Florida Groups Unite to Fight Staged Accident Insurance Fraud

Florida insurers, government agencies and consumer advocate groups have established a statewide alliance to push for legislative reforms aimed at cracking-down on staged-accidents that the industry says are costing Florida drivers nearly $100 higher in annual premiums.

The Sunshine Alliance to Ease Fraud was initiated last year by the Consumer Federation of Florida, the Florida Insurance Council and the Coalition Against Fraud to pursue legislative reforms to Florida’s no-fault auto personal injury protection law. It has since been joined by a broad array of insurers, consumer groups and government officials including Chief Financial Officer Jeff Atwater who has made no-fault reform a top priority.

The National Insurance Crime Bureau (NICB) has established several fraud task forces in Florida to counter the increase in medical fraud.

“Floridians are getting ripped off by the cost of auto insurance fraud and the evidence is piling up right along with the bills,” said Atwater. “We must act quickly to enact reforms to help stop these losses and keep Floridians’ hard-earned dollars in their pockets where they belong.”

The Florida Legislature convenes next week and House and Senate leaders have already signaled that no-fault reform will be at the top of their agenda.

Florida drivers must carry at least $10,000 in PIP insurance. Under the state’s no-fault law, insurers are required to pay 80 percent of PIP claims, regardless of which driver is at fault. The law was designed to ensure drivers had some coverage and eliminate the need for litigation on smaller claims. However, the alliance says that staged crashes have turned PIP coverage into an ATM for cheaters.

Typically, a fraud ring will stage an accident and then have fake passengers who are directed to crooked medical providers who order unnecessary medical tests until the $10,000 in coverage is exhausted. Officials say these practices have been expanded to exploit real crashes as recruiters contact crash victims and take advantage of their unfamiliarity with the law to steer them to unscrupulous attorneys and medical providers.

Walter Dartland, co-chair of the Sunshine Alliance and executive director of the Consumer Federation of the Southeast, said it is time to put an end to these practices. “Honest Florida drivers are being taken for a ride by greedy staged-crash gangs,” he said. “We must make no-fault a road to nowhere and help ease the pressure on honest drivers’ auto premiums.”

The numbers tell the story:

• According to the Insurance Information Institute, the typical Florida family pays a “fraud tax” of nearly $100 annually, a number that could rise to nearly $170 by the end of this year. The institute says the total cost to Floridians could reach as high as $1.5 billion between 2009 and 2011 if fraud remains unchecked.
• The III reported that the frequency of no-fault claims rose from 46.2 percent between the second quarter of 2008 and the third quarter of 2010. In addition, the amount of pure premium required to cover expected no-fault losses rose 87.1 percent between the start of 2008 and the third quarter of 2010.
• The National Insurance Crime Bureau ranks Florida first in the nation for questionable claims involving staged crashes. Tampa ranks second in the nation for staged accident and questionable claims and Miami ranks third and Orlando fourth. Further, the bureau says that questionable claims associated with staged crashes posted a 58 percent increase between 2008 and 2009, with Tampa recording a 290 percent increase.
• According to the Florida Office of Financial Services, PIP fraud accounts for 40 percent of the case referrals to the Division of Insurance Fraud. Since July, the division has submitted 174 cases for prosecution, made 109 arrests, which has resulted in 110 convictions.