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Auto Insurance PIP Fraud Costing Florida Drivers $658 Million This Year: Industry Reports


Posted on 17 Nov 2011

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Auto insurance fraud is still on the rise in Florida despite a crackdown on attorneys and medical clinics that abuse the state's no-fault insurance law, according to a new industry report.

Fraudulent no-fault claims will cost Florida drivers about $658 million this year through higher premiums, up about 7 percent from 2010 and a stunning 122 percent in just two years, the Insurance Information Institute projects.

"The pace of deterioration has slowed. Hopefully, that's a sign we're no longer in this rapid escalation, and we're about to flatten down," institute president Bob Hartwig said in an interview Wednesday. "But leveling off … is no reason to celebrate. Maybe the problem is plateauing, but that doesn't mean it's solved."

Hartwig is presenting the latest calculations today in a kickoff speech for the annual Florida Chamber of Commerce Insurance Summit in Orlando.

His report gives further ammunition to Gov. Rick Scott and Florida Chief Financial Officer Jeff Atwater, who are both advocating an overhaul of Florida's Personal Injury Protection law as a priority for the 2012 legislative session.

All drivers registered in Florida must carry "no fault" insurance, which allows for up to $10,000 in medical care for injuries sustained in a car crash, no matter who caused the wreck. But the cost of buying that personal injury protection, or PIP, coverage and the payout amounts have both risen substantially.

The latest numbers show Florida claims inching even closer to the $10,000 limit. As of the second quarter of 2011, Florida's average no-fault claim cost is $8,549, the third-highest in the country, trailing only Michigan and New Jersey. From 2004 to 2011, Florida's average claim cost has risen 28 percent, the fifth sharpest increase nationally.

The insurance industry blames increased fraud — from staged auto accidents to phony and inflated medical claims that are processed through clinics. Earlier this week, Atwater suggested banning accident referral firms, which connect accident victims with personal injury attorneys and clinics.

But accident referral firms such as 1-800-ASK-GARY and 411-PAIN say insurers are trying to shirk their responsibilities to reimburse legitimate claims.

Some attorneys suggest there are more claims because more people are aware of their rights to medical treatment when injured.

About 250 people, including Atwater, are expected to attend the state's two-day insurance summit at Walt Disney World's Boardwalk Resort.

The summit was created to focus on the aftermath of the 2004-2005 hurricanes and the related property insurance crisis. This year the summit has expanded its agenda to include auto insurance. Workers' compensation, medical malpractice and Citizens Property Insurance, among other topics, are also on the agenda.