Fla. Goes on Offensive to Fight Fraud

January 7, 2004

Florida is like many other states when it comes to insurance fraud –
it recognizes the problem and is doing something about it.

Recently, Chief Financial Officer Tom Gallagher and Bob Neumann, director of the Division of Insurance Fraud, spoke to Insurance Journal about the problem and what the Sunshine State is doing about it.

Insurance Journal: How big a problem is insurance fraud in Florida?
Tom Gallagher: Insurance fraud costs the average Florida family as much as $1,400 a year in higher premiums and higher costs for goods and services. As a result, more employers are finding it increasingly difficult to afford coverage for their workers, even the required workers compensation coverage. And more Floridians than ever are driving uninsured. Insurance fraud is a costly crime, and one that we all pay for.

IJ: What kinds of insurance fraud are most problematic in the state, e.g. workers’ comp, PIP?
Gallagher: All insurance fraud is problematic because of its effect on the cost of premiums. But some kinds of fraud affect people’s health and safety. Unauthorized insurance entities have left thousands of Floridians with unpaid health care bills and in some cases left them unable to get needed medical care or legitimate coverage. Increasingly, PIP fraud schemes involve staged crashes that put participants in danger of being hurt for real. Viatical fraud often robs senior citizens of their savings, leaving them vulnerable to a medical or financial catastrophe. And insurance fraud perpetrators continually find new ways to try to circumvent the law.

IJ:b> What has Florida done to fight insurance fraud?
Gallagher: In 1979, Florida became the first state to create an insurance fraud division. Initially established by the legislature to address tort fraud, the division today is responsible for investigating fraud in every line of insurance, including health, life, auto, property and workers’ compensation insurance. A reward of up to $25,000 may be offered for information leading to a conviction in complex insurance fraud schemes. The division works with local, state, and federal law enforcement agencies, and this year a prosecutor’s position was created to specifically address PIP fraud. Florida’s fraud hotline is listed in every press release, on billboards and in public service announcements currently being run on television stations throughout the state. For the past several years, Florida has led the nation in the number of insurance fraud arrests and convictions.

IJ: Do we see much fraud within the industry, e.g. agents?

Editor’s Note: To see the full interview, see the Jan. 12 premiere issue of Insurance Journal Southeast. For more information on this magazine, which contains news for independent agents in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and West Virginia, visit www.insurancejournal.com/subscribe or e-mail subscriptions@insurancejournal.com.

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