INSURANCE: April 2011

Saturday, April 30, 2011

Casualty insurance

Casualty insurance insures against accidents, not necessarily tied to any specific property. It is a broad spectrum of insurance that a number of other types of insurance could be classified, such as auto, workers compensation, and some liability insurances.

is a form of casualty insurance that covers the policyholder against losses arising from the of third parties. For example, a company can obtain crime insurance to cover losses arising from or .
is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that or other conditions could result in a loss.

Life

Main article: Life insurance

Life insurance provides a monetary benefit to a descendant's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an .

Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies, are regulated as insurance, and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and that pay a benefit for life are sometimes regarded as insurance against the possibility that a will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and , are financial instruments to accumulate or when it is needed.

In many countries, such as the U.S. and the UK, the provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of as well as protection in the event of early death.

In the U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation.

Health insurance

Great Western Hospital, Swindon

Health insurance policies issued by publicly-funded health programs, such as the UK's National Health Service will cover the cost of medical treatments. Dental insurance, like medical insurance, protects policyholders for dental costs. In the U.S. and Canada, dental insurance is often part of an employer's benefits package, along with health insurance.

Funeral insurance

Funeral insurance is a very old type of health insurance which is payed out upon death to cover expenses of the insuree. The and introduced funeral insurance circa 600 AD when they organized called "benevolent societies" which cared for the surviving families and paid funeral expenses of members upon death. Guilds in the served a similar purpose.

Accident, sickness and unemployment insurance

Workers' compensation, or employers' liability insurance, is compulsory in some countries

Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgage loans and credit cards. Short-term and long-term disability policies are available to individuals, but considering the expense, long-term policies are generally obtained only by those with at least six-figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a person for a period typically up to six months, paying a stipend each month to cover medical bills and other necessities.
Long-term disability insurance covers an individual's expenses for the long term, up until such time as they are considered permanently disabled and thereafter. Insurance companies will often try to encourage the person back into employment in preference to and before declaring them unable to work at all and therefore totally disabled.
allows business owners to cover the overhead expenses of their business while they are unable to work.
provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
insurance replaces all or part of a worker's lost and accompanying medical expenses incurred because of a job-related injury.

Home insurance

Home insurance provides coverage for damage or destruction of the policyholder's home. In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake, that require additional coverage. Maintenance-related issues are typically the homeowner's responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets

Friday, April 29, 2011

Auto insurance

A wrecked vehicle in

Auto insurance protects the policyholder against financial loss in the event of an incident involving a vehicle they own, such as in a .

Coverage typically includes:

Property coverage, for damage to or theft of the car;
Liability coverage, for the legal responsibility to others for bodily injury or property damage;
Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

Most countries, such as the , require drivers to buy some, but not all, of these coverages. When a car is used as collateral for a loan the lender usually requires specific coverage

Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as perils. An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are non-exhaustive lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an ). A policy in the U.S. typically includes coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.

insurance can take a number of different forms, such as the various kinds of professional liability insurance, also called professional indemnity (PI), which are discussed below under that name; and the business owner's policy (BOP), which packages into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners' insurance packages the coverages that a homeowner needs.

History of insurance

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and more modern monetary economies (with markets, currency, financial instruments and so on). The former is more primitive and the insurance in such economies entails agreements of mutual aid. If one family's house is destroyed the neighbours are committed to help rebuild. Granaries housed another primitive form of insurance to indemnify against famines. Often informal or formally intrinsic to local religious customs, this type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread.

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by and traders as long ago as the and BC, respectively.^[13] Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous , c. 1750 BC, and practised by early sailing . If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.

monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on : "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."

A thousand years later, the inhabitants of invented the concept of the . Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were deliberately jettisoned in order to lighten the ship and save it from total loss.

The deals with several aspects of insuring . Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in . Insurance became far more sophisticated in post- , and specialized varieties developed.

, pictured in 1991, is one of the world's leading and most famous insurance markets

Some forms of insurance had developed in by the early decades of the 17th century. For example, the will of the English colonist mentions two "policies of insurance" taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of £100 each, one relates to the safe arrival of Hayman's ship in Guyana and the other is in regard to "one hundred pounds assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed and sealed on 17 November 1628 but not proved until 1633. Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, opened a coffee house that became a popular haunt of ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, remains the leading market (note that it is an insurance market rather than a company) for marine and other specialist types of insurance, but it operates rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the , which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667." A number of attempted fire insurance schemes came to nothing, but in 1681 , and eleven associates, established England's first fire insurance company, the 'Insurance Office for Houses', at the back of the Royal Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office.

The first insurance company in the underwrote fire insurance and was formed in Charles Town (modern-day ), , in 1732. helped to popularize and make standard the practice of insurance, particularly against in the form of . In 1752, he founded the . Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain , it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, of the insurance industry is highly , with primary responsibility assumed by individual insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a . In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the (OFC)) for insurance similar to that which oversees state banks and national banks.

materialized utility of insurance

Claims

Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for. Claims may be filed by insureds directly with the insurer or through . The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form, such as those produced by .

Insurance company claims departments employ a large number of supported by a staff of and . Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes an investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizes payment.

The policyholder may hire their own to negotiate the settlement with the insurance company on their behalf. For policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim.

Adjusting liability insurance claims is particularly difficult because there is a third party involved, the , who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a . The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge.

If a claims adjuster suspects underinsurance, the may come into play to limit the insurance company's exposure.

In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation (see ).

Thursday, April 28, 2011

Insurability

Main article:

Risk which can be insured by private companies typically share seven common characteristics:

Large number of similar exposure units: Since insurance operates through pooling resources, the majority of insurance policies are provided for individual members of large classes, allowing insurers to benefit from the in which predicted losses are similar to the actual losses. Exceptions include , which is famous for insuring the life or health of actors, sports figures and other famous individuals. However, all exposures will have particular differences, which may lead to different premium rates.
Definite loss: The loss takes place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. , , and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. , for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
Accidental loss: The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks or even purchasing a lottery ticket, are generally not considered insurable.
Large loss: The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is hardly any point in paying such costs unless the protection offered has real value to a buyer.
Affordable premium: If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that the insurance will be purchased, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
Calculable loss: There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
Limited risk of catastrophically large losses: Insurable losses are ideally and non-catastrophic, meaning that the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base. constrains insurers' ability to sell as well as wind insurance in zones. In the U.S., is insured by the federal government. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the market.

