Even though claims volume has significantly decreased during the COVID-19 pandemic, the number of claims flagged for possible fraud investigation remains similar to pre-pandemic levels, RSA told Canadian Underwriter last week.

\”From RSA's perspective- this indicates [claims] with concerning loss facts are at an all-time high, really,\” said Meagan Maher, SIU (special investigations unit) specialist with RSA.

\”We are seeing more and more people committing insurance crimes that do not have history of it,\” Maher added. \”We're seeing a rise in insurance fraud by individuals who do have a history of it as well.\”

Lori Craig, national underwriting consultant at RSA, said she believes the increase in fraudulent claims is driven by the financial issues that have arisen because of COVID.

\”People just needing to offload vehicles, get free from leases, those types of things,\” Craig told Canadian Underwriter. \”We're visiting a lot of claims coming through that we've fortunately been able to prove as fraudulent. It's a huge increase over what we've seen in years past and it's all driven by those economic factors.\”

Maher and Craig were discussing the commonest types of fraud RSA has seen throughout the pandemic, as well as the correlation between increased fraud incidence and times during the economic downturn, among other topics.

In general, since there are fewer drivers on the roads, \”the chance to falsify losses without witnesses has certainly presented itself,\” Maher said. For instance, drivers involved in an accident may not call the police as often or visit the hospital. \”They're claiming it's all associated with fear of catching COVID, when really it simply provides them with an excuse to get out of reporting loss so that it's confirmable.\”

Fraud isn't just confined to auto insurance. For fraudsters, opportunity knocks in the property space as well. \”[Perhaps] you've got tenanted properties where nobody is paying rent,\” Craig posited. She says RSA has seen instances in which people have deliberately started fires to try to get a claims payout.

The insurer can also be experiencing an increase in water loss claims, \”because there's obviously not really any witnesses for that in your own home,\” Maher said. \”There's no first responders that has to respond to the scene of a water loss.\”

Returning to car insurance fraud, people might be motivated to make a false claim if they are can not make their car or any other insurance payments. Or they might falsify claims to help them pay off debts.

\”We've also seen an increase in COVID-related charges from [repair] shops for example exorbitant cleaning fees and delays of repairs, [or] refusal to release vehicles as a result of a COVID-related holding period,\” Maher said.

RSA has additionally noticed an increase in virtual telemedicine submissions. Telemedicine provides insurers having a safe way to receive medical care or treatment submissions, but it's largely unregulated because it was ushered in quickly last year, Maher said.

\”We're seeing more accident benefits claims arriving through HCAI [health claims for auto insurance] that have ‘virtual care’ listed as the form of treatment provision,\” Maher reported. \”We're definitely flagging claims more for that reason.

“It's very hard to prove [injuries are] not happening, or [that they’re] happening in a way that's different from what they're reporting, because nobody can go into the clinics and check,” Maher said. “There’s no real, official documentation that is required to prove it happened.\”

RSA's findings are in line with those observed at FRISS, a P&C insurance fraud detection software company. FRISS said during a webinar last month that it has witnessed cases of body shops charging drivers extra cleaning fees and storage days for vehicle cleaning. It's also seen a rise in residential arson and water damage claims. And fraudsters are utilizing COVID as an excuse to leave the scene of the accident.

Both RSA and FRISS pointed to a recent Insurance Bureau of Canada report that found insurance fraud tends to increase when the economy is within decline. According to a 2021 PwC economic crime survey quoted by IBC, times during the economic turmoil often lead to increased motivation to commit a criminal offense, the opportunity, and the ability to rationalize when to commit fraud.

\”For the rationalization piece that the PwC piece speaks to, during times of monetary hardship, consumers can more easily fall into the mindset that the money they've spent on insurance costs over the years entitles them to recoup some of that money when they're struggling,\” Maher said. \”We see that happening either by creating false claims or by inflating legitimate claims, which is called opportunistic fraud.\”

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