wood is a way of life.”

Because the appeal court found there was a breach of good faith, it determined it was not necessary to address a key issue raised at trial with respect to Statutory Condition 4.

“The primary issue at trial was whether the insured’s lack of knowledge that the installation of a woodstove was a change material to the risk prevented the operation of Statutory Condition 4,” Lutz said.

The case was sparked by a fire at the respondent’s home that resulted from the installation of a woodstove. The insurance company was not aware of the stove and argued that Statutory Condition 4 effectively forfeited the policy. At trial, the court addressed whether the insurer has to prove there was a change material to the risk or if it also has to establish the insured knew the change was material to the risk.

“There are divergent views on this issue expressed in the case law,” Lutz said. “Courts in Ontario have held that knowledge on the part of the insured that a change was material to the risk is not an essential ingredient in determining whether there was a change material to the risk. In Ontario, an insurer can rely on Statutory Condition 4 even if the insured did not know the change was material to the risk.”

“There is no room for doubt after the decision in Aviva that courts have jurisdiction to grant relief against forfeiture, even for breach of statutory conditions, if it is found to be unjust or unreasonable,” she added.

Aviva could not rely on Statutory Condition 4 to cancel its insurance contract with the respondent in this case, the court determined. “To conclude otherwise would require turning a blind eye to the insignificance Aviva attributed in the preloss period to the information it claimed postloss was material to the risk,” Chief Justice Ernest Drapeau wrote in his 43-page decision.

“It would also require the Court to overlook the fact that it is Aviva’s own acts and omissions that resulted in the nondisclosure of what it contended post-loss was a change material to the risk,” he added.

The appeal court did not determine whether an insured has to have knowledge that a change is material to the risk for the insurer to successfully invoke Statutory Condition 4. It did, however, address the issue in several paragraphs. “In these paragraphs, the court provides compelling reasons to support a finding that the knowledge of the insured that the change was material to the risk is determinative of the insured’s disclosure obligations under Statutory Condition 4,” said Lutz.

Specifically Chief Justice Drapeau stated: “[F]ew, if any, of the pronouncements on the subject draw upon accepted principles of interpretation to decipher the meaning of the phrase ‘within the […] knowledge of the insured.’”

Reasons: Thomas v. Aviva Insurance Co., [2011] N.B.J. No. 371.

Responding to a rise in Canadian insurance fraud, ISB Canada, a leading source document company, is partnering with AFI International, an elite security firm that provides best-in-class insurance investigations. ISB clients will be able to take advantage of these investigative services at AFI, effective immediately.

The extensive list of insurance investigation services offered through AFI International will include: GPS technology, surveillance, background investigations, witness location & statements, bodily injury claims, accident benefit, evidence collection, litigation testimony and more.