Fighting Fraud

Four years ago, Florida nearly joined the majority of states that don't require drivers to carry personal injury protection insurance coverage. But at the last minute, legislators renewed the mandate with some changes to the law that were supposed to address the rampant fraud and abuse in the PIP system.

Those "fixes" were about as genuine as a Kardashian wedding vow.

Not only did PIP fraud that was bad to begin with not decline, it appears to have gotten worse. That's like a tax increase on all Florida policyholders, because insurers don't absorb the costs of paying false and exaggerated claims; they pass them on to their customers in the form of higher premiums.

PIP has become an SUV barreling down the interstate at reckless speeds. The Legislature needs to apply the brakes — or better yet, take away the keys.

Florida requires drivers to carry $10,000 of personal injury protection on their car insurance, which compensates people injured in accidents regardless of fault and property damage insurance. The idea behind it is that people injured in auto accidents will be compensated for their medical bills without having to sue the other driver for negligence.

Although the volume of lawsuits has been reduced, the amount of PIP claims has multiplied. This week, state officials released the results of a study that showed that although the number of drivers in Florida has held steady in recent years and the accident rate has decreased from 1.76 per 100 licensed drivers in 2005 to 1.52 last year, insurance costs have skyrocketed.

Direct losses have increased from $1.6 billion in 2005 to $2.3 billion last year.

Variable losses, which include legal defense costs, taxes, licenses and policyholder dividends, increased from $2 billion to $2.7 billion in that period.

The Florida Chamber of Commerce released its own findings that indicated that despite decreases in the number of crashes and steady population growth, PIP claims have risen from less than $1.5 billion in 2008 to nearly $2.5 billion last year.

More drivers on the roads, fewer accidents — but a spike in PIP claims? How can that be?

Unfortunately, unscrupulous lawyers and medical clinics conspire with victims of legitimate crashes to exaggerate injury claims and tap the pot of PIP money. Because no fault is established and payments are guaranteed, the onus actually is on insurers to prove a negative — that a claimant's injury doesn't exist or isn't as severe as alleged.

Some claimants just flat-out make stuff up. According to the National Insurance Crime Bureau, Florida led the nation in staged accident "questionable claims" from 2007-09. During the same period, Tampa, Miami, Orlando and Hialeah were among the 10 U.S. cities with the highest rate of questionable auto claims. The number of claims that have been referred to fraud investigators has more than doubled since 2007.

All that adds up to one sobering statistic: Insurers have responded by raising PIP rates from 35.5 percent to 72 percent since 2009.

The insurance industry has recommended several solutions, such as tightening billing practices for PIP claims. But the Legislature should revisit eliminating no-fault insurance. Florida is one of only 12 states that mandate PIP coverage. Drop PIP and monitor what happens to insurance rates under a tort system that is already used by two-thirds of the states.

REPRINTED FROM THE PANAMA CITY NEWS HERALD

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