Frequently Asked Questions

What is replacement cost?

Answer:

Replacement cost is the total cost that your insurance company would pay to fully reconstruct your home if it were destroyed.

Replacement costs include things that may not be included in the resale value, like the cost and availability of skilled labour, debris removal, extra expense due to more stringent building codes, and more. Upgrades, renovations and other improvements can also make rebuilding a home more expensive than was originally estimated in your insurance policy.

How is it different from resale value?

Answer:

Resale or market value is based on a number of factors that have no direct correlation to your home's replacement cost (the cost of reconstructing your home). These include the amount that would be paid for the house if it was sold, based on details such as location, land value and the amount paid for surrounding homes.

Many policies may require you to consult with your insurance professional to make sure your insurance is up to date. For example, it should reflect any recent changes to your property or renovations to your home. Remember that many policies require that any material renovations must be reported either before or at the time they are made. Even if you haven't renovated, you may have purchased expensive contents. To be sure, always check with your broker or agent.

Why is the replacement cost higher than what I paid for my home?

Answer:

The estimated replacement cost could exceed what you paid for your home for a number of reasons:

Upgrades, renovations and other improvements can make rebuilding a home more expensive than the original cost.
Construction on your home may need to meet newer, more demanding building codes.
The cost of demolition and preparing the land to rebuild is included as part of the replacement cost.
The materials used to build your home may have gone up in price or may no longer be available, which means that using materials of like quality to rebuild your home may cost more.
A contractor rebuilding just one home won't benefit from the same cost efficiencies as a builder constructing many homes within a development.
Following a catastrophic event such as a wildfire, labour and building materials may be scarce, resulting in inflation of the costs of construction.

Will my renovations be covered by my home insurance?

Answer:

If your insurance company doesn't know about the renovation, you may not have enough coverage. The improvements you've made could have an impact on the valuation of your home.

For example, if you expand your kitchen and add new appliances and granite countertops, you have added value to your home. The amount of your insurance should reflect those changes so that you have adequate coverage.

Some policies cover minor remodeling work, but even if you think the changes are small, always check with your insurance representative to be sure.

Is my new high-tech home theatre covered by my home insurance?

Answer:

Because most home insurance policies cover contents up to a certain percentage, it is likely that your new home theatre will be covered. However, the only way to be sure is to talk to your broker or agent as every policy is different.

Underwriting and investing

The business model is to collect more in premium and investment income than is paid out in losses, and to also offer a competitive price which consumers will accept. Profit can be reduced to a simple equation: Profit = + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways:

Through , the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks;
By the premiums they collect from insured parties.

The most complicated aspect of the insurance business is the of ratemaking (price-setting) of policies, which uses and to approximate the rate of future claims based on a given risk. After producing rates, the insurer will use discretion to reject or accept risks through the underwriting process.

At the most basic level, initial ratemaking involves looking at the and of insured perils and the expected average payout resulting from these perils. Thereafter an insurance company will collect historical loss data, bring the loss data to , and comparing these prior losses to the premium collected in order to assess rate adequacy. and expense loads are also used. Rating for different risk characteristics involves at the most basic level comparing the losses with "loss relativities" - a policy with twice as money policies would therefore be charged twice as much. However, more complex through generalized linear modeling are sometimes used when multiple characteristics are involved and a univariate analysis could produce confounded results. Other statistical methods may be used in assessing the probability of future losses.

Upon termination of a given policy, the amount of premium collected and the investment gains thereon, minus the amount paid out in claims, is the insurer's on that policy. An insurer's underwriting performance is measured in its combined ratio which is the ratio of losses and expenses to earned premiums. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. A company with a combined ratio over 100% may nevertheless remain profitable due to investment earnings.

Insurance companies earn profits on "float". Float, or available reserve, is the amount of money on hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest or other income on them until claims are paid out. The (gathering 400 insurance companies and 94% of UK insurance services) 20% of the investments in the .

In the , the underwriting loss of and companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably , do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held.

Naturally, the float method is difficult to carry out in an period. do cause insurers to shift away from investments and to toughen up their underwriting standards, so a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the .

Wednesday, April 27, 2011

Health Care Levies

What does auto insurance have to do with health care?

Most Canadians have never been in a serious car crash, and may not know what auto insurance has to do with health care. In fact, Canada’s non-government home, car and business insurers pay more than $2 billion per year into the country’s health care system, most of it related to auto insurance.

What is a “levy?”

If you are seriously injured in a car crash, most of the treatment you receive is probably covered by auto insurance, but because Canadians have universal health care, any emergency care or visits to your doctor will initially be paid for by your provincial health care plan. You will likely never see the bill, but your auto insurer will – in a manner of speaking. Every year, insurers reimburse provincial health plans for treatment given to crash victims. This is called a “health levy” or “aggregate assessment,” and is an important source of funds for provincial health care systems in Alberta, Ontario, New Brunswick, Nova Scotia, PEI and Newfoundland & Labrador.

What about treatment that is not covered by provincial plans?

In addition to funding health care through levies, auto insurers pay for a number of health services directly. Depending on the type of injury you have suffered in a crash and where you live, your Accident Benefits (AB) coverage may cover visits to a chiropractor, physical therapist, psychologist, speech or occupational therapist (usually for brain injuries), and/or massage therapist, and a number of other health care professionals. In addition, AB often pays for crutches, wheelchairs and other assistive devices, and may even cover improvements to your home or car to help you deal with a permanent disability.

Top 10 Most Stolen Cars

Automobile theft is much more than an insurance problem; it's an expensive social menace. Every year, automobile theft costs Canadians close to $1 billion, including $542 million for insurers to fix or replace stolen cars, $250 million in police, health-care and court-system costs and millions more for correctional services.

Every year, IBC publishes a list called “The Top 10 Most Stolen Cars.” See if your car is a potential target.

