High auto insurance premiums blamed on staged accidents

Feb 21, 2011

The following article was published in the Orlando Sentinel on February 21, 2011:

High auto insurance premiums blamed on staged accidents

Several business groups urged Florida legislators Monday to change the state’s no-fault automobile insurance laws to reduce fraudulent claims.

The Property Casualty Insurers Association of America, the Florida Chamber of Commerce and Associated Industries of Florida said they want to beef up the state’s fraud investigations and eliminate incentives for crooks to stage accidents to collect claims payments they don’t deserve.

Florida law requires personal injury protection coverage to ensure people injured in auto accidents have a way to pay their own medical bills regardless of which driver is at fault. The requirement is designed to avoid lawsuits and the costs associated with them for minor injuries.

But it may also be fueling fraud. The most complaints about staged accidents in recent years came from Florida, according to the National Insurance Crime Bureau. The state’s Division of Insurance Fraud has made 49 arrests related to PIP fraud this year, according to Department spokeswoman Alexis Lambert.

William Stander, assistant vice president of PCI, an insurance industry trade group, said the “epidemic” of fraud is partly to blame for Floridians having such high auto insurance premiums. The average premium for liability coverage in the state in 2008 was the second highest in the country and about 56 percent higher than the national average of $471, he said.

Stander said it’s up to lawmakers to decide whether or not to require insurers to pass the savings to consumers from any legislation that is passed. “I’ve certainly seen them do that in the past,” he said.

Bill Newton, executive director of the Florida Consumer Action Network, said his group supports proposals to reduce fraud but some of the ideas suggested could hurt consumers.

Opponents, including some attorneys and health care providers, say proposed changes could make it harder for consumers to get their medical bills paid and hospitals would either have to absorb some costs or deny treatment. “Auto insurance companies will be the only ‘winners’ if PIP coverage is taken away or modified,” wrote Ed Domansky, a spokesman for the Hollywood Rehabilitation Center.

Stander said insurers aren’t looking to repeal the PIP coverage requirement because the Legislature already debated the idea a few years ago and decided against it, but his group proposes:

Capping attorneys’ fees awarded for PIP lawsuits. Newton said that could hurt consumers: “When you’re fighting the insurance company, whose fees are unlimited, you need to be able to pay your attorney.”

Giving insurers the right to interview policyholders and hospitals under oath. Newton said attorneys want to be able to videotape such interviews but some insurers are against the idea.

Requiring policyholders to show up for insurers’ exams to determine the extent of injuries and treatment options.

Creating a state arbitration program to resolve claims disputes outside of court.

Newton said another idea floated – to give discounts to policyholders that agree to use certain preferred health care providers – would effectively create a “back door way for the insurers to exclude witnesses who would favor consumers” in court.

But his group and Chief Financial Officer Jeff Atwater support a proposal to require police officers to list all passengers in the car after an accident. “That creates a record and keeps people from ‘jumping in’ later and lets us know who is in accidents repeatedly,” Newton said.

Atwater also wants civil penalties for those convicted of auto insurance fraud and tightening requirements for clinic ownership, among other things, Lambert said. “The end goal is to ensure that Floridians don’t pay more for insurance than necessary and legitimate claims get paid promptly,” she wrote in an email.

Opponents of new PIP legislation say few of the roughly 235,000 car crashes in Florida in 2009 were staged. From July 1, 2009, to June 30, 2010, the most recent fiscal year, about 6 percent of the 5,543 PIP fraud referrals to the insurance fraud division resulted in arrests and 4 percent of the total referrals resulted in convictions, according to the division’s annual report.

Find this article here:  http://www.orlandosentinel.com/business/sfl-pip-fraud-staged-accidents-link-022111,0,5221221.story