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When it comes to insurance crime, Équité Association investigators and data analysts are aware that identity (ID) theft is used to perform deeply complex insurance scams, and may be connected back to organized crime networks. ID theft starts when a criminal purposefully gains access to the victim’s personal information – stealing physical documents or tricking victims into divulging personal information through various schemes, such as phone scams or deceptive online ads.
Équité investigators and analysts are seeing an increase in criminals stealing the identity of honest, hardworking people, and using these stolen identities to commit insurance fraud. While the fraud can happen a few different ways, Équité investigators are seeing that once a criminal has the victim’s personal information, they will apply for auto loans to finance a vehicle and take out an insurance policy on the vehicle. Additionally, they may open a bank account in the victim’s name to launder money or commit cheque fraud.
As the registered vehicle owner, the criminal will then ship the newly purchased vehicle overseas, or re-VIN the vehicle to resell it to an unsuspecting buyer. Once the vehicle has been shipped or sold, the vehicle is then reported as stolen and an insurance claim is made.
Auto insurance fraud, including this rising ID theft trend, is known to finance criminal activities, such as drug and gun trafficking, making Canadian communities less safe. In this fraud the criminals are profiting twice: 1) from the sale of the fraudulently purchased vehicle and 2) through a fraudulently claimed auto insurance policy.
Canadians are victimized multiple times throughout this scam. The person who has their identity stolen is left with the devastating financial consequences, which can include impacts to credit scores, loss of savings or even bankruptcy, among others. If the vehicle was re-VINed and sold, the new owner may have the vehicle confiscated by law enforcement as stolen property.
Équité works hand-in-hand with law enforcement and government agencies such as the Canada Border Services to identify and recover stolen vehicles and promote consumer protection. In 2023, Équité recovered over 2,880 vehicles, valued at approximately $117 million in collaboration with our partners. Today, Équité continues to play a key role to protect Canadians against auto theft, through public awareness campaigns and leveraging private and public partnerships to stem the flow of stolen vehicles.
ID theft is an example of how insurance fraud hides in plain sight and why Équité is investing in leading-edge technology, which is essential for identifying fraudulent patterns across the industry. This technology will shift the entire property and casualty insurance industry from a reactive approach to a ‘predict and prevent’ model, ultimately making a meaningful reduction of these crimes across Canada.
How brokers, agents and frontline insurance experts can help their clients
Frontline insurance experts including agents, brokers and call centre staff are able to help mitigate insurance fraud through ongoing education including what frauds are trending, how customers can protect themselves and what to do if they suspect they are a victim of fraud.
The Canadian Anti-Fraud Centre has provided a list of tips to help Canadians protect themselves from identity theft, including:
If someone believes they may be a victim of identity theft, the Government of Canada guidelines suggest they should:
To report a fraudulent communication, or if your identity was stolen as part of a scam, please contact the Royal Canadian Mounted Police’s Phonebusters by email at info@phonebusters.com or call 1-888-495-8501.
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