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:

1. More than 26% of all personal injury claims contain elements of fraud.
2. Opportunistic fraud is the single largest contributor to claims costs.
3. An estimated $500 million is paid out by home, car and business insurers for claims containing elements of fraud.
4. Insurance policyholders are more likely to commit personal injury fraud than are health care providers or other professionals.
5. Premeditated and opportunistic fraud are more prevalent in major cities and metropolitan areas than in small towns and rural communities.
6. 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.