Aviva Canada, a lead insurance provider in the country, has just unveiled some troubling news about auto body shop repairs and their subsequent insurance claims.
Aviva claims that workers at auto body shops, across the province, have been “deliberately” damaging cars, installing used parts instead of new ones, and invoicing for non-existing repairs. Aviva is calling on the Canadian government to do something about these findings.
“Aviva Canada found about half the total expenses submitted for repairs to crashed vehicles during its investigation in Ontario were bogus — an amount the company estimates adds up to hundreds of millions of dollars a year.”
Gordan Rasbach, Aviva Canada’s VP of fraud management explains that, though there has always been a tiny conspiracy around auto body shop repairs, and their propensity to be misleading or illegitimate, no one company or individual has ever taken a sample of random cases to calculate the reality.
Aviva’s investigation “attempted to simulate typical fender-bender situations involving private passenger cars by deliberately crashing 10 vehicles.”
As per procedure, Aviva sourced experts to assess the damage and estimate the cost of repair. They also installed hidden cameras on the vehicles and planted them on GTA highways. The investigators “posed as hapless drivers just having gone through their first crash.”
Rasbach expressed his surprise at the fact that only one out of 10 repair representatives acted honestly. The rest, he said, showed “some degree of ‘clear cut’ fraud.”
Aviva’s experts assessed the damage for the vehicles at $30,000 while the repair shops invoiced them for $61,000, nearly double the price!
Aviva says tow-truck drivers billed the company for “towing and storage” services that “didn’t happen.” Drivers were asked to sign blank work order documents. Vehicles were damaged on purpose in-shop. And, repaired and replaced parts were undistinguishable.
If the video footage was not available as evidence, the cases may not have been as sound. “The video footage and clear evidence of fraudulent invoicing shows just how pervasive the problem of fraud is,” says Rasbach.
Between 5% and 15% of insurance premiums, paid by drivers, is estimated to go toward covering the company’s undetected “fraudulent claims.”
Aviva urges that more has to be done to combat fraud at a federal level. Unfortunately, the culture of auto body shop fraud is imbedded in the repairs industry. The company wants the government to force repair collectives to disclose, report and share information when fraud is found.
When fraud occurs, insurers also have to step up to bat and attempt to correct the problem. Fraud is not something that needs to be reported or fixed, as it stands.
Aviva suggests simple corrective measures:
“Banning referral fees to third parties — for example a tow-truck driver who gets paid to take a vehicle to a specific facility — and making it illegal to ask consumers to sign blank work orders are other measures the government should take.”
The government would not comment on any of the ideas put forward by Aviva, but would admit that structural reforms are being tested to address the problems of auto shop fraud.
These exorbitant repair costs go toward making Ontario’s insurance premiums almost 55% higher than the Canadian average.