Canadians overwhelmingly agreed that insurance fraud is a serious issue, yet many struggle to identify what it can look like in everyday life, particularly when it comes to easily overlooked details that contribute to an estimated $308.6 billion annual fraud burden in North America.
A new TD Insurance survey found that on average, only 58% of Canadians can successfully identify common real-world scenarios as insurance fraud, even as 90% said fraud raises premiums and 79% call it a serious issue. The awareness gap comes as insurance fraud costs the US $308.6 billion annually, with about 20% of claims fraudulent, leading to about $900 more per policyholder annually in increased premiums.
While nearly all Canadians surveyed (96%) believe others commit "small frauds," only 7% acknowledged they themselves may have done something that could be considered insurance fraud, even unintentionally.
The disconnect reflects the prevalence of "soft fraud"— opportunistic exaggerations or omissions rather than premeditated schemes. Soft fraud occurs when a policyholder exaggerates a claim to receive a larger payout and accounts for 60% of all incidents because it's harder to prove than deliberate "hard fraud."
"Many Canadians don't realize that small omissions or outdated information—details that are easy to overlook—can create challenges down the road," said Niro Kandasamy, AVP of fraud and special investigations, TD Insurance. "Many issues can be easily corrected when they're caught early, which is why reviewing and updating your policy matters. Left unaddressed, some details may delay a claim or affect coverage when customers need support the most."
When presented with common real-world scenarios, fewer than six in 10 Canadians recognized these behaviors as forms of insurance fraud.
Common examples include not updating mileage after driving more frequently, not disclosing tenants or short-term rental guests on a home policy, and registering a vehicle under a parent's name to reduce premiums. Additional unrecognized fraud behaviors include leaving a partner off an auto policy when they regularly drive the vehicle and padding repair estimates.
Often unintentional, these oversights can create confusion or complications at claim time — and may leave people less protected than they expect, according to the report.
Auto premium fraud resulted in $35.1 billion in insurance losses annually, with common misrepresentations including the number of drivers, vehicle use, garaging location, and mileage. Unrecognized drivers are the largest contributors to auto premium fraud, followed by underestimated mileage.
The insurance industry is responding with advanced fraud detection capabilities. Forty-two percent (42%) of North American carriers reported that AI and digital tools are being exploited for fraudulent activities, with nearly half reporting suspicious or fraudulent claims linked to AI-generated documentation.
However, carriers are fighting back. Seventy-six percent (76%) of carriers globally use AI-driven predictive analytics, and fraud detection technology is used by 71%. In North America, generative AI is being used for fraud detection by 67% of carriers, a 16-point increase from last year.
The TD Insurance survey findings reflect broader challenges facing the insurance industry as fraud losses climb 10-15% annually, translating to an extra $30-45 billion in yearly costs. The insurance fraud detection market is projected to reach $22.78 billion by 2030, growing at 26% annually as insurers invest heavily in sophisticated AI-powered solutions to combat increasingly sophisticated fraud schemes.
Regulatory pressure is intensifying in parallel with technological advancement. In 2025, the insurance industry tracked 757 regulatory changes across the United States alone, with that pace expected to continue into 2026. Regulatory frameworks including the Sarbanes-Oxley Act, False Claims Act, and Anti-Money Laundering regulations have been reinforced to combat fraud across the insurance sector, with state-specific statutes holding insurers accountable for timely and accurate claims processing.
Compliance with insurance industry requirements has evolved beyond legal obligation into a business imperative that maintains operational viability, protects companies financially, and promotes consumer trust. Non-compliance carries severe consequences beyond monetary penalties—regulatory actions and settlements reported in the media raise doubts about company integrity and commitment to fair treatment, leading to loss of brand equity and jeopardizing long-term financial sustainability.
The stakes are particularly high as Combined Operating Ratios for property and casualty insurers have hovered around or above 100% since 2020, pushing many carriers into unsustainable financial territory. Higher ratios mean insurers are paying out more in claims and expenses than they earn in premiums, forcing premium hikes, eroding competitiveness, and accelerating customer churn.
As fraud prevention efforts intensify, the Coalition Against Insurance Fraud continues driving public education and collaboration to combat this pervasive issue. Insurance companies report that fraud is increasing or remaining steady, underscoring the growing concern within the industry and the critical need for both technological innovation and consumer awareness to address the challenge effectively.
