“My insurance company raised my rates again this year!”

“My premium just continues going up year after year.”

“I haven’t had a claim so why is my insurance going up?”


The frustration around insurance premiums, especially as it relates to auto insurance, has been felt throughout Ontario. And typically that frustration is perceived as the insurance companies being greedy and wanting to make more money. However, there is a lot more at play than meets the eye. In fact, in 2017 some of the major insurance companies actually did not operate at a profit and actually paid out more money than they received. So why would that be?


Insurance Fraud

Insurance fraud at its core is any act committed by an individual with the intent to obtain a fraudulent outcome from an insurance process. Now before we get to far, we are not saying insurance fraud is the only thing driving insurance costs up. It is inevitable that there are other factors, such as severe weather or the cost of living that also come into play when determining rate increases for insurance. However, insurance companies are finding insurance fraud is costing them more and more.


Most people perceive insurance fraud as something an individual would do, and there is no question this happens. For instance someone breaks into your home and steals items from you. Now it is easy to tell the truth and only include what was actually stolen from you, but often time’s people will add items. This is a big problem for insurance companies and they do their best to combat this but it can be difficult. However, there is another side to the insurance fraud story and it involves the repair and maintenance companies. Insurance companies are paying more and more on repair costs and part of the reason is fraud.


Repair Companies & Auto Body Shops

Repair companies have always been viewed as the professionals and their tactics or measures have never really been questioned. However, thanks to a recent study performed by Aviva Insurance it was discovered that these repair companies are also taking advantage of the system. Aviva went undercover to discover that auto body shops were damaging cars even further when they received them, installing used parts but billing for new ones, or invoicing for work or repairs that were never actually conducted. In their study, which only sampled 10 vehicles, they found that the expert adjusters assigned to the study had estimated the damage for the repairs to be no more than $30,000. When Aviva received the invoices they were billed for more than $60,000. That is double the amount. This means you, the client, are paying more money for your premiums to help cover the cost of this fraudulent activity.


Towing Companies

Another fraudulent area that arose from the study was the towing companies, who billed for additional towing and storage that actually never occurred. The drivers were also asked to sign blank work orders, which is a document used to indicate a task or job had been scheduled or completed. The tow truck company’s would then fill this in even if they hadn’t done the work.



On the home insurance side insurance companies see similar cases where contractors over bill the insurance companies for the repairs. They will bill hours that were never actually worked or the contractor will use lower quality parts when repairing a home and invoice for more expensive materials. Most insurance companies do a good job at quality checking the work done to ensure it meets the standards but there still are instances where they see fraudulent invoices.


Slow Process

Not to mention the time frames that these companies have to repair the damage. Some of these repairs should be able to be completed in a week or a few days, but the repair companies are taking several weeks or even months. Guess what? That delay in time also has a cost associated with it. Insurance companies pay out more money as they need to provide rental cars or additional living expenses for longer periods of time. As a client sometimes you have a certain limit on your policy and once that coverage runs out you are now the one on the hook to figure out the rest. Meanwhile, the repair work could have already been completed and it wouldn’t be an issue. If only insurance companies had their own pit crews.

racecar pit crew changing tires


This is a problem for insurance companies as they cannot afford to maintain low premiums if they are paying out on fraudulent claims and undetected fraudulent repairs. The problem for the consumer is, they are the ones who ultimately get penalized. This is why it is important for companies and the government to try and regulate and control this fraud. The industry estimates that as a result of undetected fraudulent claims the insurers pay premiums that can be anywhere from an additional 5 to 15%. As a policy holder it is important to do your best to make sure your vehicle is taken to a trusted source to ensure your claim is handled in a timely manner and the costs to repair are reasonable and not fraudulent. Action needs to be taken and regulations put in place to try and mitigate fraud and help combat the increasing insurance rates in Ontario.