Friday’s Post  4/27/12 –  A New Jersey man pleaded guilty on charges to commit New Jersey auto insurance fraud against a number of New Jersey Car Insurance Companies  robbing them of $2,000,000.00 in insurance fraud claims. Prosecutors charged a Chiropractor on a single count of conspiracy to commit fraud by mail, engaging in a scheme based out of his chiropractic practice. The man  had two New Jersey offices which are no longer in operation.

In 2006, the  New Jersey man entered into conspiracy with an personal injury attorney and other accomplices to commit car insurance fraud against auto insurance companies by making claims using false information provided to insurance carriers, for accident claims directed by the injury attorney. The auto insurance claims made exaggerated statements regarding the patient’s condition and the costs incurred in caring for their injuries as a result of auto insurance accidents. The Chiropractor paid the lawyer cash, in excess of over one hundred thousand dollars for the fake patient and auto insurance claims information. The attorney then paid cash to auto insurance customer to find victims of automobile collisions that the attorney would then represent.

The chiropractor would use his practice to administer treatments to patients for 6 months without regard to the medical necessity, and refused to resolve the cases of patients without the authorization of the lawyer. At the end of the extended treatment period, the patient would be given a rating for partial disability, irrespective of their real physical condition. The patient received a rating for an auto accident prior to the patient being elevated for another auto accident treatment claim. The chiropractor also accepted responsibility for his knowledge that the lawyer was using an unlicensed doctor for medical records reporting. In addition to the scheme, was also the proprietor of a medical testing company providing tests to auto accident victims without any medical necessity. The unlicensed doctor would use the chiropractor for medical tests, believing carriers would raise settlement amounts under a doctor’s direction. If convicted of auto insurance fraud and related charges, the Doctor could spend 5 years in jail, and repay about three and a half million dollars in fines. Similar Auto Insurance Accident Fraud stories have been reported in PA, NJ, DE and OH. These Car Accident Schemes raise auto insurance rates and makes it difficult to shop for budget car insurance rates.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Post Date April 16, 2012 – Auto Insurance Companies are very enthusiastic regarding the premium generation this year even though 2011 was a very difficult year. Where profits were exceptional in earlier years, auto accidents spiked in 2012.  One good sign this year is increased premium.  Auto Insurance Rate collection has been much higher since auto insurance companies have been focused on hiring sale field staff to expand car insurance agent representation.  Based on a recent car insurance company study, over half of all car insurance carriers nationwide are planing to add extra insurance agent representation. The study involved over a hundred car insurance carriers including 62 regional auto insurance carriers and 50 national and international carriers. 87% of the study were property and casualty insurers. An interesting statistic is the average number of employees in regional Auto & Home Insurance companies is about 800, while national and international  Auto & Home Insurance carriers have a combined average of 2,755 workers.  19 % of insurance providers plan to cut staff members, while 30% will support their current workforce, according to a recent market survey. The reasons cited for staff redundancies among insurance companies are automation, restructuring and streamlining of operations.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Post Date April 13, 2012 –  The American Automobile Association called for more laws to ban text messaging, hand-held cell phones and other items which case distracted driving. The association expects law makers in fifteen states to pass driving laws barring such habits. 35 states have passed  new laws that bar drivers from sending or receiving text messages while driving a car or motorcycles. These activities cause, driving violations ,at fault accidents and increases in auto insurance rates.

Since last year,  the NTSB has lobbied for a complete ban on non-emergency use of portable communication devices by drivers; saved for GPRS or other gadgets that actually help communication in driving. The AAA’s main legislative priority in 2012 will be lobbying for stricter laws on teen driving.  The AAA motor club and the AAA Auto Insurance Company reiterated the need for tougher penalties on drivers who violate laws on distracted driving.

The penalties for distracted driving behaviors such as talking, texting, changing radio stations and applying makeup behind the wheel, vary across state lines. Sending text messages in Pennsylvania will cost a driver only $50 as fine. If the same driver receives multiple violation, they will receive an increase in their auto insurance rates. In New York State, the same offence costs drivers $150, and three points on their driving record. Those points will result in an car insurance rate increase.  Talking on a hand-held device also earns drivers three points on their record and a steeper cash fine. There is no total ban on cell phone usage in any state yet, nine states including Washington D.C., prohibit drivers from talking on hand-held gadgets.  Some states, laws forbid youthful operators and school bus drivers from using mobile devices while driving.  AAA will lobby for a graduated driver licensing (GDL) to improving teenage drivers’ skills. These programs delay full licensure for teenagers, until they become experienced under low risk conditions. These programs exist in all states, but concerned authorities hardly enforce them strictly.

