Consumers benefit with focus on auto insurance fraud

Fraud is driving up auto insurance costs in Florida. The state’s “no-fault” insurance law is easy money to fraudsters who fake crashes, then send co-conspirators to sketchy medical clinics that bill for services that often aren’t delivered. These scams are getting attention from insurers and the Florida Division of Insurance Fraud — and that’s good news. Last week, Florida’s Insurance Consumer Advocate, Sean Shaw, hosted a Personal Injury Protection Roundtable to bring diverse groups together to talk about the issue.

Personal Injury Protection (PIP) is being exploited by criminal groups, according to state fraud investigators. Also known as no-fault insurance coverage, PIP pays for the driver’s own injuries no matter who is at fault for an accident. It is designed to help reduce the need for Floridians to sue to cover injuries from an automobile accident. They sue anyway, and a Senate report on auto insurance from 2008 offers data on how lawsuits relate to a rise in medical procedures, such as a finding that claimants with attorneys were five times more likely to report MRI (magnetic resonance imaging) charges. If you need an MRI, you should get one – but the report from the Senate stated that its analysis of 2005 PIP claims showed elements of suspected fraud in almost one-third of claims! Wow. Rising claims costs are also attributed to “buildup,” which is when injuries may be exaggerated or reported losses are inflated to drive up the overall cost of the claim. Take a look at the fraud division’s annual report. Page 13 shows a chart for 2008-2009 statistics revealing that PIP fraud comprises 30 percent of its referrals for investigation.

The epicenter for auto insurance fraud in Florida is the Tampa Bay area. It used to be South Florida, and when the National Insurance Crime Bureau and law enforcement got really aggressive with fraud prosecution there, the crime organizations moved. That focus on fraud is coming to Tampa Bay, a good thing for consumers since insurance fraud is not a victimless crime. We all pay the price.