How often your make and model of car is stolen is one of the factors insurers use to set your insurance premium. It’s a good idea to check out these lists, as well as the publication .

Thieves generally steal cars for one of four reasons:

1. For sale abroad - Stolen cars are often immediately packed – with their vehicle identification numbers (VINs) still intact – and shipped abroad, where they are sold for many times their original market value.

2. For sale to unsuspecting consumers – Stolen cars may be given a new identity with false VINs, and then sold to unsuspecting consumers. They can also be dismantled and sold for parts.

3. To get somewhere – This is commonly, but inappropriately, referred to as “joyriding.” Auto theft of any kind is still a crime, and innocent people do get hurt or killed as a result.

4. To commit another crime – Stolen cars used to commit other crimes are often recovered – abandoned and badly damaged – within 48 hours of their theft.

Don't Be a Victim: What You Can Do to Avoid Insurance Crime

Insurance crime is not victimless. It costs Canadians more than $3 billion a year in insurance premiums and health care, emergency services and court costs. Insurance criminals take money right out of your pocket - when they cheat, you pay.

Insurance companies are committed to putting an end to this type of crime. Individual companies and Insurance Bureau of Canada (IBC) investigate insurance crimes and educate Canadians about their costs and consequences. IBC also lobbies for that will increase the risk and decrease the profit associated with this type of activity.

You can help combat insurance crime. Below are some precautions you can take to avoid being a victim of insurance crime, and some clues to help you identify an insurance crime in action. If you have information about an insurance crime, report it.

Auto accident insurance crime

To avoid a staged collision:

Never tailgate; allow ample time to stop if the car ahead of you suddenly jams on its brakes.
Look beyond the car in front of you while driving. Apply your brakes if you see traffic slowing.

In the event of a collision:

Get the other car's licence plate number. Also, count how many passengers were in the other car when the accident took place. Get their names, phone numbers and driver's licence numbers. Later, you can compare this information to the information on the resulting claims, to make sure that all of the claimants were actually passengers in the car.
Note descriptions of the passengers. Try to find some characteristic that distinguishes each passenger.
Note how the passengers behave. Do they stand around and joke, but suddenly act injured when the police arrive?
Take pictures of the other car, the damage it received and the passengers. Take pictures on your cellphone or keep a disposable camera in your glove compartment for this purpose.
Call the police to the scene. Get a police report with the officer's name, even if the damage is minor. If the police report notes just a small dent or scratch, it will be harder for crooks to claim serious injuries or car damage later.
Get involved if you're a witness. Watch for the warning signs of a scam, and help the honest victim with details.
Call if you suspect an insurance crime. The 24-hour toll-free number is 1-877-IBC-TIPS (422-8477). Give the location of the collision, the licence plate number(s) of the car(s) involved, the names of people involved, the reason you think the collision is suspicious and as many other details as possible.

You can use the to note the details about the accident, the driver(s) and the passengers.

Tow trucks

The Financial Services Commission of Ontario (FSCO) offers excellent advice about what to do when you are approached by a tow truck driver at the scene of an accident. This advice applies in most jurisdictions in Canada:

Make sure the tow truck has some kind of licensing number on its side before you use its services.
Look to see if the tow truck is affiliated with a reputable company such as an automotive roadside assistance group or automobile association.
Ask if the tow truck driver has a police contract.
Listen for obvious clues. Does the driver recommend a particular repair facility without being asked? This might be an indication that a referral fee arrangement exists.
Carefully read everything the tow truck driver asks you to sign.
Ask that your vehicle be taken to a secure location where an adjuster or appraiser from your insurance company can have access to it.
Contact your insurance company, if possible, for information on towing and where to take your vehicle to be repaired.
Consider having your vehicle towed to a preferred vehicle repair shop. Some insurance companies use preferred repair shops where they have an agreement that guarantees your vehicle will be repaired to the highest possible standards. For more information, contact your insurance company.

After a collision:

Contact your insurance company if a stranger tries to steer you to an unknown body shop, doctor, chiropractor or lawyer. Give officials the names, addresses and phone numbers of these service providers.
See only medical and legal professionals you know and trust, or that are recommended by people you trust. Never take referrals offered by a stranger.
Check out the doctor or lawyer. Contact your provincial medical licensing board to ensure that your doctor is licensed and that no complaints have been lodged against him or her.
Know what your medical benefits are – what's covered and what isn't.
Keep detailed records of your medical treatments. Include all dates, locations, who provided the treatments, what diagnoses and services you received, and what medicine, supplies or equipment were provided.
Compare your records against the statements you receive to make sure the bills aren't padded and that they don't include treatments you didn't receive. Are the treatment dates, doctor name(s), facility locations and medical services the same as you remember? Question your health provider and ask for clarification if you see problems or inconsistencies on your bills.
Never sign blank insurance claim forms.
Never give strangers your policy number, insurance ID number or any other information, especially if they offer you cash or free gifts, treatments or equipment.

Slips, trips and falls in business settings

Criminals are lazy. They don't want to have to work for their reward so they will target businesses that make their job easier for them. Don't let your operation be an easy target for an insurance criminal looking to cash in big on a little "accident." There are some simple steps you can take to make your business less vulnerable to these criminals. to get some tips on managing the many types of risk that businesses face every day.

Check your VIN

Many insurance crimes are committed using or re-using vehicle identification numbers (VINs).Your best defence against this type of insurance crime is to ensure that your VIN is accurate

Government Action

Over the years, IBC and Canada’s home, car and business insurers have helped bring about a number of important legislative changes that have led to safer communities. These include mandatory seatbelt use, anti-drinking-and-driving measures and graduated driver licensing.

IBC continues to work with municipal, provincial and federal governments to promote changes that will lead to decreased insurance crime and, as a result, safer roads and a safer Canada.

IBC seeks changes to penalties for auto theft

IBC continues its efforts to have auto theft recognized as a serious and violent crime.

IBC was integral in the introduction of Bill C-343, a private member's bill that was not passed because the session of Parliament was prorogued. The bill had passed a number of readings and had been placed before the Standing Committee on Justice and Human Rights.

