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Canadian Institute of Actuaries2009 Annual Meeting
Garry RobertsonNational Director, Investigations
Justin MurrayRegional Director Atlantic Canada
Agenda
What is IBC? Organized Auto Theft Staged Collisions and Injury Rings Current trends and issues Questions
Insurance Bureau of Canada
IBC represents nearly 95% of p & c home, car and business insurers: Data Collection – mandatory submission of auto
claims data from insurers as required by Statistical Plan; voluntary submission of claim data over and above tombstone information
Marketing – Eg. Operation Red Nose; head rest, Be Smart, Be Safe, D.U.M.B Car, Lock it or lose it
Insurance Bureau of Canada
Advocates for Legislative Changes – Bill C-26 Motor Vehicle Theft – mandatory minimum jail time-VIN tampering- trafficking -exporting, led the charge for graduated licensing.
Investigative Services – Organized auto theft and Injury Rings
IBC investigative services
Over 85 years claims investigative experience Focus on organized insurance crime Experts in vehicle identification, recovery and
repatriation
An investigative body
IBC is a designated investigative body under federal privacy legislation Personal Information Protection and Electronic Documents Act (PIPEDA)
As long a reasonable grounds exist, allows IBC to collect, use and disclose personal information, without consent, to detect and prevent fraud or breach of a Canadian law.
[Schedule 1 Clause 4.3 Principle 3]
An Investigative Body
7 (3) (d) (i) “…an organization may disclose personal information without the knowledge or consent of the individual only if the disclosure is…made on the initiative of the organization to an investigative body..and the organization …has reasonable grounds to believe that the information relates to a breach of an agreement or a contravention of [law]”
An Investigative Body
7 (5) “…an organization may disclose personal information for purposes other than those for which it was collected in any of the circumstances set out in paragraphs (3)(a) to (h.2)”
[including (3)(d)(i)]
Why people commit insurance crime
Lowrisk
Highreward
High costs to society=
The insurance crime equation:The insurance crime equation:
The problemThe problem
Impact of insurance crime: 2007
Auto theft costs Canadians over $1 billion per year (including police, court costs, medical services, etc.)
Auto theft costs Canadian insurers $542 million per year, or about $35 per auto insurance policy
IBC estimates that insurance crime is a $3 billion per year industry
According to a study by the National Committee to Reduce Auto Theft (1999-2001), because of auto theft:
80 people died 130 people seriously injured
Fate of a Stolen Vehicle
1. Used to commit a crime
2. Dismantled – chop shops
3. New identity – cloning/revinning
4. Exported
Safety and Security
Auto theft supports organized crime and terrorism Vehicle with Texas plates found in bomb factory
by American troops Boston Globe reported that the FBI has found
dozens of vehicles used for bombings in Iraq Hundreds of high-end stolen vehicles shipped to
Lebanon
Auto Theft for Export
IBC estimates that 20,000-30,000 high-end stolen vehicles exported from Canadian ports each year
Average value per vehicle $40,000-$50,000. Federal government taking positive steps to
address this safety and security issue
Repatriation
Main goal is to intercept stolen vehicles before they leave Canada.
Establish relations with foreign customs, law enforcement and justice.
Return vehicles from out of country - Canadian cars in China, Japan, Africa, South America, U.S. Middle East, Europe.
Imperial Oil Wharves
National Gypsum Wharf
Richmond Terminals(Mariner &
Scotia)
Auto Port
Port of HalifaxMajor Marine
Terminals
HaltermSouth End
Ceres Corp(Fairview Cove)
Ocean Terminals
DND Dockyard
Grain Elevator
Ports Project 2008
Project to determine volume of stolen vehicles exported through ports of Halifax and Montreal
Partnered during pilot with Canada Border Services Agency, RCMP and Montreal Police
Ports Project - Results
347 stolen vehicles recovered including repatriations, worth $10 million
112 more vehicles identified for possible repatriation
RCMP supporting permanent installation of the ports project at all major ports
AutoFind
Over 7000 vehicles recovered. Actual cash value over $30 million. 70% of vehicles recovered within 15
days
License plate reader technology. Used to locate stolen vehicles. Operating in Toronto, Hamilton and
Edmonton Police operate the system and recover
the vehicles.
