Insurance crime always has a victim. March is Fraud Prevention Month and an ideal time to raise awareness about the work the insurance industry is doing to protect honest, hardworking Canadians from insurance crime and fraud. On behalf of their members, Équité Association is fighting to stop insurance crime in its tracks through centralized detection, recovery and prevention efforts.

Raising awareness is essential to preventing insurance crime, which is why Équité and its member, TD Insurance, are collaborating to educate Canadians about false brokers.

“TD Insurance does not use brokers, so any phone calls or social media posts from individuals who claim to be a TD Insurance broker are a scam,” Melinda Seibold, Senior Vice President and Chief Claims Officer, TD Insurance. “Sharing personal or financial information can put you and your family at significant risk. Stay informed, stay vigilant, and protect what matters most.”

What is a false broker?

A false broker is an unlicensed individual who does not represent a legitimate insurance provider. They will falsify information in an attempt to secure a lower premium and charge a fee to the client. They impersonate the insured when calling or binding a policy online. If a customer makes any material misrepresentations to the insurer while insured, the insurer may refuse to cover the claim or void the policy as if it had never existed in the first place. By using a false broker to purchase a policy, you may be impacted when attempting to secure future insurance.

“Recognizing the signs of insurance fraud empowers individuals to take decisive action,” says Bryan Gast, VP, Investigative Services, Équité Association. “By working with Équité, members have access to specialized anti-fraud expertise and leading-edge data designed to prevent and disrupt insurance crime.”

The difference between a false broker and a ghost broker

A ghost broker will pose as a legitimate insurance broker and attempt to sell fake insurance policies. Importantly, the coverage being offered does not exist, and the victims usually do not discover the fraud until they try to file a claim or need assistance.

False Brokers:

• Unlicensed agents
• Charge a fee for a real policy, which may not provide the coverage needed at a time of a loss, putting you and your family at financial risk

Ghost brokers

• Unlicensed agents
• Charge a fee for a fake policy and insurance slip, which puts you and your family at financial and legal risk

How do false brokers operate?

False brokers tend to look for individuals who are not familiar with the insurance process in Canada, such as young people and newcomers to Canada. False brokers will exploit their victim’s knowledge gaps in the Canadian insurance system and make insurance offers that seem like the perfect fit.

TDI’s expert insurance investigators have noticed false brokers building authentic looking websites, complete with testimonials, a professional looking email address, letterhead and business cards. This makes it difficult for Canadians to differentiate between legitimate businesses and scams. A popular trend is seeing these false brokers using social media as a primary tool for reaching potential victims. The scam profiles tend to look professional and have posts or paid ads that promise ‘too good to be true’ deals and discounts.  

The victim impact of using a false broker

Criminals often prey on the most vulnerable, inflicting significant financial, physical and emotional harm. Buying an insurance policy from a false (unlicensed) broker can have devastating consequences:

• Financial impact
  • False brokers charge large, lump sum, upfront fees to apply for a policy to be bound by an insurance company. When in reality, direct insurers, such as TD Insurance, provide the documents and have free customer service available to support new clients.
• No insurance
  • At policy binding when falsified information is provided, this could mean the driver may be under insured or may not have coverage for a claim at the time of loss.  
  • Law enforcement could charge you for driving without insurance, which would lead to the possibility of a hefty fine, a licence suspension, your vehicle may be impounded, and the conviction will show up on your insurance history and driving record, which will make getting a legitimate policy far more expensive.

How individuals can protect themselves from false brokers

• Find out if your insurer uses agents or brokers.
  • TD Insurance does not use brokers or agents, so if someone is claiming to be a TD Insurance broker or agent, you may be speaking with a false broker.
• Purchase your insurance from a legitimate and reputable insurance company directly or through a licensed broker, either online or over the phone.
  • A legitimate broker will be licensed and registered with their provincial licensing body. In Ontario, visit the  Registered Insurance Brokers of Ontario (RIBO) website to check if your insurance broker is licensed.
• Do not purchase a policy through social media channels or “money saving” forums.
• Call the brokerage directly to confirm that the broker is indeed employed there.
• If the price is ‘too good to be true’, take that as a warning sign.

Équité partnered with Crime Stoppers Canada to make it easier for Canadians to report insurance crimes. To report insurance crime anonymously to Crime Stoppers Canada, available 24-hours a day, seven days a week, call 1-800-222-TIPS.