How your own car will ruin your attempt at insurance fraud

Jordan Listen, I’m not saying you or anyone you know has ever done this. I am just saying that the data shows that it happens a lot. Here’s how it goes. You find yourself in a car accident. Nothing crazy. You’re not hurt, but you swerved to avoid an animal in the street. You jumped a curb, you hit a road sign, and your car took serious damage. You don’t have the money to get it fixed right now, but that’s okay. Insurance should cover it. Except, Oops, you were actually going pretty fast. In fact, you were doing 57 in a 40 zone. But you think the insurance company doesn’t know that and you did have a legit reason to swerve. So what is the harm in a little fib to get the damage fixed? Well, the harm comes when you get caught in a lie. And now, my friend, you’ve committed insurance fraud and you know who betrayed you? The same car you were trying to get fixed. This kind of story isn’t unusual, except for the last part. For decades, insurance companies have had to try to figure out the truth behind claims like this one. Now, thanks to the ever increasing amount of technology in vehicles, they have help. And what they are discovering is pretty interesting.

I’m Jordan Heath-Rawlings, this is The Big Story. Aaron Hutchins is a writer with Maclean’s magazine. He is one of the original longtime guests of The Big Story podcast. Aaron, it’s been a while.

Aaron Hutchins Hey, Jordan, how are you doing?

Jordan I’m doing really well. How are you?

Aaron Hutchins Doing great.

Jordan My first question is kind of a simple one, but I didn’t know this existed. What is an event data recorder as it pertains to an automobile?

Aaron Hutchins Well, if you’ve ever been on a plane, you know, people on planes, whenever there’s an accident, God forbid they always talk about finding the black box, the airplanes flight recorder. Similar to what you have on a black box on a plane is kind of similar to what’s happening in your cars.

Jordan For how long have these things been standard issue because I don’t know when it began, but I don’t remember cars that our family owned way back when, having them.

Aaron Hutchins I don’t know the exact timeline of when these event data recorders became more commonplace in vehicles. They are quite standard practice nowadays. I believe there’s a few companies that may not have these black boxes in their cars, but they’re quite commonplace nowadays and they have been for the last number of years. So it’s likely if you’re driving on the road today, you probably more than likely have a black box in your car.

Jordan What kinds of stuff do they record?

Aaron Hutchins Well, say you’re in an accident, they can measure things like the speed that the vehicle was going before it got into a crash. Let’s say they could tell if a seat belt is buckled or unbuckled. I believe in some instances they could even say if someone was sitting on the driver’s seat or the passenger seat at the time of an accident.

Jordan Can you give me a concrete example? You had a couple in your story and maybe tell me the one about the driver from Manitoba and kind of what happened and what use this data was.

Aaron Hutchins The Manitoba public insurance does a really good job of every year they put out a list of some of the more outlandish or kind of funky claims that they have rooted out. And there’s this one case of a Manitoban who was driving a Chevy Silverado, a relatively new one, and he was 20 years old. And his claim and his insurance claim was that he fell asleep behind the wheel and he veered off road and must have crashed into a few parked cars. Fortunately, he was uninjured. And he mentioned to the investigators that he’d only been traveling 5 km over the limit in a 50 kilometre/hour zone. And that seemed all well and good. The challenge is when the insurer looked up the pickup trucks event data recorder, they could see that, in fact, at the moment of the crash, the Chevy was going 140 km an hour. The brakes were never applied, the seat belts weren’t done up. So it gave them a lot of information just to start with, knowing that his story really was not checking out right from the get go. His claim, which was for $150,000, was effectively denied, and that saved money for the insurance company and also the cost that would be passed down to all the other folks who are part of the Manitoba public insurer. So when they root out these claims, it’s actually good at saving other folks money from these fraudulent claims.

Jordan Traditionally, before the event data recorders, what used to happen with insurance claims in those cases, how were they verified or not?

Aaron Hutchins Before, it was really a lot of forensics. You would look at skid marks, you would look at the impact of a crash of a vehicle, because in the case of this Chevy Silverado, if you crash into a bunch of parked cars going 55 km an hour, as the young man alleged, then the damage to his car, not to mention the parked cars, would look a lot different than someone hitting it at 140 km an hour. So they’d be looking at a lot of the information more forensically to see what jibes. But what the technology now does is it really makes things a lot easier for these investigators to root out. That’s almost in many ways kind of a nail in the coffin. I’m confident that forensics would have proven that this young man was fibbing about the events of him falling asleep behind the wheel. But when you have the car’s black box essentially saying, hey, here’s concrete proof why you’re not telling the truth, it really kind of puts an end to his story very quickly.