Street Sweeper
Staged auto collisions
Deliberate collisions that involve willing and possibly unwilling participants
Trends well known in Canada & US. Costs to properly investigate can be expensive
and prohibitive
Types of staged collisions
Phantom Vehicle (Hit and Run) Swoop and Squat Drive Down Side Swipe Paper Accident
Profit to players
Passengers: Pay: $500-$1,000 per person (X4) Receive: Weekly IRBs - $400 X 104 weeks
Total exposure: $41,600 x 4 = $166,400
IRBs – Income replacement benefits
Profit to players
Paralegal: Receives: $1,000-$1,500.00 (X4)
Potential profit: - $6,000, plus 20%-30% of each client’s final settlement, and
IRBs.
• Law Society of Upper Canada establishing licence requirements
Profit to players
Clinics: Treatment $10,000 x 4 =
$40,000 Assessments:
In-Home $1,200 x 4 = $4,800 Work Site $1,200 x 4 = $4,800 FAE $1,200 x 4 = $4,800 Dental $1,500 x 4 = $6,000 Psychological: $2,250 x 4 = $9,000 Driver Evaluation $1,300 x 4 = $5,200
Total exposure $74,600
Impact of insurance crime
Since the beginning of the Injury Rings Unit, we have investigated 125 projects
Majority involve staged collisions Recent project is estimated to have cost
insurers $5.0 million Funds generated support guns, drugs and
terrorist activities
Project 92
How it was Discovered Adjusting a Claim
Identified oddities in one collision Recognized identical characteristics in a second collision
– Same tow truck, similar accident location, same vehicle brand Discovered a third collision with the same characteristics Referred to Special Investigation Unit Additional 9 claims identified that fit the same fraud
indicators Brought to IBC and developed through the liaison program
to involve multiple insurers
Project 92
The Scheme Vehicles that were involved in previous collisions
were purchased from a Salvage Dealer Vehicles re-registered using false documentation Insurers believe they insure a re-built vehicle Vehicles involved in subsequent collision where
property damage and injury claims are made
Project 92
Who is involved? A car dealer with a license to purchase the salvage
and record the sale of the vehicle when it was purported to be “Rebuilt”
A mechanic qualified to write a Structural Integrity Certificate and Safety Standards Certificate
Tow Truck Operators to tow the wrecks to the CRC and then to the body shop
Body shop mechanics who submitted phony invoices for repairs
Project 92
Who is involved (con’t)? Drivers and passengers willing to report an
accident and make a claim Clinics prepared to submit invoices for treatment
which was never given Someone to organize all the people and make the
events happen
Project 92
Additional 12 collisions identified. Charges are before the courts, in various stages of prosecution 8 guilty pleas to date Sentences typically include house arrest from 6
months to 2 years followed by probation, license suspension for minimum of 1 year and restitution
Insurance payments totaling close to $3.0 M
Increased Awareness
Police 2007 Accident #28
Initially some resistance from the police in accepting that the collision was an orchestrated, organized event involving multiple players
First confession obtained supported the documentary evidence and cemented the concept of a staged collision
2009 Officers identifying red flags at the scene of staged
collisions Notifying Insurance Bureau of Canada
Increased Awareness
Crown Prosecutors 2009
Project 92 currently has about 200 charges being navigated through the Scarborough Court System
Charges are all related and as a result, two dedicated prosecutors have been assigned
Crown recognizes the serious threat to safety and the impact on many public institutions
Increased Awareness
Accident #34 is a good example of a staged collision that demonstrates the involvement of organized crime and the threat to public safety.
Staged Auto Collisions
Intentional collisions to obtain benefits through the Statutory Accident Benefits Schedule, or through Bodily Injury Tort
Rings involving PD only – increase business to shops
Obtaining coverage for uncovered losses/owner Referrals and Kickbacks
– Tow truck operator involvement– Professionals
Rehabilitation Centre Crime
Billing for services not provided Treating for more than injury warrants Assistive devices Double invoicing Assessments
– Double assessments– Break out of assessment components– Multiple assessments
Identity Theft
Employment Fraud
Falsifying employment documentation to obtain Income Replacement Benefits Claims Forms Cancelled cheques T4 slips record of employment
Double dipping
What Can Insurer Do?
Obtain Statements – be detailed, ask questions Compare claimants signatures Contact the doctor or other practitioner Send your client copies of the claim forms
Send audit letters summarizing payouts Communicate with other insurers if dealing
with multiple occupants
Report insurance crime. Take the time.
IBC receives tip via e-mail or telephone
IBC searches for organized activity
1 877 IBC TIPSwww.ibc.ca
IBC contacts
Garry RobertsonNational Director, Investigations
E-Mail: grobertson@ibc.ca
Justin MurrayRegional Director – Atlantic Canada
E-Mail: jmurray@ibc.ca
www.ibc.ca
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