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What is Insurance Fraud? And How to Combat High Insurance Premiums

By Ben N.  •  My Insurance Broker
Jul 4th, 2016 at 10:52 am  •  Richmond Hill, ON

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Insurance fraud is a serious crime that affects everyone by severely increasing insurance rates.

What is Insurance Fraud?

Insurance fraud is a criminal offence under the federal Criminal Code of Canada where one engages in the illicit act of intentionally falsifying a claim in an attempt to defraud an insurance company with the expectation of receiving income when not entitled to payment from the benefits being sought.

Common Instances of Fraud

How Does Insurance Fraud Affect Premiums?

Fake claims can encompass anything that cannot be proven when making a claim, such as headaches, stress, and pain. According to Aviva Canada, insurance fraud is estimated to cost the province approximately $1.2 billion per year, resulting in inflated Auto Insurance rates in Ontario (Bliss, 2016). These higher rates occur because insurance companies must counter company losses, therefore, consumers bear the brunt with higher rates (see also Toronto Auto Insurance rates: Why are they so high? And how can you lower yours?)

What Happens If You Are Caught Committing Insurance Fraud?

If you are caught committing or attempting to execute insurance fraud: your claim will be denied, your policy may be cancelled, you may be forced to pay higher premiums, you may be denied any potential requests for insurance, and you may be criminally charged and punished up to 14 years in prison (Financial Services Commission of Ontario, 2016).

A textbook example of insurance fraud occurred with one of My Insurance Broker’s partners, Aviva, when it was revealed that a paralegal and staff at a Northern Toronto wellness clinic had been captured on hidden camera encouraging Aviva’s undercover patients to commit insurance fraud via fake claims. Charges have been laid and a verdict is pending (Bliss, 2016).

What Can You Do to Combat Fraud?

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Financial Services Commission of Ontario (2016). Fighting Auto Insurance Fraud: What You Can Do. As retrieved June 30, 2016 from
Paul Bliss (2016). Undercover investigation captures alleged car insurance fraud. As
retrieved from