Bill C-343 would have made auto theft, which is now a simple property crime, a separate offence in the Criminal Code and subject to harsher sentencing. Under the bill, the minimum sentence for third-time offenders would have been two years in jail and a tougher financial penalty. Bill C-343 would have recognized auto theft as a violent offence that endangers public safety.

IBC will continue to advocate for legislation, such as Bill C-343, that will result in the adequate punishment of auto thieves, putting more of these criminals where they belong - behind bars.

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Tightening the borders: Working more closely with Canada Border Services Agency (CBSA)

The CBSA (formerly Canada Customs) has worked with the insurance industry to tighten the borders against those who would export stolen cars. The “Ports Project” of 2004 was a three-month, cooperative effort involving Canada Border Services Agency (CBSA), law enforcement and IBC. It was very successful; a total of 61 vehicles, worth over $2 million, were recovered.

IBC is working with law enforcement, the Royal Canadian Mounted Police and the Canadian Association of Chiefs of Police to establish a permanent presence at major Canadian ports.

IBC has submitted a proposal to CBSA that has the following objectives:

To improve sharing of information among CBSA, law enforcement and IBC, especially when it pertains to vehicles that have been or are being exported from Canada;
To have CBSA participate in a national program designed to intercept stolen cars before they leave Canada and to return those that are successfully shipped overseas; and
To have CBSA assist with the identification and prosecution of those involved in the export of stolen cars.

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Dedicated insurance crime prosecutors

Organized insurance crime is an attractive avenue for criminals because it is a low-risk crime with high potential for profit. Insurance crime cases are very complex and difficult to prosecute, so the criminals very seldom suffer any serious consequences for their crimes.

Currently, IBC investigators prepare insurance crime case files and present them to the Crown attorneys who are responsible for prosecuting the offenders. However, because courts are consistently backlogged, the Crown attorneys often prefer to prosecute other crimes that are higher-profile and perhaps more likely to lead to a conviction. Therefore, prosecutors frequently choose either to plea bargain (often resulting in a slap on the wrist) in insurance crimes cases, or to drop the cases outright.

A number of jurisdictions in Canada and the US have assigned dedicated insurance crime prosecutors, who become experts in the field and are able to devote more time and resources to it than would otherwise be possible. This approach has met with considerable success.

Advantages of a dedicated insurance crime prosecutor:

The prosecutor works closely with the investigators on each case to ensure an effective investigation, supported by appropriate documentation. This increases the chances of a successful prosecution.
The prosecutor becomes an expert in presenting organized insurance crime cases and gathering evidence. Both the prosecutor and any witnesses are well prepared for a trial.
The prosecutor ensures charges are laid when there is sufficient evidence.
More cases proceed to court, and more convictions are won.
Penalties are greater. Larger fines, restitution orders, even jail time become more common.
Stronger penalties act as a deterrent to others who may be considering insurance crime as a career.
With organized insurance criminals in jail, financing terrorism becomes more difficult.
The judiciary becomes more educated about insurance crime and becomes more willing to impose appropriate sentences, along with fines and restitution orders.
Front-line claims adjusters develop an increased awareness of signs of possible insurance crime. They continue to be educated about proper documentation and developing trends.

Everyone Can Help Fight Auto Theft

A Few Simple Precautions is All it Takes

A professional thief can steal your car in about 30 seconds – without a key. It’s really that easy. But there are few simple precautions that you can take to help make the thief’s target a little harder to reach:

Always roll up your car windows, lock the doors and pocket the key.
Keep your vehicle registration certificate and proof of insurance on you at all times – not in the glove box.
Never leave valuable objects or packages in full view. Put them in the trunk.
Don't leave the keys in the ignition, even while getting gas. Approximately 20% of stolen cars have keys in them.
Always park in a well lit and busy area.
Protect your car with an IBC-approved that meets the strict Canadian Standards. However, please be aware that it has been proven that the installation of aftermarket remote starting systems (including those installed at new car dealers) can seriously compromise the effectiveness of immobilization systems. You may be trading the complete protection of your car for a convenience. Make sure to ask if they are compatible.
Have the parts of your car marked. Parts marking will render your car less attractive to thieves who like to chop up old cars and sell the parts (“chop shops”).
Prevent thieves from towing your car; park with your wheels turned sharply and apply the emergency brake.
Give only your ignition key to a parking lot attendant. Keep your other keys with you.
If you have a garage, use it and lock the door as well as your car.

Lock It or Lose It!

IBC has teamed up with the Ontario Provincial Police (OPP) to remind drivers to take these precautions. As part of the Lock It or Lose It! program, volunteers and OPP officers visit community parking lots across the province. They're on the lookout for drivers who leave valuables in plain view, leave the engine running unattended or leave doors unlocked. In each case the Lock It or Lose It! team leaves a notice under the car's windshield wiper to remind the driver to better secure the vehicle in the future.

Tuesday, April 26, 2011

Crime-fighting Partners

Insurance crime costs Canadians more than $1 billion per year. It transcends our borders and often involves international organized crime rings. No one organization, group or association has the power, influence or resources to effect significant change on insurance crime, but if resources are pooled, ideas are shared and groups work together, the possibility for change is limitless.

With formal agreements in place, IBC works with many individuals, groups, professional associations and law enforcement agencies, both here in Canada and abroad, to reduce or eliminate insurance crime. Below is a partial list.

IBC could not have had the success it has in reducing insurance crime for honest policyholders without the generous assistance of these crime-fighting partners.

The Recovery of Cars Stolen for Sale Abroad

Cars are often stolen for resale in another country. Once a stolen car leaves Canada, it is usually very difficult to find and/or return to its owner. IBC operates a service to recover cars stolen for export.

Recovering the stolen cars before they leave Canada

Early detection and timely exchange of information are the keys to recovering stolen cars before they leave the country. To this end, IBC facilitates the flow of information among police forces (local, provincial and federal), federal government agencies and export companies. Stopping a car before it leaves Canada minimizes losses for insurance companies (who avoid the cost of international shipping) and prevents the need for legal and administrative wrangling with other jurisdictions.

