Insurance News - Wednesday, August 29, 2012

Deloitte Report Estimates U.S. P & C Insurance Fraud At $30 Billion

A recent report, A Call to Action: Identifying Strategies to Win the War Against Insurance Claims Fraud, released by Deloitte says auto insurance and workers’ compensation are the two biggest sources of an estimated $30 million in insurance fraud.

With losses mounting from fraudulent claims, fraud management has moved higher on the agenda of senior management. Many companies have taken steps to improve their ability to identify and address fraudulent claims, but these efforts have typically been fragmented. Effectively addressing claims fraud rests on four pillars of an integrated fraud management program:

• Develop a fraud management strategy
• Align the operating model
• Improve information quality
• Leverage advanced technology tools and analytics

The Deloitte report can be downloaded here.

Deloitte has also reported on the cost of auto insurance fraud in Ontario. Information about that report can be found here.


Falling On Ice Outside A Vehicle Is Not An Accident Under The SABS

A woman who slipped on ice after exiting her car is not eligible for auto accident benefits in Ontario because the incident does not constitute an “accident” under insurance regulations, a director’s delegate of the Financial Services Commission of Ontario (FSCO) recently ruled.

In Wawanesa Mutual Insurance and Webb, Daphna Webb was injured when she parked in a residential neighbourhood. After parking at a pedestrian access point along a snowy street, she exited the driver side and walked around the front of her car. Webb slipped and fell on ice, breaking four bones in her foot.

The burden of proof rested with Ms. Webb to show on a balance of probabilities that she was injured as a result of an accident pursuant to subsection 2(1) of the SABS. The arbitrator found in her decision dated May 12, 2011, that Ms. Webb satisfied her burden.

Disembarking from a motor vehicle is a normal activity required by the use or operation of a motor vehicle. The key question to be answered was whether Ms. Webb's injury was "directly" caused by the use or operation of her motor vehicle.

Wawanesa submitted that the access point constituted a different geography and was an intervening event. Once Ms. Webb had exited her vehicle and walked to the front of her vehicle, the disembarkation had concluded as she stepped onto the access point and, accordingly, she was no longer engaged in the ordinary activities to which an automobile is put. The arbitrator disagreed on this point.

The director's delegate disagreed with the arbitrator. He indicated that Ms. Webb was not in the process of actually disembarking from the vehicle when the incident took place. She was not intending to momentarily return to her vehicle so no auto contributed physically to her injuries.