How a tough economy contributes to claims fraud

How a tough economy contributes to claims fraud | Insurance Business Canada

Claims

How a tough economy contributes to claims fraud

Experts discuss strategies to support struggling clients

Claims

By
Mika Pangilinan

The sustained impact of inflation has affected both insurers and insureds throughout 2023.

A recent roundtable discussion hosted by Insurance Business Canada, which featured senior industry experts from CNA Canada, Desjardins General Insurance Group, and Royal Claims Services, delved into the impact of fraud on claims, especially against the backdrop of a more challenging economic environment.

According to data from the Royal Canadian Mounted Police (RCMP), the country faced a historic fraud cost of $530 million in 2022, reflecting a 40% increase from the previous year’s $380 million.

Tucker added that this number may not be wholly accurate, as only five to ten percent of fraud incidents are believed to be reported.

Given the prevalence of fraud cases, she stressed the importance of education and raising public awareness.

Meanwhile, Matt Woodall, president of Royal Claims Services, pointed out a recent increase in opportunism surrounding legitimate claims as businesses seek to maximize payouts.

He said his business has seen a surge in claims of opportunity, where legitimate claims are inflated.

“Our mind always tends to go first to completely fraudulent claims,” said Woodall. “Ultimately, those are pretty rare in our industry, but what we’ve seen is a big uptick in claims of opportunity … where [for example] a scheduled loss is submitted and instead of it being 100 items it turns out to be 120 items.”

Regarding this issue, Woodall emphasized the need for vigilance.

“It seems a lot of businesses are hurting and looking to get ahead wherever possible,” he said.

To help reduce cases of claims fraud, Valérie Lavoie, president and chief operating officer of Desjardins General Insurance Group, underscored the importance of supporting clients through difficult economic conditions.

“This brings a lot of opportunity to be creative, to be innovative, to use data and think about how we can better support our clients,” she said.

Want to know more about today’s claims landscape? Take a look at Insurance Business Canada’s roundtable discussion featuring insights from top industry experts.