Fraud Tax

It’s not very often that private insurers, state regulators, lawmakers and consumer groups are all on the same page on an insurance issue in Florida—or any state, for that matter. But this miracle is taking place in Florida.

The agreement is not on property insurance, of course, where not everyone agrees what the problem is or what to do about it. Rather, it’s on personal injury protection (PIP) auto insurance fraud, which has become so bad that all of the special interests have put aside their differences to at least agree that trying to combat it should be a priority for the state legislature, governor, CFO, insurers, law enforcement, consumer groups— for everyone.

Everyone agrees except the criminals, of course. These crash “victims,” attorneys and medical providers are much too busy staging accidents and fabricating personal injury claims to hang around Tallahassee. They are using the no-fault PIP system like an ATM, costing Florida drivers about $100 a year in jacked-up premiums just to cover their fake accidents and medical claims.

How bad does it have to get before all of the interests are willing to heed the industry’s warnings?

The National Insurance Crime Bureau ranks Florida first in the nation for staged crashes—ahead of New York. Among cities, Tampa ranks second in the nation, Miami ranks third and Orlando, fourth.

PIP fraud accounts for 40 percent of the case referrals to the state’s division of insurance fraud.

The insurance industry says the total cost to Floridians could reach as high as $1.5 billion between 2009 and 2011 if fraud remains unchecked.

Even consumer advocate Walter Dartland, executive director of the Consumer Federation of the Southeast, has had enough. “Honest Florida drivers are being taken for a ride by greedy staged-crash gangs,” Dartland said. “We must make no-fault a road to nowhere and help ease the pressure on honest drivers’ auto premiums.”

The Florida Legislature reconvenes this week and House and Senate leaders have already signaled that no-fault reform will be a priority. Chances look good that they will act. After all, politicians love to give tax breaks and this is an opportunity to give every driver the equivalent of a $100 tax break.

The umbrella group for the fight against fraud is being called the Sunshine Alliance to Ease Fraud. Does that mean that stopping this fraud is too ambitious? It would be a crime not to try.