Insurance Fraud Investigation in Ontario: Building the File

Insurance fraud investigation in Ontario is a licensed private investigation under the Private Security and Investigative Services Act, 2005, in which a PI documents whether a claimant’s physical capabilities are consistent with the limitations reported to their insurer. PSISA s.6 prohibits conducting such investigations for remuneration without a valid licence.

In 2024–25, the Solicitor General’s branch issued 435 new PI licences — a 31% year-over-year increase — reflecting growing demand from Ontario insurers and defence counsel. This guide covers the four claim types that warrant PI investigation, the three legal layers governing the work, the five-phase file-building process, and the Rule 30.09 admissibility requirements that determine whether the surveillance file holds up in court.

What is an insurance fraud investigation in Ontario

Insurance fraud investigation in Ontario is a PSISA-licensed engagement in which a private investigator documents, on video in public spaces, whether a claimant’s physical capabilities are consistent with the limitations they have reported to their insurer. The investigator reviews publicly available records, performs open-source and social media research, and compiles all observations into a signed written report formatted for production in Ontario civil courts, the Licence Appeal Tribunal (LAT), or criminal proceedings.

The PI’s role is strictly evidentiary, not decisional. The investigator produces court-ready footage and a signed report; the coverage determination stays with the insurer or adjudicator. Investigations span four claim categories — accident benefits under SABS, tort personal injury, long-term disability, and property fraud — and may produce evidence tendered across multiple Ontario forums depending on how the insurer proceeds.

What law governs insurance fraud investigation in Ontario

Three layers of Ontario and federal law apply to every insurance fraud investigation simultaneously.

Ontario’s Financial Services Regulatory Authority (FSRA) also oversees the auto insurance market. As of June 2025, FSRA implemented Canada’s first mandatory standardized fraud-reporting regime — the Fraud Reporting Service (FRS) Rule — requiring Ontario auto insurers to submit fraud data to a centralized registry. FSRA initiated 100 enforcement actions in fiscal 2024–25, up 54% from the prior year, and imposed approximately $1.2 million in administrative monetary penalties. These enforcement volumes explain why insurers commission PI investigation files before regulatory escalation.

The PI’s investigation may produce the evidence that substantiates a s.380 Criminal Code charge — the claimant’s potential criminal exposure, not the PI’s.

What types of insurance fraud warrant a PI investigation

Ontario PI investigation is most commonly deployed across four fraud categories.

• Accident benefits fraud under O. Reg. 34/10 (Statutory Accident Benefits Schedule): the PI documents physical activity against reported income-replacement and medical-rehabilitation limitations. SABS s.33 defines the insurer’s examination rights.
• Tort personal injury: surveillance contradicts the stated functional limitations the plaintiff advances at trial; the footage is produced under the Rule 30.09 two-track regime before discoveries and trial.
• Long-term disability: most commonly triggered at the 24-month own-occupation-to-any-occupation definition change, when the disability test shifts and the insurer reassesses whether the claimant can perform any occupation.
• Property fraud: staged theft and arson, where scene analysis and background investigation are the primary tools rather than physical-activity surveillance.

Insurance crime costs Canada an estimated $3–5 billion annually, according to Équité Association. In Ontario specifically, auto insurance fraud costs drivers an estimated $1.6 billion per year — equivalent to $236 per policy — based on a KPMG assessment for Ontario’s Anti-Fraud Task Force. PI-deployed investigation is the insurer’s primary tool to document staged collisions, exaggerated injury claims, and phantom medical billing before those files proceed to LAT hearings or civil trial. For the full breakdown of IBC and Équité data, see our compilation of insurance fraud statistics in Canada.

For Ontario-specific IBC and FSRA data on staged collisions, accident benefits fraud volumes, and FSRA enforcement trends, see our compilation of auto insurance fraud statistics Ontario.

What insurance fraud investigation in Ontario includes — and what it does not

A clear scope boundary separates compliant PI practice from conduct that compromises the investigation and exposes the insurer to procedural prejudice.

A PSISA-licensed PI retained by an Ontario insurer may:

• Conduct video surveillance in public spaces and from public vantage points, with continuous timestamped recording.
• Perform open-source and social media research to identify activity patterns before field deployment.
• Interview consenting witnesses who can speak to the claimant’s activities or capabilities.
• Review publicly available records including corporate registry, court filings, and property records.
• Prepare written evidence reports verified on oath, formatted for affidavit-of-documents production.

A PI may not:

• Enter private property without consent.
• Access private medical records or financial accounts without authorization.
• Intercept private communications — prohibited by Criminal Code, s.184(1), which carries up to five years’ imprisonment.
• Conduct activity constituting criminal harassment under Criminal Code s.264.
• Use pretext methods that involve deception to gain access — such as delivering materials under a false identity to photograph a claimant — which violate PIPEDA Principle 4.4 and were found unlawful by the OPC in Case Summary #2008-392.

Evidence obtained outside these boundaries is inadmissible and creates procedural risk for the insurer, making scope compliance as important as surveillance quality. For a broader overview of how Ontario insurers engage PI firms across claim types, see how insurance companies use private investigators.

How a licensed PI builds an insurance fraud surveillance file: the five phases

A compliant Ontario insurance fraud surveillance engagement follows five phases, each designed to satisfy PIPEDA’s four-condition framework and produce output that holds up under Rule 30.09 disclosure scrutiny.

