Florida Leads Country in Suspicious Auto Insurance Claims

May 10, 2010

The South Florida Sun-Sentinel is reporting that the Sunshine State has led the country in the number of insurance fraud complaints related to staged accidents for the past three years, according to a report released this morning by the National Insurance Crime Bureau (NICB).

Insurance companies in that state reported 3,006 suspicious auto insurance claims between the beginning of 2007 and the end of 2009, while the next states on the list, New York and California, reported 1,680 and 1,619 such claims, respectively. Among metropolitan areas, South Florida ranked second in the country, behind the New York/New Jersey metro area, with 1,298 suspicious claims filed during the same three year period.

Industry experts believe that Florida and New York have the most suspicious automobile accident claims because both are among the country’s five largest states, and both have laws requiring that a motorist’s insurance covers some of his or her own medical payments, no matter who is actually at fault in an accident.

A representative of the NICB, a nonprofit organization with support from more than a thousand insurers and self-insured groups, and fights insurance fraud by tracking, researching, and investigating claims, wrote, “Staged accidents are dangerous criminal events that target innocent drivers with increasingly bold schemes aimed at defrauding insurance companies out of millions of dollars. Unless someone becomes suspicious, many of these staged accidents go undetected.”

Frank Scafidi, public affairs director for the NICB, said that the group isn’t certain how many of the suspicious claims led to convictions. Such claims, he said, are a mere fracti9on of all the claims policyholders submit. Less than 1% of the 48 million insurance claims processed each year are flagged as possible fraud, but the recession seems to be fueling an increase in suspicious activity. “That winds up costing us all more in the end,” he said, since insurers pass their expenses – including claims costs – to policyholders, in their rates.

Alex Sink, Florida Chief Financial Officer, announced last month that the state’s Division of Insurance Fraud partnered with the NICB and local law enforcement to find and arrest eight people for “alleged involvement in staged accidents,” which brings the total number of arrests this year, to twenty-seven. The insurance fraud division made more than 830 arrests in the last year, and the state’s Department of Financial Services pays informants up to $25,000 for information that directly leads to a conviction.