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Cheap auto insurance by reducing fraud

There's a real problem with the increasing level of fraud. When you add up the estimates for each state it comes to so many billions, it brings tears to the eyes. Who would have thought we had become so dishonest as a nation. If only we could bring the same level of commitment to reducing the deficit, the Tea Party could retire feeling there was a job well done. As it is, some states have become fraud magnets. The majority of these unlucky states run a no-fault system.


Put simply, a system designed to enable people to recover their losses with fewer administrative and legal problems is ripe for the plucking. It's somewhat ironic to applaud the role of attorneys but, in this instance, their job is demand satisfactory evidence to support a claim. If the claimant has no good evidence, the claim is dismissed. In no-fault states, the insurance companies have no incentive to challenge every claimant to produce credible evidence. There's an administrative routine and so long as the paperwork matches the requirements, payment is authorized. The result, of course, is scam artists queuing up for payment and all the bills being passed on to the policyholders. Yes, that's right. We all get to pay higher premium rates to cover the cost of the fraud while the insurance companies continue to be highly profitable.

Florida not only attracts the snow birds, it's also become the fraud capital of our nation. Even though the number of accidents has been falling steadily over the last five years, the estimated cost of fraud is now estimated as almost $2.5 billion a year. Equally predictable is the cycle of the lawmakers' proposals to solve the problem. At the beginning of each year, someone proposes a new bill. Over the year, there are debates as all sides pitch in with their thoughts. At the end of the year, it fails to get a majority and we wait for the new year. This January sees the latest idea. The key problem is seen to be the role of clinics, many of which are fronts for fraud. If the insurers cannot be persuaded to insist on independent medical reports on every claim for personal injuries, the law should be changed to require every alleged victim of a traffic accident to report to an ER for a medical evaluation. If no doctor certifies the alleged injuries as real, the insurers will be barred from paying out.

This is a bold suggestion. At present, some doctors in clinics take a percentage of the claims to certify injury. Who is to say there will not be ER doctors prepared to do the same? More importantly, ERs in Florida already have too many people turning up for treatment. The number with health insurance means there's a steady tide of people coming into ERs as emergencies. If the government requires thousands of drivers and passenger who might have injuries to join the queues, some would be there for days before being seen. Although the theory says you get cheap car insurance if you reduce fraud, the result in this case would be higher medical bills as hospitals build larger ERs and hire extra doctors. For auto insurance quotes to fall, we need effective policing, i.e. the state spending money on law enforcement.

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