Insurance companies are wising up to auto-collision scam artists that are bleeding companies through payouts from bogus crashes and driving up premiums for the rest of us.
It's estimated that in Ontario alone, fraudulent claims are costing about $1.6 billion annually, adding more than $100 on average to annual premiums.
Insurance providers have beefed up their fraud-investigation teams to help expose sophisticated organized rings that stage accidents but inevitably they also snare the amateur scammers like Bahadur and Amarjeet Panag.
The Surrey, B.C., couple was ordered to pay more than $200,000 to the Insurance Corporation of British Columbia (ICBC), the government auto insurer for lying about a 2006 crash caused when Amarjeet ran a stop sign and was T-boned by another vehicle driving through the intersection.
The couple apparently wanted to avoid paying the $300 collision deductible and an anticipated increase in premiums, the Globe and Mail reports.
“Had they succeeded in their deception, they would have saved a mere $801 plus whatever might have been gained through a potential personal injury claim,” B.C. Supreme Court Justice Christopher Grauer wrote in his recent ruling.
Instead they've been ordered to repay ICBC $188,000 in costs arising from the claim, including its lengthy investigation, and $20,000 in punitive damages for sticking to their pathetically weak story throughout the subsequent trial.
The Panags were not professional scammers like the ones plaguing the insurance industry, especially in Ontario, which appears to be a hot spot.
A year ago, Project Whiplash, a joint investigation by police and the insurance industry, exposed a fraud ring in the Toronto area that staged car accidents to produce millions of dollars in bogus claims. In all, 37 people were arrested, including paralegals and the operators of injury rehab clinics, the Toronto Sun reported at the time.
Last December, York Regional Police charged nine people with 41 counts in connection with rigging phoney collisions after an investigation dubbed Project Sideswipe, according to Canadian Underwriter. That's in addition to 51 others charged with 201 fraud and other counts in the first phase of the operation.
The accused included the operators of rehab clinics, legal services offices and auto repair shops.
The issue has caught the attention of new Ontario Premier Kathleen Wynne, who said earlier this month she's willing to entertain demands to cut auto insurance premiums but thinks tackling fraud in the system is the best way to save money, according to Wheels.ca.
Back in British Columbia, ICBC spokesman Adam Grossman told the Globe that fraud costs drivers in the province $100-$150 in higher premiums.
"We are not prepared to sit back and simply pass on these costs to them," he said. "It is theft from our customers. This judgment sends an extremely strong message."
The Panags' scam fell apart quickly under scrutiny. According to the court decision, Bahadur Panag enlisted his friend Harinder Grewal to act as a witness to his wife's collision. She had claimed she followed other cars through the stop sign, which was part of an intersection that included a pedestrian-controlled traffic light. She claimed the light was red because someone was crossing and the collision came as a surprise.
Grewal, a taxi driver who apparently had driven past the accident but didn't actually see it happen, initially backed her account. But he quickly recanted after ICBC investigators presented him with contradictory statements from other witnesses, including the driver of the van that hit the Panag vehicle, who said the light was green and no other cars went through the stop sign.
Despite that, the Panags stuck to their version and the case headed to court. Their lawyer argued that it just wasn't logical for the couple to perpetuate a scam merely to save a $300 deductible and an estimated $501 in added premiums over seven years. Amarjeet considered filing a personal injury claim but never followed through.
"Nevertheless, rationality is seldom the partner of deception, and the argument does not sway me," Grauer wrote. "Mrs. Panag testified on discovery that she was aware her husband was concerned that her accident would cause problems for his insurance. On all of the evidence I find the fact of Mr. Panag's participation to be an irresistible inference."