Jordan How sophisticated is the technology beyond just the event data recorders that’s being used in cars and can find that information? Modern cars right now are essentially digitized almost everywhere.

Aaron Hutchins Yeah, your infotainment system is really open door to what you’re doing. So with your infotainment system, these insurance companies potentially can see when you’re texting, if you’re texting right before a crash, if you’re on a call before the crash, if you were maybe touching a button to fiddle with the music or your Spotify. So it actually has a lot more digital traces as to what you’re doing. That’s not only in the car, too. With your infotainment system, obviously, people can be aware if you’re on the phone or not at the time of an accident. But there’s other areas that you might not think about.

For example, if you have a key fob that helps you drive your car, the key fob contains information like your Vin number. It says what the car’s mileage was. It says when it was last driven. And where that might help an insurance claim, or rather an insurer try to figure out an insurance claim. There was one example about one person claiming that they wrecked their car. They totalled their car on a Saturday, let’s say, and it was undriveable, and they brought into the shop to get it fixed. Well, then the insurer looked at the key fob and they claimed their car was wrecked on a Saturday, and then on Sunday, Monday, their car was used to go driving. So the Fob itself proved that their story, at least the timeline of their story, didn’t hold up.

Jordan How big a problem is this kind of auto insurance fraud? Obviously, there’s an investment being made to try to combat it. So what kind of numbers are we talking about?

Aaron Hutchins So there was a report done about four years ago by the insurance company Aviva, and what they found was that insurance fraud is adding about $2 billion a year to premiums across Canada. So when you divide that across the entire country, it’s not a small amount of money. I know from my insurance, I get upset when my premiums go up by a couple hundred bucks, or I guess anything. And there was a previous survey just in Ontario from 2017 which found that just under one out of every ten respondents have admitted to previously engaging in some type of auto insurance fraud.

Not necessarily, let’s say, staging an accident. But insurance fraud could be lying about your address to get a lower rate because as some of us know, your postal code dictates what your rate might be. If your car is stolen, maybe you had a pair of dollar store sunglasses and you said, my pair of really expensive Ray Bans were stolen, things like that. Or say you had a little ding on the back of your car and then you got into a bigger accident. You’ll say, oh, yeah, there was a small ding on the back there. Just add that to the repairs as well, even though that wasn’t from the exact claim. So there’s lots of small ways that Canadians might be engaging in auto insurance fraud that may not be the most obvious one, which is outright staging an accident.

Jordan What can the companies do about that in terms of this technology? Can they require me to use a black box or a key fob in order to get insured? Can they offer lower rates if I’m allowing them to track what I’m doing? How do they try to get in here to prevent that?

Aaron Hutchins I think for the black boxes and the key fobs, a lot of those things are standardized now, and I don’t know if you can request that let’s say, your Camry come without a black box. I’m not sure what’s allowed what’s not allowed. I know insurance companies in previous years have tried to incentivize drivers to add technology to their car to, as they would put it, reward good driving. If you’re someone who’s a good driver, who’s not always slamming on the brakes, who’s always let’s say, going the speed limit. They would reward those drivers with better rates. And that led to some of the Big Brother privacy concerns that still exist now with these infotainment systems. How much information do we want to give these insurance companies and all for the sake of maybe saving a couple hundred bucks on our insurance bill?

Jordan Tell me about how ridiculous some of these claims can get, though, because you had an example of a woman from Winnipeg, and this is the kind of stuff that’s out of a movie.

Aaron Hutchins This example really kind of threw me off guard. And you have to stay with me because it’s going to get from a little weird to weirder. But essentially, she had this tale that she told investigators. So she has a 2004 Chevy SUV and it was stolen from her home. Then she received a message through Facebook that was demanding a ransom. So she wants her car. She goes out to pay the ransom. And then those who have stolen her car kidnap her. And then with her in the car, they are racing through the city streets for hours until the SUV crashes into another car. Now, for the investigators, it didn’t take long to suss out this lie. And there are many reasons for it. But one of the easiest ways for them to do it was they asked her where were the keys for her vehicle when it was stolen from her garage. And she said, well, my keys were with me at all times. At no point was I without the keys. Here’s the trouble. Even this 18 year old Chevy, has an ignition with what’s known as a immobiliser system, which is an electronic security device that effectively makes it impossible to drive the car without a key. So once you have that technology and she said the keys never left by possession, well, then the insurance company knew right away, well, then no one could have taken your car away.

