Posts Tagged ‘no-fault insurance’

Is it time to reform mandatory no-fault car insurance — again?

Wednesday, May 30th, 2012

No-fault insurance was supposed to reduce the expense of auto insurance by cutting down on the number of accident-related lawsuits. Any Florida driver who has tracked his auto coverage premiums or counted the number of “Accident!” billboards knows that’s not the case.

“Spiraling medical costs and rampant fraud have made the system a persistent target for reform,” writes Susan Ladika of in an article headlined “Reforming reform: Fixing no-fault insurance.” The report was published on the Nasdaq’s community website in May 2012.

States that repealed no-fault insurance saw premiums fall – 35 percent in Colorado, 31 percent in Connecticut, and 20 percent in Georgia, according to the article.

The big lesson may come from a RAND Corp. study that found that costs associated with medical care in no-fault states such as Florida were 40 percent higher than in states with systems that let people sue each other.

What’s to be done? Ladika said Florida took a big step with PIP reform that was enacted in May 2012.

Michael Carlson, spokesperson for the trade group Personal Insurance Federation of Florida, said in the article that consumers “shouldn’t be paying these outrageous PIP (personal injury protection) premiums.”

James Whittle, assistant general counsel for the American Insurance Association, a trade organization, concurs. He says in the article that there’s a “real hope people will see real savings as a result of the reforms.”

Florida’s consumer advocate questions how long PIP can stay viable

Thursday, November 3rd, 2011

Robin Westcott, Florida’s insurance consumer advocate, says that the current system no-fault auto insurance may not be sustainable.

The cost of Personal Injury Protection (PIP) is rising so rapidly that it is becoming unaffordable. At the same time, auto insurance companies continue to lose money on PIP coverage, raising doubts about whether they will continue to do business in Florida.

Families with two teenage drivers that State Farm insures in Tampa saw premiums rise from $1,279 in 2008 to $1,997 this year. according to Insurance Journal’s article on Westcott’s report to the Florida Cabinet.

“We’re talking $2,000 out of someone’s budget for a $10,000 benefit,” Westcott said.

Florida has two choices — reforming the system or seeing fewer companies providing the coverage at higher rates, Journal reported.

“To keep companies here, we are going to have to make this business model work or the insurance commissioner will have no choice but to approve premium increases,” said Atwater.

The way that injured individuals are treated and insurance companies are billed makes it all but impossible to check PIP claims for fraud. Insurers and regulators cannot monitor certain health care clinics and their services due to loopholes in a previous PIP reform measure.

Westcott said lawmakers must weigh the costs and benefits of monitoring the clinics to eliminate fraud.

“We have a dramatic system to police for a $10,000 benefit,” she said.

PIP fraud knows no boundaries: Thieves prosper north of U.S. border

Tuesday, January 4th, 2011

Personal Injury Protection (PIP) thieves have taken their act to Canada. Using techniques developed in Florida to rip-off insurance companies, a ring of PIP fraudsters have staged accidents and bilked insurance companies in Canada for more than $10 million.

No matter the country, it shows that unscrupulous individuals are abusing no-fault auto insurance systems.

Here’s how one group of thieves stole $1.2 million from State Farm in Ontario: They staged accidents using older-model luxury cars that they bought from salvage shops and later claimed were in top condition. They then organized more than 40 fake accidents and sent the so-called injured to medical clinics that were in on the fraud. 

Taking advantage of Ontario’s no-fault system, the clinics submitted PIP-related bills that averaged more than $250,000 per accident.

Sound familiar, Florida?

In its lawsuit claiming PIP fraud, State Farm claimed Vishnukanthan Sabapathy of Scarborough, Ont., was the de facto owner or manager of three clinics that had presented false treatment plans, disability certificates and invoices to the insurer since 2008.

Why is it so easy to rip off Canadian insurance companies? According to a news report, a fraudster caught in New York told investigators that it was easy to set up X-ray facilities in Ontario and charge insurance companies $1,500 a scan. Lax business regulation of clinics make it easy for crooks to set up shop, according to the article.

For just $500, anyone can register with the province as a clinic operator and start billing insurance companies. The claims need billing information and the signature of a doctor or registered practitioner, but all of that can be forged.

Sound familiar, Florida?

Canada and Florida can solve the PIP problem by cracking down on the attorneys and clinics that make fraud so profitable. Tough investigators supported by even tougher laws can save drivers tens of millions of dollars. Once the profits from PIP fraud disappear, so will the thieves.