Getting the cars back to Canada

If a car cannot be prevented from leaving the country, all is not lost. IBC has agreements and procedures in place with governments in many countries that:

facilitate the exchange of information necessary for police in the country where the car ends up to detect, catch and prosecute international thieves; and
allow IBC to return the car(s) to Canada in a minimum amount of time and at a minimum expense.

Who pays and how much?

The insurance company that pays the claim for the stolen car (and, therefore, owns the car) is responsible for all costs incurred in the process of recovering it. Insurance Bureau of Canada charges a service fee for recovery that differs depending on whether or not the insurance company is a member of IBC.

For more information

If you would like more information about this program to recover cars stolen for export,

Putting a Dent in Car Theft with AutoFind

Recovering stolen cars is an important part of reducing the cost of auto theft. IBC has joined forces with a number of police services across Canada to implement the AutoFind program, which uses licence-plate scanning technology to compare the plates of cars parked on the street against a list of stolen cars. If a match is registered, the car's status as stolen is confirmed and the police begin the process of returning it to its owner.

The AutoFind program is currently operating in Laval, Toronto, Edmonton and Hamilton.

Between January 2003 and June 2009, the AutoFind program helped to recover over 8,200 vehicles with an actual cash value of $41 million. Almost 70% of the stolen vehicles recovered by AutoFind have been found within 14 days of them being reported stolen.

Monday, April 25, 2011

Confirming a Car’s True Identity

IBC helps police verify vehicle identification numbers (VINs) to ensure that recovered stolen cars get returned to their rightful owners more quickly, and that consumers can be confident about a car’s history before they buy.

Vehicle identification numbers (VINs)

All cars built for sale in North America since 1981 have a vehicle identification number (VIN) that consists of 17 letters and numbers. This is like the car’s fingerprint. A car’s VIN:

is engraved on a metal plate on the driver’s side of the dashboard and in other places on the car;
provides basic information about the car, including the make and model and where and when it was built;
stays the same no matter how many times the car changes owners and license plate numbers;
can be used to track the history of the car – e.g., whether it has been in any serious crashes or been stolen, and how many owners it has had;
is used by insurance companies to set accurate premiums; and
can help police find the rightful owner if the car is stolen.

VINs of stolen cars

Car thieves often try to hide the fact that a car is stolen by:

removing the VIN plate;
scratching out the VIN number;
altering the VIN (e.g., turning a 3 into an 8);
replacing the real VIN with a made-up one; or
replacing the real VIN with a copy of another car’s VIN (sometimes called “cloning”).

IBC’s VIN programs

In Alberta and Ontario, IBC assists police in determining the real VINs of stolen cars that are recovered with missing or altered VINs. If IBC cannot determine the real VIN and identify the car, the Ministry of Transportation will assign the car a new VIN.

Once the real VIN has been identified or a new VIN assigned, IBC removes all false or old VINs from the car before installing a brass plate with the correct VIN on the driver-side door frame and placing a sticker with the correct VIN on the dashboard where the original VIN plate would be.

IBC can also:

reproduce the original VIN on a car whose VIN has been lost or damaged for some other reason (e.g., the dashboard was replaced);
create a new VIN for cars that are built from scratch or from kits, or assembled from parts of other cars; and
create VINs for trailers (since April 2004, all trailers in Alberta require a standard VIN).

Branding Protects Everyone

Any car registered in a Canadian province or territory has a permanent record that is linked to its . When a car is stolen or severely structurally damaged (sometimes called a “write-off”) authorities can add a note, or a brand, to that record.

Four different brands can be assigned. The names vary depending on the province, but the categories are essentially the same:

Irreparable – a badly damaged vehicle that can only be used for parts or scrap metal. A car with this brand cannot be driven.
Salvage – a vehicle that can be repaired, but cannot be driven until an inspector has deemed it safe.
Rebuilt – a vehicle that was branded “salvage,” but has since been rebuilt and passed a safety inspection.
Stolen – a vehicle that has been reported stolen. This brand can be assigned or cancelled only by police, and is cancelled only when the vehicle is recovered.

Branding fights crime and protects consumers

Branding makes it more difficult for criminals to pass off stolen or unsafe vehicles to the unsuspecting public. In this way, it protects consumers and makes roads safer.

Because every vehicle has a VIN that is linked to the vehicle’s record, crooks need to work very hard to make stolen cars look legitimate. Often, this involves removing the VIN from a car in the junkyard and putting it on a stolen car to mask its identity.

By disguising its true identity, a criminal can sell you a car that is stolen or that has serious hidden damage. Many unsuspecting consumers have purchased stolen vehicles and later had them seized by the police with little hope of recovering the money they paid. Others have bought seemingly fit vehicles, only to discover that structural damage makes the car undriveable.

If junk vehicles are branded irreparable or salvage, their VINs are of little use to criminals. Branding makes it very difficult for crooks to disguise the identities of stolen and damaged vehicles.

Branding:

enhances road safety by ensuring proper repair of “salvage” vehicles;
protects consumers by making stolen cars and car parts more difficult to resell; and
helps police identify stolen vehicles.

Insurance Bureau of Canada's Theft Deterrent Program

Your best defense against auto theft: Immobilizers meeting the National Standard of Canada (CAN/ULC-S338-98)

How do immobilizers work?

An immobilizer is an electronic device that arms automatically when your vehicle is switched off and prevents unauthorized starting of the vehicle.
An immobilizer meeting the National Standard of Canada (CAN/ULC-S338-98) cuts three vital circuits: the starter, the ignition and the fuel. This makes it impossible for thieves to start your vehicle without the key.

Having your car stolen is not only emotionally upsetting, but also very time-consuming and expensive. Unfortunately, car theft is all too common and costs Canadians $1 billion per year.

There are human costs, too. Innocent Canadians are put at risk when a thief steals a vehicle. Each year, 40 people lose their lives and 65 more are injured as a direct result of car theft.

More information about immobilizers

Immobilizers are integrated into the vehicle’s circuitry and engine-management system. They automatically interrupt the power to multiple electronic circuits, usually the starter motor, ignition and fuel pump circuits, when the specially coded key is removed from the ignition switch, or the vehicle is shut off.
Only if the correctly coded key (or other coded element) is used and recognized by the system will the circuits be enabled, allowing the car to start. Immobilizer keys typically have a transponder or resistor embedded in the head to communicate the code to the engine-management system.
If the correct code is not recognized, or someone attempts to start the vehicle by some other means – such as hotwiring or breaking the ignition lock cylinder – the system will remain armed and prevent the car from starting.
An engine immobilizer should always be at the core of any car theft deterrent system. It is the most effective means of preventing drive-away theft.

