Property Casualty Insurers Association of America Launches Web Site to Combat Florida Auto Insurance Fraud

 

This morning, February 21, 2011, the Property Casualty Insurers Association (“PCI”) of America officially launched a new Web site designed to highlight Florida’s problem of rampant auto insurance fraud.  

Called www.insurancefrauduncovered.com, the Web site is expected to assist in amassing grassroots support for auto insurance fraud-related issues and augment PCI’s work with state legislators to create a long-term fix for the costly problem of fraud.  It also offers anecdotal and statistical data on auto insurance fraud, including “case files” provided by PCI member companies, explained William Stander, PCI’s assistant vice president and regional manager for Florida, while speaking at a morning news teleconference.  The Web site’s intent is to “shine a light” on fraud and help Florida lawmakers and interested consumer groups come up with solutions.

“The Web site is meant to educate people as to what is really going on out there.  We don’t think the people of Florida understand how ridiculous some of these things are that are going on out there, how people are being put in danger by staged accidents and how many people are ripping off the system,” Mr. Stander said.

The Florida Chamber of Commerce and Associated Industries of Florida are also backing PCI’s efforts.

“We plan to initiate the dialogue with state legislators and the public regarding solutions on how we as a state can aggressively crack down on questionable insurance claims in Florida,” Mr. Stander said.  “We feel it is imperative because Florida continues to have the highest number of questionable or staged auto accidents of any other state in the country.”

Miami, Hialeah, Orlando and Tampa are among a “Top 10” list of cities that have recorded the highest number of questionable auto insurance claims in the United States, Mr. Stander said.  The result is costly for consumers.  The 2008 average Florida auto insurance liability premium is $736, or 56 percent higher than the national average mean of $471, he added.

“Florida now rates first in the nation in questionable auto insurance claims,” said Teye Reeves, Director of Governance and Quality of Life Policy for the Florida Chamber of Commerce.  “Florida’s business community can no longer afford to stand by and expect PIP fraud to go away.  We must do something now.”

Estimates from the Insurance Information Institute indicate the increase in premiums related to insurance fraud, or the “fraud tax,” could reach $946 million for insured Florida drivers in 2011 if left unchecked, said Jose Gonzalez, vice president of Governmental Affairs for Associated Industries of Florida.

“We hope to initiate change this (legislative) session,” Mr. Gonzalez said. 

Mr. Stander said the Florida Legislature considered eliminating the State’s Personal Injury Protection system a few years ago, but decided against it.  As a result, legislators must now consider ways to “fix” the system instead, he said.

“I think the system that is in place has proven it can work if the rules are fair.  What we are presenting here are the tools that both the (Florida) Division of Insurance Fraud and the courts could use to better investigate and enforce the solution and reduce the incentives in order to pursue these claims,” he said.

“We are working with insurance trade associations and business groups, and some consumer groups who are concerned with the amount of money people are paying in premiums.  Some of the agenda will be supported by everyone.  We will be supporting some additional reform elements,” Mr. Stander said.

Some of the auto insurance fraud-related areas that PCI would like to target for reform include:  independent medical examinations, arbitration, PIP lawyers, the PIP lawyer fee multiplier, expansion of the investigation and prosecution process of insurance fraud, and examinations under oath.

During the press conference, people were invited to visit www.insurancefrauduncovered.com, as well as send any fraud-related concerns to state legislators.  Along with related news releases and other stories, the Web site offers a list of pre-written comments to insert in an e-mail to highlight some of the key fraud-related concerns. 

PCI’s related news release on the Web site launch is reprinted below.

 

Should you have any questions or comments, please contact Colodny Fass.

 

PCI Introduces InsuranceFraudUncovered.com

Property Casualty Insurers Association of America unveils website and suggested reform measures to help fight insurance fraud in Florida

TALLAHASSEE, Fla.-The Property Casualty Insurers Association of America (PCI) today introduced www.InsuranceFraudUncovered.com, a website that shines a spotlight on the out-of-control automobile fraud problem in Florida. Beginning with this informative website, PCI will initiate the dialogue with state legislators, and the public, regarding solutions to how we as a state aggressively crack down on questionable insurance claims in Florida. PCI also highlighted reforms that can be considered during the upcoming Legislative Session to stop PIP fraud in Florida.

“Floridians need to know that our state, unfortunately, continues to have the highest number of questionable, or ‘staged,’ auto accidents of any other state in the country. Four of the 10 U.S. cities with the highest rates of questionable claims are Miami, Tampa, Orlando and Hialeah,” said William Stander, PCI’s assistant vice president and regional manager for Florida. “This fraud epidemic amounts to costly premiums for Florida drivers. Based on the latest data available, Florida motorists as a group pay the 2nd highest auto liability insurance premiums in the nation. The 2008 average annual liability premium is $736, which is 56 percent higher than the national mean of $471.”

