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Insurance Consumer Advocate


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Tallahassee, FL 32399-0308

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Florida leaders demand insurers fork over fraud data

Julie Patel, Sun Sentinel


Florida Insurance Consumer Advocate Robin Westcott told Florida Cabinet members today that the first thing required to address automobile insurance fraud is to get more information from the insurance industry on where money its spends on claims is going, what medical treatments are being provided and how much attorneys' fees for disputed claims cost.

"They have the data," Chief Financial Officer Jeff Atwater said, noting he gives insurers a "failing grade" for not providing the information after it was requested by Westcott and the Office of Insurance Regulation.

Still, Atwater and Westcott said legislators should address insurers' pleas for the state to fight personal injury protection insurance fraud because higher costs for insurers are typically passed to consumers. Atwater said he'd want insurers to "rapidly" reduce automobile insurance rates if legislation is approved.

State law requires drivers to have up to $10,000 in PIP coverage, which pays medical bills for people injured in auto accidents regardless of who is at fault. The requirement was intended to avoid lawsuits.

But Westcott said state data shows there were about 36,000 lawsuits over PIP in 2010 and more than 47,000 suits so far this year.

She said insurers' direct claims costs for PIP rose from $1.5 billion in 2008 to $2.3 billion 2010 even as the number of licensed drivers and recorded automobile accidents stayed flat or dropped. If you include administrative and other costs for insurers, the costs rose to $2.7 billion. Meanwhile, insurers only collected $2.3 billion in premium.

Gov. Rick Scott said it amounts to a $900 million tax on all Floridians.

image of black vehicle

Westcott is expected to release a report with her findings, based on meetings she had with insurers, health care providers, attorneys and others, in the next few days. An insurance industry trade group released its recommendations last week.

"Our [PIP] laws need bold and significant change," Atwater said. "Fraud has found its way so deeply into the system that the industry questions" whether to sell policies in Florida.

Atwater said the state should give insurers more time and more tools to investigate suspicious claims. For instance, they should allow insurers to conduct interviews under oath of policyholders and health care providers and examine clinics in person to verify what treatments were provided.

Attorneys want to be able to videotape such interviews but some insurers are against the idea. Critics said legislation proposed earlier this year to give insurers the right to grill health care providers under oath even if there isn't a lawsuit could make it hard for policyholders to find good doctors.

Critics have also questioned how rampant PIP fraud is and have said insurers should have to prove the problem with data.

Regardless of what the data ends up showing, Westcott said about half of the Florida Division of Insurance Fraud's resources and time are spent working on PIP fraud. "We have a $10,000 benefit that we are putting" so much time and effort into, she said.

Scott asked how many people are uninsured in Florida.

Westcott said 21 percent don't have health insurance. She said estimates for uninsured drivers varies. The Florida Department of Highway Safety and Motor Vehicle estimates around 2 percent of drivers are uninsured and the Insurance Research Council estimates 24 percent. She said traffic stops around the state targeted at uninsured motorists indicate that as many as 30 percent of people stopped don't have proof of insurance.

The Personal Insurance Federation of Florida, whose members include Allstate, Progressive and State Farm, called for "a comprehensive solution." "We cannot continue to timidly chip away around the edges," said Michael Carlson, the group's executive director.

Photo: Allstate Insurance and Miami-Dade police demonstrate signs of a staged car crash in Doral in September to raise awareness about personal injury protection insurance fraud. (Cristobal Herrera, Sun Sentinel)