Other security devices, such as steering wheel locks, alarms, tracking systems and parts marking, can be combined with an immobilizer to provide additional layers of protection.

Who’s Involved?

Paralegals/Lawyers

A legal representative can be an important resource for you as you pursue your insurance claim. Most lawyers and paralegals are honest, working in the best interest of their clients.

Regulators have issued Cease and Desist orders against specific paralegals for unfair business practices. One lawyer suspected of being involved in staged collisions left the country before there was an opportunity to have charges laid.

One scam involved a paralegal making off with their client’s insurance settlement. In this scenario, the legal representative negotiated a settlement with the insurance company for injuries suffered by their client, pockets the cheque and tells the client, a legitimate accident victim, that they got no compensation.

In response to inquiries from government about insurers’ experiences with paralegals, IBC recommended that there be rules in place dictating acceptable practices for paralegals, including a requirement for paralegals to have liability insurance to protect clients they treat unfairly.

Medical and rehabilitative care providers

The vast majority of medical providers are committed to helping their patients get better and only look to be fairly compensated for their work. However, there are those that, instead of healing the sick and protecting the innocent, abuse the public trust by "doctoring" insurance bills. They inflate bills or give unnecessary treatment in an attempt to collect as much money as possible. Participants may include chiropractors, physicians, physiotherapists, pharmacists and their office managers.

In many cases, the patient, satisfied that he or she is receiving quality treatment and service, is unaware of the fraud.

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Tow truck operators

An accident, no matter how minor, can be very stressful and confusing. And there are some people looking to take advantage of this time of uncertainty. Tow truck drivers may be paid a fee to refer accident victims to a particular paralegal. This is illegal.

A tow truck driver may also be paid a referral fee by a vehicle repair or body shop to have damaged vehicles towed there. This kind of tow truck driver is known in the industry as a “chaser.” Many “chasers” are owned or controlled by vehicle repair shops.

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Vehicle repair facilities

Vehicle repair facilities can be involved in a variety of insurance scams. Here are some of the more common ones:

Burying the deductible - The car owner and collision repair shop conspire to make the insurance company pay the entire cost of the repair. One way to do this is for the body shop to install cheaper aftermarket, repaired or junk parts, but bill the insurer for original manufacturer parts. This may seem harmless, but repair with inferior parts could make a car unsafe. Also, proper use of deductibles keeps premiums affordable for all drivers.
Chop shops - Collision repair shops sometimes serve as a front for an illegal operation where stolen cars are disassembled and sold piece-by-piece to other repair shops.
Inflated damage estimates -Some dishonest shops will estimate charges for work that they don’t intend to complete. Shops may also inflate the estimate by purposely doing further damage to the vehicle.
Kickbacks - Unscrupulous collision repair shop owners have been known to bribe insurance adjusters to send claimants their way.
Airbag fraud - With airbags now coming standard in most new cars, airbag fraud is an emerging trend. Airbags are quite costly to replace and re-install, so if someone brings a car in for minor repairs after a minor fender-bender, a dishonest body shop can easily inflate the price of the repair by making it seem like the airbag deployed.

A crooked repair shop can bill the insurance company $2,000 or more for a new airbag. If you’re lucky, they pocket the money and leave your airbag alone. A more greedy outfit might take your perfectly good airbag, sell it on the black market, and fill your airbag space with old rags, cardboard or beer cans. More likely, they will leave you with a stolen, previously deployed or salvaged airbag. You won’t know the difference until you are in an accident, but your family will be put at risk.

Types of Personal Injury Fraud

Premeditated personal injury fraud – auto insurance

The common auto insurance scams described below are carried out by seasoned criminals, who attempt to claim debilitating injuries in order to get income replacement and other financial benefits from insurance companies. These sophisticated criminals often plan accidents, hire witnesses to back up their stories, and provide all kinds of false documentation to support their claims.

Swoop and squat

In this scenario, a “swoop” car suddenly speeds up and cuts off the “squat” car (sometimes an innocent person in the wrong place at the wrong time and sometimes an accomplice). Unable to stop in time, the “squat” car rear-ends the “swoop” car. Usually, everyone who is in on the scam claims some sort of injury, and makes an auto insurance claim.

This sounds harmless enough – what’s a little fender bender? But in the past this scam has been known to go horribly wrong, with innocent victims being seriously injured and even killed.

Juan and Maria Lopez and their two-year-old daughter Joanna were burned alive when two men tried to stage a car collision on a California freeway in 1997. The criminals chose to cut-off a tractor-trailer (the “squat” vehicle), forcing it to stop suddenly. The Lopez’s, behind the tractor trailer, also stopped suddenly and were rammed from behind by a gravel truck, killing the young family.

Fortunately, such a tragic result is not the norm, but you never know what will happen when cars collide at high speed. Real accidents are dangerous enough. Criminals can try to stage a “safe” accident, but they have no control over road conditions and the reactions of other drivers. This happens every day on Canadian streets and highways, putting everyone at risk.

Drive down

The criminal appears to yield and waves to the innocent victim to proceed with a merge or lane change. As the victim merges, the criminal drives into the innocent driver, and later denies that he or she had waved the victim on.

Sideswipe

The criminal targets an innocent driver and purposely collides with the side of the target vehicle. This usually occurs in busy intersections with dual left turn lanes. If the victim in the inner lane drifts even a little into the outer lane, the criminal intentionally causes a collision.

Imaginary accidents

In some auto insurance fraud schemes, no accident ever really happens. The criminal reports an accident and subsequent injury, and makes a claim, but the accident only exists on paper. In some cases, police are called to the scene of an alleged “hit and run,” where only one car is present, and damage has been fabricated.

Seat sales

This is a common feature of staged accidents. The principal perpetrator of the accident will “sell” passenger spaces in the car for a set price or a percentage of the passenger’s insurance claim. In some cases, the passengers do not even ride in the car when the accident occurs.