Together with PCI, the Florida Chamber of Commerce and Associated Industries of Florida, both devoted Florida business advocates, fully support the efforts of PCI and InsuranceFraudUncovered.com as they tackle the problematic insurance automobile insurance fraud in Florida.

“According to the National Insurance Crime Bureau, Florida now ranks first in the nation in questionable automobile insurance claims. Florida’s business community can no longer afford to stand by and expect PIP fraud to go away. We must do something now. In conjunction with InsuranceFraudUncovered.com, the Florida Chamber of Commerce stands ready to fight against rampant PIP fraud on behalf of the automobile owners in Florida,” said Teye Reeves, Director of Business Climate and Quality of Life Policy, The Florida Chamber of Commerce.

“PIP fraud is out of control in Florida. The Insurance Information Institute estimates that, if left unchecked, the increase in premiums related to insurance fraud, a.k.a, the ‘fraud tax,’ could reach $946 million for insured Florida drivers in 2011. Associated Industries of Florida supports the efforts of InsuranceFraudUncovered.com to highlight the escalating, and costly, PIP fraud in Florida,” said Jose Gonzalez, Vice President of Governmental Affairs, Associated Industries of Florida.

Amongst the possible reforms, PCI today discussed reforms for consideration for the 2011 Legislative Session, such as:

EXAMINATIONS UNDER OATH: The “Shaw” court decision created confusion regarding an insurer’s ability to investigate claims by using a procedure called an Examination Under Oath (EUO). These are routinely used to determine if fraud exists by interviewing the policyholder or provider regarding the alleged benefits received, under penalty of perjury for lying. We recommend specifically authorizing the use of EUOs by insurers to investigate fraud.

INDEPENDENT MEDICAL EXAMINATIONS: In the course of investigating a claim, an insurer can conduct an Independent Medical Examination (IME) on an insured to determine the extent of injuries and what sort of treatment is reasonable. If an insured is participating in a fraud ring, or even if an honest insured is just following directions from a clinic or PIP lawyer who is part of a ring, the insured often misses or never goes to these appointments, in order to keep the crime a secret. The “Custer” court decision allowed an insured and his/her PIP lawyer to keep making excuses for never showing up to an IME. We recommend specifically stating that a refusal to submit to an IME is a rebuttable presumption that the failure was unreasonable.

ARBITRATION: When disputes do exist, they can often be resolved faster and more efficiently by using arbitration, which also saves the taxpayer money by reducing the caseload on the court system. We recommend allowing an insurer to offer a policy that includes arbitration as an alternative dispute resolution mechanism available to both the insured and the insurer, while preserving everyone’s right to access the court system if necessary.

PIP LAWYER FEES: Florida PIP law requires an insurer to pay both its lawyers’ and the insured’s lawyers’ fees if the insurer loses in court, even if the insurer thinks the claim is a scam. Sometimes the insured’s lawyers’ fees total more than the original $10,000 in PIP coverage. This causes an insurer to think twice about challenging suspicious claims or medical treatments. Likewise, the lawyers have an incentive to file as many lawsuits as possible for any reason, all the while driving up insurance costs for everyone else. Since a similar change to the workers’ compensation laws in 2003 resulted in substantial savings for policyholders, we recommend capping lawyers’ fees in PIP litigation to a percentage of benefits obtained.

PIP LAWYER FEE MULTIPLIER: In addition to their regular hourly fees, PIP lawyers can also obtain something called a “contingency risk multiplier.” Originally developed to encourage attorneys to take on difficult civil rights cases, the multiplier now regularly shows up in PIP cases, and literally multiplies up to two-and-a-half times the amount of money a PIP lawyer can make in litigation. These inappropriate multipliers dramatically increase the PIP lawyer’s incentive to sue in a no-fault system that is supposed to be free of litigation. We recommend prohibiting the award of contingency risk multipliers in calculating PIP lawyers’ fees.

SUPPORTING AND EXPANDING INVESTIGATION AND PROSECUTION OF INSURANCE FRAUD: Crash reports that include the names and addresses of all passengers, better licensure and inspections of PIP clinics, and more authority and funding for Chief Financial Officer Jeff Atwater and the Department of Financial Services are among the many reforms that could help solve this problem.

Using anecdotal statistical data to highlight Florida’s rampant PIP fraud through “case files” provided by member companies of PCI, InsuranceFraudUncovered.com will expose Florida’s real-life cases of fraud while starting the conversation to find solutions to Florida’s PIP problem. For more information and to follow the ongoing campaign, please visit www.insurancefrauduncovered.com.