Insurance fraud is on the rise, with higher costs of living, organized crime threats, and geopolitical instability among the key reasons, says Aviva Canada.
Aviva Canada’s claims fraud investigations rose 76% in 2024, according to new data cited by the company. Auto-related incidents accounted for nearly two-thirds (67%) of those investigations. And that likely isn’t going to slow in 2025, the insurer suggests.
“Many factors have contributed to the rise of fraudulent activity in 2024,” Jamie Lee, Aviva Canada’s head of financial crime and fraud tells Canadian Underwriter. “Economic pressures like inflation and worries about a recession, combined with geopolitical instability, can create an environment where fraud is more common.”
Organized crime groups have also played a significant role in auto-related incidents, Lee tells CU. “They are becoming more prevalent and sophisticated, and the use of AI and technology is making it easier to falsify information in both staged claims and opportunistic fraud. Ultimately, fraud is not a victimless crime, impacting Canadians who are already facing rising food prices and cost of living challenges.”
In spring 2024, nearly half (45%) of Canadians reported that rising prices were greatly affecting their ability to meet day-to-day expenses, 12 percentage points higher than the results of the same survey showed two years ago (33%), according to Statistics Canada.
However, while some actors may choose illegal ways to drive down their personal costs, insurance fraud is costing the average Canadian more on their insurance bill.
“Fraud costs everyone and drives up insurance premiums,” Lee says in the company’s press release. “Insurance fraud costs Canadians $1 billion per year in added premiums. It’s vital for Canadians to stay educated on the rising trends to better protect themselves.”
Five fraud trends are emerging in the Canadian market, according to Aviva’s data. Auto claims fraud, in particular, is expected to persist.
Claims fraud to expect in 2025
First, vehicle theft and ReVINing remains pervasive, Aviva says. The insurer’s car theft investigations increased 58% in the second half of 2024.
Often, stolen vehicles are exported to overseas markets (LINK), or their vehicle identification number (VIN) is altered and the car is resold to unsuspecting buyers. To combat auto theft, government and law enforcement have tightened the Canada-U.S. border in recent months, and that may lead to an increase in reVINing, putting Canadians on the market for a used vehicle at risk.
Second, staged auto accidents are on the rise. Aviva saw a 47% increase of such incidents in 2024 Q4. “This type of scam could be linked to organized crime groups operating in Canada,” Aviva suggests.
Related: The spreading tentacles of staged collision operations
Third, Aviva is watching for AI-enabled or forged documents. The insurer says it already sees AI being used in both staged collision claims and opportunistic fraud. In opportunistic fraud cases, AI “is used to create false claims or inflate legitimate claims, such as personal and commercial property contents claims, by supporting them with false invoices.”
Aviva expects this trend to be on the rise in 2025.
Fourth, watch for the rise in ghost brokers.
In 2024, Aviva warned consumers and clients to beware of an Alberta-based ghost broker claiming to be affiliated with Aviva, but was instead selling fake insurance policies. The ghost broker had been advertising its scam on social media sites as “Allcoveredbrokers” or “AllcoveredAviva.”
Some clients were issued fake pink slips for auto insurance after being asked to transfer money for insurance premiums, while others never heard back, the company said at the time.
The insurer expects this to be a growing concern in Canada.
“Consumers should be extra-vigilant when purchasing insurance. They are encouraged to check their provincial registries to ensure the person they’re dealing with is properly licensed and confirm proof of insurance directly with the insurer,” Aviva says.
Fifth, policy misrepresentation is increasing in the Canadian market.
For example, consumers may attempt to misrepresent or omit important information from their insurance policies — be it their true address, their intended use of a vehicle or property, or non-disclosure of major renovations or constructions they’re conducting.
The aim is to acquire lower insurance costs by leaving out information that may impact their premiums. But in doing so, “honest customers” may consequentially pay “disproportionately higher premiums,” Aviva says.
Feature image by iStock.com/Olivier Le Moal
