Car crash fraud cases still rising, boosting insurance for all drivers, state says

TALLAHASSEE — Florida's epidemic of car insurance fraud is getting worse even though the total number of crashes in the state is declining.

The result: what amount to statewide premium increases of more than $900 million since 2008, Insurance Commissioner Kevin McCarty told Gov. Rick Scott and the Cabinet on Tuesday.

"That's just like having a tax increase," Scott said.

Neither Scott nor any Cabinet member called for outright repeal of the state's 1972 no-fault auto insurance law that requires every driver to carry a minimum of $10,000 of personal injury protection, or PIP. But they agreed changes, perhaps even dramatic ones, must happen.

Florida is one of 10 so-called no-fault accident states. Most other states, 38 in all, have what is known as a tort system, which requires motorists to buy bodily insurance coverage. A tort system holds at-fault drivers liable for the economic and noneconomic damages they inflict on others.

Scott said he wants McCarty to consult with key lawmakers and push for reforms to be taken up in the next legislative session, which begins in January. But by then, McCarty said, more premium hikes are likely.

"The commissioner (McCarty) has been here a long time. He knows how to fix this," Scott said. "I think he needs to sit down with the Legislature and come back with something that we can get passed and get it fixed."

All of this has to be done through the Legislature, Scott said.

More than a decade after a scathing grand jury report exposed the extent of car insurance fraud in Florida, McCarty acknowledged that a series of minor tweaks by legislators have failed to combat the problem.

By staging accidents, ordering needless medical tests and other abuses, McCarty said, scammers have driven up car insurance premiums for everyone.

"There's a group of people — fraudsters and hucksters — who have perfected the system of finding the weak points, and they're taking advantage of that," McCarty said.

The notion that PIP fraud is mostly a Miami-area problem is a "myth," McCarty said.

Tampa has become the epicenter of staged car accidents in Florida, with 739 such crashes in 2010, a five-fold jump over the 125 reported in 2008, according to McCarty's report.

From 2008 to 2010, McCarty said, total PIP benefits paid increased from $1.4 billion to $2.3 billion, a 70 percent increase. The money comes from premiums paid by all drivers.

Total PIP-related lawsuits more than doubled in the same period, from about 7,500 to nearly 19,000.

For every $1 motorists pay in premiums, McCarty said, the insurance industry spends $1.40 in losses and expenses.

"Obviously, that is not sustainable," said McCarty, who predicted more rate hikes or an exodus of insurers from Florida.

He gave the example of a 43-year-old Miami woman whose annual car insurance premium skyrocketed from $447 in 2005 to $826 in 2011, an 84 percent increase.

Chief Financial Officer Jeff Atwater said if another package of reforms can't curb fraud, it's time to abolish PIP coverage.

"You can't keep throwing consumers to the wolves, and that's what's happening here," Atwater said. "They have to buy it, and we're the ones choosing to allow an environment to exist where all this fraud continues."

Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.

Car crash fraud cases still rising, boosting insurance for all drivers, state says 08/16/11 [Last modified: Tuesday, August 16, 2011 11:46pm]

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