Letter to the Editor: Reduce Insurance Fraud
Apr 28, 2012
The following article was published in the Lakeland Ledger on April 28, 2012:
Reduce Insurance Fraud
Florida’s mandatory automobile insurance no-fault law is beset by runaway personal injury protection costs — including the nation’s highest incidence of staged accidents and nearly $1 billion in automobile insurance fraud. On March 9, the Legislature passed a bill to rein in the cottage industry of trial attorneys and corrupt medical clinics, and create new fraud-fighting tools to reduce costs.
The legislation prescribes insurers to reduce PIP rates by 10 percent by Oct. 1 and 25 percent by Jan. 1, 2014, or provide a detailed explanation if rates are not reduced.
Lower fraud and lower rates sound good, but lower rates are entirely dependent upon first reducing fraud, which raises two challenges:
First, the bill does not take effect until July 1, 2012, providing little opportunity for cost savings to occur and for consumers to see lower rates by Oct. 1.
Second, the cottage industry of trial attorneys, medical clinics and fraudsters that feed on PIP dollars is already looking to exploit loopholes in the new law, according to recent news articles [“Tampa Company Looks at End Run Around New PIP Law,” April 4]. Because an increase in fraud will only put upward pressure on rates, diligence is needed to end this fraud.
As the head of an organization that fights for consumers, I applaud Gov. Rick Scott, Chief Financial Officer Jeff Atwater and legislators for taking bold steps to fix the state’s historically problematic no-fault-auto-insurance system. Let’s reduce the fraud now, so that consumers can see the benefits of lower prices tomorrow.
American Consumer Institute Center for Citizen Research