Fla. Officials Search for Solutions to Insurance Fraud Epidemic

Florida regulators and lawmakers are huddling in hopes of devising a plan to combat the personal auto insurance fraud they say is causing premiums to skyrocket statewide.

The state is one of a dozen with so-called “no-fault” systems that are designed to reduce the need for motorists to file lawsuits to cover injuries resulting from accidents. Florida law requires drivers to carry a minimum of $10,000 in personal injury protection (PIP), which covers policyholders up to that limit regardless of who caused the accident.

But insurers, state officials and industry experts say fraudulent claims are causing insurers to hike premiums in order to maintain profits. That means significantly higher costs across the board for existing policyholders and those making a Florida auto insurance quotes comparison, experts say.

Florida insurance fraudRobin Westcott, who was appointed last month as the state’s new insurance consumer advocate, has formed a working group of legislators and regulators tasked with drafting legislation to tackle the problem.

“My goal is to formulate real solutions in response to the escalating rates burdening Florida’s consumers,” Westcott said in a statement. “Every option should be on the table before car (coverage) becomes completely unaffordable and Floridians opt to go without protection.”

According to a report from the Insurance Information Institute (III), Florida insurers are being forced to pay 70 percent more each year to cover costs associated with fraud such as staged accidents, excessive or unnecessary medical treatment and inflated or questionable claims.

The III report, released in January, states that the $10,000 PIP minimum has become a “dollar target” aimed at by those looking to game the system.

Questionable claims reported by Florida insurers increased by 42 percent from 2008 to 2010, the National Insurance Crime Bureau (NICB) reported in March, with 84 percent of those bogus claims being made for personal auto coverage.

NICB reports as questionable those claims that are referred to it by insurers for review and possible investigating of fraud.

Westcott said she will invite members of Florida’s House of Representatives and Senate, as well as various stakeholders in the state’s PIP system, to help search for a solution.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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