Premeditated personal injury fraud – liability insurance

This type of fraud is most commonly referred to as a “slip/trip and fall.” And it is as simple as it sounds. The criminal pretends to have been seriously injured on your property – at your place of business or your home. The amounts awarded for these claims are covered by your liability insurance, commercial insurance or under occupiers’ liability.

Types of Personal Injury Fraud

Premeditated personal injury fraud – auto insurance

Swoop and squat

This sounds harmless enough – what’s a little fender bender? But in the past this scam has been known to go horribly wrong, with innocent victims being seriously injured and even killed.

Drive down

Sideswipe

Imaginary accidents

Seat sales

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Premeditated personal injury fraud – liability insurance

Sunday, April 24, 2011

The Cost of Personal Injury Fraud

In 2001, IBC studied the cost of personal injury fraud across Canada (except BC, the only province that chose not to participate). Fourteen companies, both public and private, of varying sizes and representing 60% of the insurance marketplace, participated in the study. Personnel reviewed files randomly selected from their records, looking for evidence of personal injury insurance fraud. A total of 4,066 closed claims files with payment were examined, providing IBC with a 3% margin of error.

Key findings:

More than 26% of all personal injury claims contain elements of fraud.
Opportunistic fraud is the single largest contributor to claims costs.
An estimated $500 million is paid out by home, car and business insurers for claims containing elements of fraud.
Insurance policyholders are more likely to commit personal injury fraud than are health care providers or other professionals.
Premeditated and opportunistic fraud are more prevalent in major cities and metropolitan areas than in small towns and rural communities.
Fraud indicators used by the industry are important to the successful detection and control of premeditated and opportunistic fraud.

These findings suggest that health-related costs to insurers could be reduced substantially by minimizing the opportunities for personal injury fraud. They also suggest that, regardless of who pays (private insurers or provincial health plans), our limited health care resources are often being misused.

Many people think of health services as “free,” so they may not consider misuse a big deal. But in the end, we all pay for it, either through our taxes or through our insurance premiums.

Personal Injury Fraud

Personal injury fraud – as it pertains to home, car or business insurance claims – is any act or omission intended to result in a financial insurance benefit for an injury that is nonexistent, exaggerated or unrelated to any accident that would be covered by the policy. No matter what the circumstances, personal injury insurance fraud is a crime.

Personal injury insurance fraud can be “opportunistic” or “premeditated”:

Opportunistic personal injury insurance fraud – most commonly an inflated claim. Examples:

A health care professional exaggerates the severity of a patient’s legitimate injury in order to increase the claim amount.

A person who is actually injured exaggerates the extent of his or her injury or required recuperation time. Often such injuries are classified as “malingering.” Assuming that insurance is paying for lost income, the individual may be seeking a “paid vacation” courtesy of the insurer.

Such cases usually necessitate extra medical visits and medical examinations, thus adding to the societal cost of this crime.

Premeditated personal injury insurance fraud – when someone devises a way to make an insurance claim. Premeditated fraud often involves some extreme action. Example:

A person intentionally causes a car collision or falls down a neighbour’s stairs, and then collect benefits from his or her insurance company for a nonexistent injury.

This kind of fraud also has related financial and human costs, as unsuspecting victims of staged car collisions often suffer very real injuries.

What Happens to Stolen Cars, the Victims and the Thieves

What Happens to Stolen Cars?

Stolen cars usually end up in one of the following places:

In chop shops
In shipping containers at ports in Canada or overseas
At other crime scenes
Abandoned in random locations
In the hands of unsuspecting consumers

Chop shops

About 50% of stolen vehicles end up in "chop shops,” where stolen cars are dismantled into parts to be sold off separately, often to legitimate businesses unaware the parts are stolen. This is a big business that accounts for millions of dollars a year in profits for criminals.

Shipping containers

Each year, tens of thousands of cars are stolen for export to other countries where they can be sold for many times their original market value. In some cases, these cars are recovered at Canadian ports before they reach their intended destinations. IBC is actively working on having CBSA take a more active role in preventing these vehicles from leaving Canada.

Where are all the stolen vehicles going?

Crime scenes

Many stolen cars are taken to commit another crime. Thieves take advantage of owner negligence, grabbing the first vehicle they can find. Why would criminals risk using their own cars when they can very easily use a car that’s been left running in a driveway?

Abandoned

Sometimes, thieves take cars just because they can or because they want them for transportation. It used to be called “joyriding,” but that term takes away from the seriousness of the crime. Auto thieves have no regard for people or property and often vandalize then abandon the cars that they steal.

Unsuspecting consumers

Every year, hundreds of unassuming consumers buy stolen cars and face having their new cars seized by police. Stolen cars are often sold for a quick profit – sometimes to fund other criminal activity like drug smuggling and even terrorism. Thieves mask the true identity of a stolen vehicle by changing its vehicle identification number (VIN).

A consumer who unknowingly purchases a stolen car has no recourse, and no way to get his or her money back.

What Happens to the Victims of Auto Theft?

Everyone is a victim of auto theft, whether they have had a car stolen or not. On average, $35 per auto insurance policy goes to pay for the cost auto theft.

Owners are upset and inconvenienced when their cars are stolen.
Unsuspecting buyers of stolen cars suffer financial loss.
Those who steal because they can often damage the vehicles they steal and other property that may be inside it.
There are significant time and expenses involved in reporting, processing and settling vehicle insurance claims. This impacts many stakeholders, including policyholders, insurance companies and investigators, taxpayers, police and society.
Stolen vehicles are frequently used while committing other crimes (e.g., break-and-enter robberies of homes) and in police chases when, owing to the thieves' reckless driving, they may be involved in the injuries or deaths of innocent people.
Every year approximately 40 people die and 65 are injured as a direct result of auto theft. A stolen car is just like a loaded gun when it’s in the hands of a thief. Car thieves have absolutely no regard for public safety and the rules of the road.

And What Happens to the Thieves?

Regrettably the courts still look at auto theft with more compassionate eyes. Of course, some of their hands are tied by the restrictions within the Youth Criminal Justice Act.

