The proposed changes Michigan House members are considering also are aimed at cutting down on fraud, in which unscrupulous doctors or other health care providers collaborate with drivers to fake crashes or embellish medical claims from real crashes to collect insurance payouts.
Without a requirement to prove fault, scammers can easily trick the system into an illegitimate payout, which also leads to higher premiums for law-abiding drivers. The proposal would create a fund to pay for investigators and prosecutors dedicated to chasing down auto insurance fraud cases.
“Insurance companies know that there is fraud going on,” Conarton said. “But when they take it to a prosecutor or investigators, their resources are limited. They’re working on cases that involve murder and assault... and don’t always have the time or the knowledge of insurance fraud to pursue those cases.”
Florida has been plagued by a string of auto insurance fraud cases over several years. One scam led to $1.5 million in questionable insurance payouts to a Florida chiropractor.
But fraud is only part of the problem in Florida, said Republican state Senator Jeff Brandes, who proposed that the state scrap its no-fault law and instead force drivers to carry coverage for property damage and bodily injury liability.
The current no-fault law, which has capped medical benefits at $10,000 since 1972, only provides “marginal” benefits to crash victims because medical claims for serious injuries can cost a lot more, Brandes said.
“It’s basically a bare-minimum policy that’s rife with fraud and abuse,” Brandes said.
When his bill failed earlier this year, Brandes asked the state to study how premiums would change if the no-fault system doesn’t change and how proposals, like his bodily injury liability coverage requirement, could improve coverage.
The study also will analyze the effect of Florida’s 2012 reforms that required that crash victims seek treatment within 14 days and capped the medical payout at $2,500 for injuries not considered to be “emergency medical conditions.” The changes were designed to lower the cost of personal injury protection and limit fraud, though medical providers say it hindered their ability to get paid.
“We’ve been constantly reforming it since the ’70s, but I think there’s a general consensus that $10,000 of minimum coverage is not enough,” Brandes said. “As most other states have figured out, you can provide better, more comprehensive coverage.”