Florida Insurance Fraud Grows Expensive

Enterprising criminals in Florida are using Florida’s no-fault insurance laws to game the system at the expense of ordinary policy holders. It’s the law-abiding citizens that are increasingly covering the costs of the growing Florida insurance fraud cottage industry and legislators must now face the issue of what to do to curb the problem. It is also the real victims of Florida car accident injuries who are given a bad name by this abuse. With insurance rates throughout the state soaring as a result of the fraud, the only question that remains is whether legislators with so many other priorities will carve out the necessary space to address the issue during next year’s legislative session.

Any practical solution should tread a narrow line and attempt to reduce the rampant fraud while preserving the no-fault insurance which was designed to protect victims of car accidents. A total repeal of the no-fault law would end up causing harm to the same innocent policy holders who are now being punished by the fraudsters’ misbehavior.

The statistics speak for themselves. Since 2004, the number of Florida drivers has been fairly constant. The frequency of car crashes has even decreased. Add together safety efforts and their increasing effectiveness, better seat belts, improved air bags, more aggressive enforcement by police officers, and the result should be reduced medical costs associated with auto accidents. What has actually happened is that the benefits paid by insurers under the state’s no-fault law, called PIP (personal injury protection), have jumped some 70 percent since 2008.

Florida Insurance Commissioner Kevin McCarty estimates the insurance fraud in Florida has led drivers to pay $900 million more in insurance premiums. One would expect the increased premiums to be a boon to insurance companies; on the contrary, insurers are hemorrhaging money under their PIP claims. For every $1 insurance companies collect they are paying $1.40 in claims. This despite some companies raising their PIP premiums by as much as 50 percent in recent years.

The typical automobile insurance fraud scheme in Florida goes as follows: Fraudsters realize that under the state’s no-fault law, monetary damages from an accident up to $10,000 are covered by each driver’s own insurance. Knowing this, the criminals then set about staging an accident. With the fake accident now having taken place, both sides go to an unscrupulous medical clinic and bill their insurers for up to $10,000 for a variety of procedures that were never obtained. Other fraud occurs when dishonest lawyers or medical clinics exaggerate injuries for victims from legitimate crashes to unload even more money from insurers.

Auto insurance fraud was initially a problem confined to South Florida. However, this has changed dramatically and with incredible speed. As the economy has soured, the prevalence of these scams has spread north to Tampa and Orlando. In 2010, Hillsborough County had an estimated 739 staged accidents; Orlando, 394; and Miami, 292. Though some of the criminals responsible for setting up these elaborate hoaxes were eventually apprehended many more were not.

Our Florida car crash attorneys know that though such crimes aren’t especially hard to investigate, the fact of the matter is that law enforcement is stretched thin with a multitude of priorities and lacks the financial and human resources to deal with so many questionable claims.

The increasing costs associated with auto insurance fraud in Florida has prompted some in the industry to push for a change. They have suggested that Florida abolish its no-fault system in favor of a policy that holds the negligent driver responsible. While talk of such change swirls around the state, Florida’s insurance consumer advocates want to ensure citizens and legislators alike don’t forget that the main purpose of no-fault insurance is to help innocent Florida car accident victims regain their lives as soon as possible after a crash. It remains important for all victims of actual area crashes to ensure that they visit with a Florida car accident attorney to learn about their rights and ensure they are protected.

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