IBC has been working to make the courts aware of the impact of auto theft – that it is not a victimless crime. IBC has made a victim impact statement available for all Crown Prosecutors. Additionally, IBC has also been actively advocating for changes to the criminal code to have auto theft treated as a violent and indictable offense.

Auto Theft

Insurance Bureau of Canada has been helping Canadians fight auto theft for more than 80 years.

Regrettably, some people still have a very misguided notion as to what auto theft is and isn’t. Let’s set the record straight.

Auto theft is not:

just an insurance or a policing problem
just a victimless crime
just a property crime

Auto theft is:

a global problem
profitable for criminals
expensive for law-abiding citizens
dangerous and a threat to our safety

Auto theft defies all boundaries - jurisdictional, political, geographical and administrative. And it is a big and lucrative business; on average, a car is stolen every three and a half minutes in Canada - that's approximately 420 per day. Because of the changing trends and complexity of the issue, the fight against auto theft requires the cooperation and involvement of many partners. It starts with automobile owners and includes the law enforcement community, automobile manufacturers, dealers of new and used cars, salvage operators, car repairers, automobile insurers, theft deterrent system manufacturers and installers, licensing and customs authorities, and the judicial system.

Auto theft is not a victimless crime – or just a property crime. First, on average, it costs each policyholder an additional $35 on his or her insurance premium. On top of that, auto theft costs all Canadians at least $1 billion per year, if one also considers health care, court, policing, legal and out-of-pocket costs, such as deductibles.

Second, and more serious, auto theft costs people their lives. Car thieves have absolutely no regard for public safety and the rules of the road. Every year approximately 40 people die and 65 are injured as a direct result of auto theft. When it’s in the hands of a thief, a stolen car is like a loaded gun.

Insurance Crime

Insurance Bureau of Canada’s (IBC’s) primary goal in providing investigative services is to protect the premiums of honest policyholders by ensuring that insurance companies pay only legitimate and honest claims.

IBC has an 80-year history of providing investigative services to Canada's home, car and business insurers. IBC focuses its investigative efforts on organized insurance crime rings - specifically, rings involved in auto theft and/or filing fraudulent injury claims. In Canada, organized insurance crime continues to be a destructive and costly offence and represents a significant cost to insurers and policyholders - about $542 million annually. Once related costs for health care, police, emergency services and the courts are factored in, the annual cost of auto theft to Canadians amounts to $1 billion.

IBC is uniquely positioned to combat insurance crime

Effective lobbyist. As the voice of Canada's home, car and business insurers, IBC can lobby governments for legislative changes that would deter insurance criminals. For example, IBC has requested that auto theft be recognized as a serious, violent crime (rather than a mere property crime) in both the Criminal Code of Canada and the Youth Criminal Justice Act. If passed by the federal government, Bill C-26 would make this change and several others to give law enforcement officials the tools they need to more effectively combat auto theft.
Cross-country data. As a national association, IBC has access to insurance crime data from across the country, which it uses to detect trends within and across regions.
Investigative body. IBC is designated as an investigative body under federal privacy legislation – the Personal Information Protection and Electronic Documents Act (PIPEDA) – meaning it is able to exchange information with insurers for the purposes of preventing and detecting insurance crime.
Experienced investigators. IBC’s investigators have extensive insurance and policing experience. They have the unique knowledge and technological tools required for investigating organized criminal activity related to insurance.
. IBC is a trusted partner with other insurance-crime-fighting agencies nationally and internationally. These partnerships mean that important information gets shared between IBC and, for example, police forces, making for effective investigations and increasing the likelihood of charges being laid.

IBC has an excellent track record as an investigative force. Every year, the work of IBC's investigative services results in millions of dollars in savings for insurance companies and their policyholders.

Saturday, April 23, 2011

Protecting Canadians Against Natural Disasters

Canada’s home, car and business insurers are committed to better preparing communities for natural disasters. As part of this commitment, the industry recently donated $500,000 to support groundbreaking research into making houses more resistant to extreme weather.

The research is being conducted by The Faculty of Engineering from the University of Western Ontario at a one-of-a-kind research facility called The Insurance Research Lab for Better Homes. It allows for the study of damage to houses from wind, snow, rain and mould by simulating extreme weather, including winds of up to 320 km/h – the equivalent of a Category Five hurricane.

The project permits researchers to assess the structural integrity of houses, and develop cost-effective ways to retrofit existing houses and build stronger ones in the future.

The insurance industry is a leader in natural disaster mitigation. In 1998, insurers partnered with Western to create the – a research institute committed to reducing the loss of life and property damage caused by severe weather and earthquakes.

Evidence suggests that the severity and frequency of extreme weather will continue to rise. A financially strong insurance industry will be there to help rebuild Canadian communities when disaster strikes. And, through initiatives like The Insurance Research Lab for Better Homes, it can help make Canadian communities stronger and better equipped to deal with extreme weather.

The Insurance Research Lab for Better Homes uses a typical 1,900 square foot, two-storey house. Studies will be conducted in a controlled environment inside a hangar. Extreme winds (up to 320 km/h) are simulated using specially-designed “pressure boxes” that apply both air pressure and suction to the house. Researchers will also study the effect of snow, rain and mould.

Institute for Catastrophic Loss Reduction

Insurers working to help Canadians withstand natural disasters

The insurance industry established the Institute for Catastrophic Loss Reduction (ICLR) in 1998. It represents a coordinated effort of Canadian home, car and business insurers, the University of Western Ontario and other partners to use research and education to reduce the loss of life and property caused by severe weather and earthquakes.

ICLR is working to improve Canadians’ capacity to adapt to, anticipate, withstand and recover from natural disasters by:

building a network of researchers involved in disaster research;
directly sponsoring research projects. ICLR’s research staff is recognized internationally for its pioneering work in a number of fields, including wind and seismic engineering, atmospheric sciences, hydrology, and economics; and
supporting research by other organizations with letters or public statements affirming the importance of a specific research proposal.

Resilient communities and knowledgeable individuals are best prepared to ensure that hazards don’t become disasters. For more information about ICLR and its work, and about how to be better prepared for natural disasters,