Putting the brakes an auto insurance fraud
Florida made the national news last week over its growing problem of auto insurance fraud. CBS Evening News had a segment on scammers cashing in on car “accidents”, and it included an interview with a former scammer explaining how it all works. Much of it has to do with organized criminals who stage accidents with one driver as the hitter and the other as the “hit-ee”, and then a bunch of cohorts jump into the car after the crash to file insurance claims for injuries that are hard to prove, such as soft tissue injuries like a pain in the neck. The real pain in the neck is how the scams are a pain in your wallet. The chart shows how the average cost of an auto insurance claim keeps rising, and since insurance premiums correlate to claims payments, rates rise.
The Insurance Information Institute estimates the “fraud tax” Florida drivers pay at $57.60 per vehicle in 2011, double the cost of fraud from two years ago.
What makes these rising claims even more suspicious is that traffic crashes are declining and cars are now built to reduce injuries.
Some people think the fraud is a myth, like the person writing a letter to the editor who reasoned that fraudulent auto insurance claims must not be a problem for insurers because so many of them advertise on TV. Hmmm. Advertisements = no fraud? Those TV ads only show that auto insurers are willing to compete for your business. Many times these are national ads that run on the networks coast to coast. (Notice there are few TV advertisements for property insurance, which is not as competitively priced – at least in Florida.) I like this quote from Mark Twain: “Many a small thing has been made large by the right kind of advertising.” Conversely, many big things cannot be made small by a commercial message. So, if you are interested in non-commercial messages, here are two suggestions: Check out the case files on www.GearUpFlorida.com/ and the number of fraud arrests in the PIP Source newsletter, a publication produced monthly by the state’s Division of Insurance Fraud. Fraud detectives routinely arrest 20-30 people every month for criminal activity associated with auto insurance scams.
Here’s another non-commercial source: The FBI says the estimated cost of insurance fraud is $30 billion a year. There’s an FBI news story on the fraud schemes the agency is focused on, including staged accident fraud and bodily injury fraud, to name a few. Its website explains how to defend yourself from insurance fraud, including this FBI tip: After an auto accident, be careful of strangers who offer you quick cash or recommend a particular attorney or health care provider.