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Auto Insurance Scams Dropping in Florida

By Aaron Crowe

Of the 12 states with no-fault auto insurance, Florida has seen its share of auto insurance fraud, mainly through scams involving Personal Injury Protection, or PIP insurance.

In 2011, for example, a chiropractic center in Fort Myers billed an insurance company seven times that summer for treating injuries it claimed a man suffered in a car accident. The man wasn’t in a car accident, however, but was serving time in jail for a DUI, according to the Miami Herald. Three employees at the chiropractic center were arrested.

At the time, South Florida was second in the nation in PIP fraud, according to the National Insurance Crime Bureau, or NICB, a nonprofit funded by the insurance industry to investigate fraud. Tampa Bay was No. 1.

“In Florida it’s widely abused,” says Carol Kaplan, director of public affairs for NICB, of PIP fraud.

PIP premiums represent roughly 2% of Florida’s collected insurance premium, but accounts for nearly half of fraud referrals, according to the Florida Office of Insurance Regulation.

$10,000 limit

No-fault auto insurance is required for all cars in Florida, and provides up to $10,000 in immediate medical coverage without having to go through the court system to establish fault. One problem with that $10,000 limit is that criminals see it as a target, says Lynne McChristian, a spokesperson for the Florida office of the Insurance Information Institute, or III.

“Some people will be miraculously healed when they reach that dollar target,” McChristian says.

The average PIP claim is very close to $10,000, she says. Fraud can include recruiting people to be involved in staged accidents, then sending them to a medical provider who is in on the scam and has them fill out paperwork for injuries they don’t have.

PIP fraud dropping

Auto insurance fraud has dropped in Florida since a 2012 law reformed PIP. The changes included stronger penalties for medical providers who commit PIP fraud, and a 14-day, post-accident window for accident victims to seek medical treatment, and reduced benefits and treatments.

“It’s getting attention so it’s starting to go in the right direction,” Kaplan says.

According to the Insurance Information Institute, the Florida Office of Insurance Regulation reported in January 2014 that the reforms are working and that PIP coverage rates are falling. PIP coverage is expected to drop by an average of 13.2%, based on a review of insurers who provide auto insurance to more than 75% of the Florida market.

The average cost per no-fault claim in Florida hit a peak in 2012, at $9,915, with no-fault fraud and abuse the main drivers, according to III.

Other common types of fraud

Questionable claims in Florida’s PIP dropped 7.6% in 2013, and staged accidents decreased 61% from 2010 through 2013, according to the NICB. Still, Florida remains a “hotbed for fraudulent activity,” NICB President Joe Wehrle said in a statement in March.

Another popular type of auto insurance fraud in Florida is having fake insurance identity cards, says NICB’s Kaplan. Since drivers must show proof of insurance to police if they’re pulled over or are in an accident, some people buy a policy online and print an ID card, then cancel the policy, Kaplan says. They use the card with the cancelled insurance policy to show to police, who might not find out on their computers that the policy is no longer effective.

Getting in an accident and relying on such a card as proof of insurance won’t work because the insurer will find out they’re not insured, but it could work on a quick traffic stop.

“Just by a routine traffic stop you wouldn’t get caught,” Kaplan says.

In staged accidents, organized crime rings have been identified by the NICB as repeatedly conducting them, with a 2013 report by the NICB listing Florida as the top state with questionable claims by crime rings with 3,530 between 2008 and June 2012.

The fake accidents set the stage for other types of fraud ranging from fakes or exaggerated injuries to unnecessary or excessive medical treatment, according to NICB.

However the fraud is committed, it results in a “fraud tax” that drivers see in increased insurance rates, Kaplan says.

“It drives up the cost of insurance for all drivers,” she says.


Aaron Crowe is a writer who covers the auto industry for