Grand Theft Auto: P&C industry sounds the alarm

Auto theft costs in 2023 are projecting to break record levels established in 2022, P&C insurance professionals are warning.

A recent survey by Équité Association shows auto theft in Ontario increased by 31% year-over-year in the first half of 2023. In Quebec, it increased by 17% year-over-year in the first half of 2023.

Last year in 2022, Canada’s insurers paid more than $1 billion in claims for stolen vehicles, the Insurance Bureau of Canada says. That compares with just $400 million in 2018. “Regions at higher risk of auto theft include the Greater Toronto Area (GTA), which is responsible for approximately $500 million of this total,” the IBC states on its website.

In a sign auto theft has turned into a global criminal business, Canadian auto insurers recovered only 57% of the vehicles stolen nationwide. Ontario (46%) and Quebec (36%) have the lowest provincial stolen vehicle recovery rates.

“The lower recovery rates Ontario and Quebec indicate that stolen vehicles from those provinces are either being shipped overseas, mostly through the Port of Montreal, or the vehicle identification number (VIN) is being changed in order to resell the vehicle domestically to unsuspecting Canadians,” Équité observed in a press release yesterday.

Susan Penwarden, managing director of personal lines at Aviva Canada, discussed what’s happening to these stolen vehicles in a panel discussion on auto theft at the National Insurance Conference Canada (NICC) in Quebec on Sept. 27.

“They are not being stolen as they would have been in the past and resold in local markets,” Penwarden observed. “They are gone [overseas] in typically 24 hours. Once they are in a container, we have no way to retrieve those vehicles, even if we know where they are, because you have to have a court order to do so. Otherwise, it’s in a sealed container and it’s gone. Fifty per cent of our theft GI [general insurance] is unrecoverable because those vehicles have left the country.”

Insurance companies must negotiate with local authorities to recover the vehicles — with mixed degrees of success—depending on the various different jurisdictions, Penwarden said. She said the average claims cost sits at about $70,000 per vehicle stolen.

That boomerangs back to insured drivers in the form of premium increases. “That’s an average of $125 per policy,” Penwarden said.

Related: P&C industry reacts to Ontario’s crackdown on auto theft

Revinned cars present a lucrative opportunity for car thieves, Penwarden added. Each car has a VIN, or a vehicle identification number, which the thieves change so the car can’t be tracked.

“Basically, after the vehicles are stolen, the thieves are using those VIN numbers to create ‘ghost’ vehicles, and then submitting those [to insurers],” said Penwarden. “[The VINs are] still valid in MTO [Ministry of Transportation Ontario]’s records, so [the thieves] are able to put those in and obtain a fraudulent insurance policy, and then make a claim on that, too.

“Aviva has discovered quite a few of those, thanks to the information we’re getting from Équité. And we are cancelling some of those policies…But that takes time. And that’s another person, another resource, we’re not using to pay the claims of our customers, because we’re trying to cancel policies that are actually fraudulent.

“It’s causing all kinds of challenges across our system.”

Insurers are negotiating with the Canada Border Services Agency and Interpol to see what can be done to curb the export of stolen cars from the Port of Montreal, said Bryan Gast, vice president of Équité’s investigative services division and NICC panellist.

The thieves are targeting “premium” vehicles, Gast said, citing SUVs, pickup trucks, and luxury sedans.

“Organized crime has a wish list of vehicles, and those are being targeted,” he said. “Ontario and Quebec, unfortunately, based on their proximity to the Port of Montreal, their population, and the sheer number of high-value vehicles present, is a bad recipe. These vehicles primarily are being stolen for export.”

NICC panellists noted the money involved in auto theft rings, backed by organized crime, can be laundered through commercial trade, and then used to fund terrorist activities, weapons purchases, and drug trafficking.

The Port of Montreal is now becoming the destination of choice to export cars stolen in western Canada, Gast said.

“We’re starting to see vehicles from the West put on rail to eastern ports,” he said. “You would wonder, ‘Why not just go to Vancouver?’ That happens, too. But the marketplace is already established for the final destination in West Africa, Africa, Middle East, and a variety of other countries. So that’s where the system is already in place. It doesn’t cost that much to put them on rail together.”

Insurers are having discussions with government ministries to disrupt this way of trafficking stolen autos, Gast said.

Feature image courtesy of iStock.com/AntonyBridge