We hear so much about cyber fraud and the various types of fraud that happen through computers, and phone calls that it is easy to forget the older schemes that are still around. There are records of insurance fraud going back to ancient Greeks in 300 B.C. Hegestratos attempted to sink an empty ship to collect on the cargo insurance. Today, fraud in its many forms is still a pervasive issue.
More than 2,000 years later, we still see insurance fraud similar to what Hegestratos attempted to commit. The Canadian Underwriter determined that in 2022, cargo theft was up 15% from 2021, averaging $214,104 per claim. Of these claims, 96 were fraudulent, 600% more than in 2021. The TT Club, a transport and logistics insurer, states that “Fraud is the biggest threat to cargo losses,” accounting for 84% of their claims in 2022.
While cargo fraud is a major concern for everyone as it drives up the cost of products by impacting the supply chain, cargo fraud is only one of many types of insurance fraud.
Auto fraud is also a big issue. One form of insurance fraud is when someone submits a claim for damage that occurred before the policy was purchased. Staged collision is another fraud scheme. Two or three vehicles force an accident to benefit from the insurance. According to the Insurance Bureau of Canada, staged collision fraud costs Canadians over $1B per year. The linked video provides examples of this type of auto fraud.
When insurance fraud occurs, it impacts all of us as our insurance rates increase. If you suspect that you know of insurance fraud, please report it to the police.
Kathleen O’Donoghue, CFE
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