Auto Industry Looks to Create Insurance Fraud Authority
Michigan’s auto insurance industry is looking to tackle the issue of fake medical claims relating to auto accidents and scams that involve the billing of insurance companies for procedures more expensive than those performed. There has been a recent increase in such questionable claims, and Michigan now ranks third in the nation in such claims. Even Gov. Rick Snyder is on board, addressing both the issue of auto insurance fraud and no-fault insurance in general during his State of the State address last month.
The robust no-fault insurance provider can be a “magnet for unscrupulous and fraudulent claims activity,” says Meghan Cass, an Allstate Insurance spokeswoman. Under Michigan’s no-fault law, it is required of motorists to purchase unlimited, lifetime medical benefits. While the concept has worked well, it has resulted in steady premium increases.
The proposed Fraud Authority would involve the ferreting out of what scams are taking place while providing financial support to law enforcement, prosecutors, and insurance associations. While insurers may have to dedicate up to $15 million per year towards such authority; it would save millions more. It is estimated that 10% of all claims in Michigan are fraudulent. The result: the opportunity to save at least $40 million per year.
The high fraud rate in Michigan may be the result of other states cracking down, driving con artists to find new stomping grounds. While Florida and New York grew more stringent, questionable auto insurance claims related to medical issues rose 70% in Michigan from 2010 to 2011.
If the issue of a fraud authority does not get too tied up in the more controversial debate over no-fault insurance in general, some say the creation of such authority may stand a chance this year.
To learn more and read the original article, please visit the Insurance Journal.