-Mike 

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Post Date April 9, 2012 According to a report from the Insurance Research Council, market reforms introduced have led to significant improvements in delivery of auto insurance rates to customers in three states. The report focused on South Carolina, New Jersey, and Massachusetts, which have all carried out major auto insurance reforms in the past fifteen years. South Carolina restructured its auto insurance rate system in 1999, New Jersey in 2004 and Massachusetts was the most recent in 2008. Car Insurance service reforms have resulted in better rates, underwriting results and expanded coverage for policyholders in all three three states.

Findings from the report reveal that regulatory changes in the car insurance price sectors of the three states have had positive effects on local residents. There have not been any cases of  car insurance rate hikes or reduction in quality of service delivery, since the introduction of reform measures. The report is based on a study conducted by IRC, a non-profit research body funded by Property and Casualty Insurers of the US. Some of the changes that have come about because of the regulatory reforms include:

• Overall car & Truck insurance rate reductions and downward trends in insurance expenses, contrary to skyrocketing costs witnessed before.
• Overall decrease in the number of claims by insured clients.
• Improved underwriting results by car insurance carriers in the states.
• High levels of insurance coverage per capita compared to other states.

Nevertheless, it has taken sometime for the situation to return to normalcy after enactment of the insurance reforms. For instance, the mean insurance expenses in New Jersey and Massachusetts skyrocketed immediately they introduced reform measures. Auto Insurance Companies in the garden state experienced roughly 25 percent increase in average expenditure, immediately after ratifying insurance reforms. This phenomenon lasted until 2004, when things finally began to fall into place. In the last five years, the mean insurance expenditure in the state has dropped by about 12 percent. Prior to the 2008 insurance reforms, insurers in the Bay State had average expenditure rises annually from 1997 to 2004. These costs have reduced significantly since the introduction of reforms, with current expenses equaling 2001 levels.

Managed competition, an inherent feature of New Jersey car insurance rates, is among the factors that have helped to lower average costs in the state. Before its introduction, state car insurance regulators strictly controlled insurance coverage and rates, limiting competition among providers. However, introduction of managed competition has seen the entrance of new players between 2009 and 2012. These include Geico Auto Insurance, Progressive Auto Insurance, Allstate Auto Insurance, and many others. This has saved drivers almost $270 million in premium discounts according to the report.

-Mike 

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Post Date April 3, 2012 –  From time to time all body shop operators in Pennsylvania and New Jersey are faced with requests from an auto insurance customer to “bury the deductible” where auto damage is covered by comprehensive or collision auto insurance coverage.  At this point when the customer is told “no”, the customer should be advised that before he or she takes the car around the corner to find a body shop owner which will say yes, the auto insurance customer should consider the following:

1. Conspiring to “bury a car insurance deductible” is committing car insurance fraud upon an insurance company and law.

2. Car Insurance Company Appraisers know the cost of repairs or replacement parts and can’t be fooled by inflated estimates.

3. If a  PA or NJ Body Shop agrees to bury a car insurance deductible, it has to take short cuts in making repairs and the car owner always gets a second rate job.

4.  A body shop willing to cheat an auto insurance company will be equally willing to cheat the car owner. The body shop never absorbs the cost of the deductible. The value is taken out of the loss amount and your car’s value is ultimately diminished.

5. If a Pennsylvania or New Jersey body shop decides to clip the job a little more and the job is second rate, the owner has no one to complain to if he conspired to “bury the claim deductible”

The smart thing for a car owner to do is to protect their investment by getting a first-class job from a 1st class body shop and to be glad that all they have to pay is the deductible they agreed upon when signing the car insurance policy.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Post Date April 1, 2012 – The auto insurance betterment clause in most car insurance policies holds the company liable for actual loss.  On a tire claim for example, the auto insurance carrier can rightfully and legally pay the fair value of the tire at the time of the loss and not for a new tire replacement.  Many, many years ago auto insurance companies in Pennsylvania, New Jersey and Ohio were using the betterment clause to confuse and beat auto insurance claimants out of millions in damage losses. They simply interpret the car insurance betterment clause to mean any new part installed on the car.  Courts in PA, NJ and OH have determined only wearing parts requiring periodic replacement such as tires and batteries are covered by the clause. According to members of a prominent auto body association, a number of car insurance carriers reduce claim amounts on car doors, hoods and other auto body parts.  The sad irony of this situation is a loss of value for any car suffering body damage. Any car appraiser worth his salt can spot the new part or new paint and immediately reduce it trade-in value. The car owner then participates in the cost of repairs that lowers the actual value of his vehicle.

-Mike 

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602