So as was quickly determined that this woman from Winnipeg was actually drinking with friends, speeding around town, crossed the car, and the group left the scene of the accident. And it was later where she unspooled this outlandish tale. As much as technology solved that one, I think there’s also a bit of questions that even the regular person would ask, like who steals a 2004 Chevy for ransom? That’s an old car to be holding for ransom, in my opinion. But then again, who knows?

Jordan Okay, well, so far we’ve talked about individual stories and how these get sussed out and the tech that helps us do it. But is it all like individual people trying to scam their way to a few extra bucks or explain their way out of a drunk driving thing, or is this organized in any way by other people?

Aaron Hutchins There’s an association that started up relatively recently. It’s called the écouter Association. And what this group does, it’s a not for profit anti fraud organization that integrates two important bodies. It has the Insurance Bureau of Canada’s Investigative Services Division with the anti fraud data analytics organization called Canadian National Insurance Crime Services. That’s kind of a long way to get into it. This is a growing problem that the CEO of this organization, who came over from banking, says that a lot of the fraud, the organized fraud that you used to see in the banking sector is now migrating over to the auto sector. And part of the reason is because the banking sector has done a relatively good job using technological safeguards to stop fraud. One simple example is putting chips in your debit and credit cards. So simple things like that. So when the bank started to really clamp down on laundering with their prevention and detection, she felt that the crime had to move somewhere. And from their analysis, they believe it’s moving right into the insurance industry. And as she put it to me, she looks at it as commoditized money laundering.

Jordan What does that look like? What do you do to create insurance fraud at scale?

Aaron Hutchins There are little ways and there are big ways. And I think one example which might lead into more technological examples is there was one individual who was basically every couple months or so, he was just claiming a broken windshield claim. And this is kind of small, couple hundred bucks for a windshield. But he was doing it so frequently that he was collecting thousands of dollars. And the reason that no one really looked into it is because the claim was so small that these insurance companies that process tons and tons and tons of claims, there’s not one insurance investigator for every claim. It was almost low enough that he was on the automatic check insurance claim approved list.

And what Équité is doing and what other companies are doing is they’re really trying to find new ways to try and suss out this fraud. And one means that is really coming up nowadays is artificial intelligence and trying to use AI to figure out patterns, whether it’s small scale for one guy trying to take too many windshield claims or if there is organized crime and there are people who are connected to one another who are either known offenders, and using AI to try and connect those dots to see if this one person is obviously making claims frequently enough and they are associated through banking records or something else with another person, they can try and figure out small or large scale fraud and try and suss it out earlier.

Jordan What does the future of this hold? What are the next steps? You mentioned they’re getting more and more technically advanced from the black boxes to using AI. At what point do Privacy rights advocates come in here and say, hey, we have a right to keep our records private, or does that just not even factor into it? And it’s kind of like if you’re in an accident, the police are going to take a look.

Aaron Hutchins I think that the Privacy advocates are definitely on this. They are very much aware of how much information we are giving and not just from our cars, but from every aspect of our life. And I think this is something that they think is really important. What do you think about the idea that the data points that we’re leaving from a car accident or insurance claim might find shared IP addresses or cell phone numbers or networks of known associates which might help connect insurance companies to known fraudsters. There’s a lot of concern that our data is being shared too wideley and I don’t think there is a simple answer to this unless you’re driving an old 89 Ford Topaz. Maybe. But I try to think of all the cars that have so much technology that it’s something that we’ve learned to live with for better, for worse. And now it’s tough to kind of figure out the repercussions and catch up in that regard.

Jordan Kind of like a cell phone.

Aaron Hutchins Everything man. Cell phones, cars and cell phones connected to cars. It’s all connected.

Jordan Aaron, thank you so much for this.

Aaron Hutchins Anytime.

Jordan Aaron Hutchins of Maclean’s, one of our all time favourite guests.

That was The Big Story. For more from us, head to thebigstorypodcast.ca, talk to us on Twitter at @TheBigStoryFPN, write to us at hello@thebigstorypodcast.ca. And call us. I haven’t waited by the phone like this since I was in high school. Nobody called then. Help me beat the curse. The phone number is 416-935-5935. You can tell us anything. But in particular, we want some questions about how we make this show or we want answers to the question, what should we cover?

Thanks for listening. I’m Jordan Heath-Rawlings. We’ll talk tomorrow.

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