I'm glad as well, Mr. Chair. Thank you.
My name is Randy Bundus, and I am senior vice-president, legal and general counsel, with lnsurance Bureau of Canada. I am joined by my colleagues Maddy Murariu, with IBC government relations, and Rick Dubin, with IBC's investigative services. We are pleased to be here today.
IBC is the national industry association representing over 90% of private home, car, and business insurers in Canada. My remarks will focus on how Bill S-4 will affect my industry's ability to continue to combat insurance crime, which includes fraud and auto theft.
Insurance crime is big business in Canada. A recent Ontario government task force estimated that in that province auto insurance fraud alone costs up to $1.6 billion yearly. Insurance crime costs everyone in higher premiums and increased costs to our legal and medical systems.
Our industry works hard to suppress and prevent insurance crime through early detection, and also works hard to protect our customers' privacy. Insurers know that they must safeguard customers' personal information or risk losing business.
There are different types of insurance crime. It can be opportunistic. For example, a driver hits a guardrail and then invites a friend, a “jump-in”, to falsely state that he was also in the vehicle and suffered an injury for which he then claims compensation. Opportunistic claims are handled by insurers, but PIPEDA does not allow one insurer to verify facts by reaching out directly to another insurer that might also have been victimized by the suspected fraudulent incident.
Insurance crime can also be premeditated and organized. Large crime rings stage collisions that involve fraudulent injury claimants and others such as auto body shops and medical rehabilitation clinics. A crime ring can generate several million dollars in fraudulent claims.
IBC's investigative services, or ISD, was the first designated investigative body under PIPEDA, and it plays a critical role in the investigation of organized insurance crime. ISD is uniquely positioned to investigate organized insurance crime that involves multiple insurers, multiple claims, and multiple claimants. An example of this is the case of a police officer in Peel Region who was convicted in February on 42 counts, including 21 counts of fraud. This officer falsely reported nine collisions and, as a result, 14 insurers paid out almost $1 million in false claims to 69 participants.
ISD begins an investigation as a result of being made aware of an anomaly in an insurance claim. Information triggering an investigation may come from an insurer, a victim, law enforcement, or a tip from an informant. ISD then acts as a case file manager, coordinating investigations and identifying linkages between parties that are then submitted to regulators and other enforcement agencies. Individual insurance companies are not well positioned to handle organized crime on this scale.
This brings me to Bill S-4. We support the proposal in Bill S-4 to repeal the sections in PIPEDA that create investigative bodies and instead allow for an organization to disclose information to another organization in limited circumstances. These circumstances, as set out in Bill S-4, are to investigate a breach of an agreement or contravention of a law of Canada, and to detect, prevent, or suppress fraud.
My industry's experience under PIPEDA in investigating and detecting insurance crime has been of mixed success. While IBC's investigative services have been successful in combatting large, organized insurance crime, that has not always been the case for insurers in handling the opportunistic fraud. This is because many of the insurers are not able to disclose to each other information about suspected insurance crimes.
The proposed changes in Bill S-4 would help investigations into opportunistic or one-off insurance crimes involving only two claimants with two insurers, such as the jump-in example I gave earlier. Bill S-4 would allow insurers to disclose, in those very limited circumstances, when it is reasonable to do so, information to another insurer without the involvement of an investigative body.
An insurer could also disclose that information, in the same very restricted circumstances, to an organization such as ISD in the investigation of insurance fraud. In our view, this new process would be efficient and effective in detecting, preventing, and suppressing fraud, while still being respectful of privacy rights. Under Bill S-4, ISD could continue to function as a case file manager for organized insurance crime.
In our written comments to this committee, we address a number of other important issues in Bill S-4, including some minor wording changes to ensure consistency among the provisions allowing for responsible fraud investigations. We would be pleased to discuss these matters with this committee or with Industry Canada officials.
Thank you for your attention. I'd be happy to take any questions.