1. Intake brief: the insurer or defence counsel provides the claimant’s file, reported limitations, and the specific evidentiary basis for the investigation — documenting the demonstrable-need condition required by PIPEDA Principle 4.4 before field work begins.
2. Open-source pre-surveillance: public records and social media are reviewed to identify activity patterns and routines before field deployment, satisfying the least-invasive-alternative condition. If open-source evidence alone resolves the evidentiary question, field surveillance may be avoided entirely.
3. Field surveillance in public spaces: the PI observes and documents physical activity using timestamped video, recording continuously rather than in cherry-picked clips. Footage of a single atypical day creates an admissibility risk under the framework refined in Nemchin v. Green, 2019 ONCA 634; establishing typical functional capacity requires multiple surveillance days.
4. Evidence compilation: all footage, observation logs, and field notes are compiled with date, time, location, duration, and equipment particulars, satisfying the affidavit-of-documents requirements under Rules of Civil Procedure, Rule 30.09. The compilation must document which footage is tendered as substantive evidence and which is maintained for impeachment only.
5. Signed written report: a report verified on oath is tendered to counsel, formatted for affidavit-of-documents production or LAT disclosure. Surveillance intended as substantive evidence must be produced — privilege waived — at least 90 days before trial.

Each phase is designed to produce evidence that will hold up under the three-part admissibility test and Rule 30.09 disclosure scrutiny applied by Ontario courts.

Is PI surveillance of insurance claimants legal in Ontario

Covert video surveillance of an insurance claimant is lawful in Ontario only when four conditions are satisfied under the OPC’s 2009 Guidance on Covert Video Surveillance in the Private Sector, as articulated under PIPEDA Principle 4.4.

The four conditions are: (1) demonstrable evidentiary need — a specific, articulable basis for suspicion, not a mere contested claim; (2) purpose-relevant collection — the information must relate directly to the legitimate insurance investigation purpose; (3) proportionality — the privacy loss must be proportional to the benefit gained; and (4) least-invasive alternative — less-invasive methods such as open-source social media review or independent medical examination must be considered first.

A contested claim alone is not sufficient grounds. The OPC confirmed in Case Summary #2008-392 that a PI firm violated PIPEDA by photographing a claimant under a false pretext when sufficient evidence could have been gathered through less-invasive means. The consequence of a PIPEDA breach is not merely regulatory: evidence obtained in breach of the framework is at risk of exclusion and may expose the insurer to adverse procedural findings.

Surveillance conducted in compliance with this framework is lawful regardless of the claimant’s lack of consent — PIPEDA s.7(3)(b) provides an insurance-investigation exception that permits collection without knowledge or consent when the collection is necessary to investigate a breach of an agreement or a contravention of federal or provincial law.

What makes surveillance evidence court-admissible in Ontario

Surveillance evidence in Ontario civil proceedings must satisfy two independent requirements.

1. The three-part admissibility test: the footage must (a) accurately and truly represent the facts, (b) be fair and not intended to mislead, and (c) be verified on oath by a person capable of doing so. These conditions apply at the point of tendering — not merely at the point of collection.
2. The Rules of Civil Procedure, Rule 30.09 two-track disclosure regime: surveillance intended as substantive evidence must be produced — privilege waived — at least 90 days before trial; surveillance maintained for impeachment only must be listed in Schedule B of the affidavit of documents, with full particulars (date, time, location, duration, videographer names) provided on request before discoveries.

In Iannarella v. Corbett, 2015 ONCA 110, the Ontario Court of Appeal held that failing to disclose all surveillance — including footage over which privilege is claimed — and then using it as substantive evidence at trial constitutes trial by ambush and warrants a new trial. The Court required disclosure of all surveillance in the affidavit of documents, with detailed particulars, before discoveries.

In Nemchin v. Green, 2019 ONCA 634, the Court of Appeal refined the framework on a clip-by-clip basis: footage of activity on a single atypical day does not establish the claimant’s typical functional capacity, and surveillance cannot morph from an impeachment tool into affirmative substantive proof of full functional recovery. The admissibility assessment is granular; individual clips may be admitted or excluded based on their representative quality.

These two cases together define the quality standard a surveillance file must meet. A PI report that supplies continuous, multi-day, timestamped footage from public spaces, with complete particulars compiled at the time of observation, satisfies both the admissibility test and the Rule 30.09 disclosure regime.

What this means for insurers and defence counsel in Ontario

For Ontario insurers and defence counsel, the practical implication of Iannarella and Nemchin is that evidence quality and Rule 30.09 disclosure compliance determine outcome. A surveillance report that cannot satisfy the two-track disclosure requirements — or that was obtained through pretext methods that violate PIPEDA Principle 4.4 — creates as much procedural risk for the insurer as no investigation at all. When surveillance is properly disclosed and admitted, expert opinions that rely almost entirely on a plaintiff’s self-reported symptoms are at risk of being discounted where the claimant’s credibility is undermined.

As licensed PSISA investigators operating across Ontario, at Discreet Investigations we build insurance fraud surveillance files for insurers and their defence counsel. Every engagement is scoped to public-space surveillance that satisfies the OPC’s four-condition framework under PIPEDA Principle 4.4: we document the evidentiary basis before deployment, consider less-invasive open-source alternatives first, limit collection to the stated purpose, and format all footage and observation logs to the Rule 30.09 particulars required by Ontario civil courts and the Licence Appeal Tribunal. The result is a signed written report with timestamped field video and contemporaneous observation logs, tendered to counsel in a form ready for affidavit-of-documents production. To discuss whether an insurance fraud investigation fits your file, call +1 (888) 680-0036 or visit our insurance investigations page.

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