PIP Auto Insurance Is A Favorite Among Fraudsters

FraudstersPost Date January 30, 2013 – A study by the National Insurance Crime Bureau (NICB) shows U.S. States which have personal injury protection (PIP) insurance coverage as part of their no-fault auto insurance policy form have a higher chance of insurance fraud through fake insurance claims.  States with no-fault auto insurance have PIP auto insurance coverage which compensates policyholders for medical expenses for injuries caused by auto accidents. The PIP Auto Insurance coverage will pay regardless whose fault the accident was.

PIP Auto Insurance and fraud goes together like Peanut Butter and Jelly

The study which used  four years of data from 2008 through June 2012. The NICB showed the large number of fake PIP Auto Insurance claims were abviously influenced by “organized group/ring activity”.  When fake PIP Auto Insurance Claims are influenced by an organized group, everyone have their hands out.  Dishonest Lawyers, Doctors, Insurance Agents and medical clinics seem to be part of the group.  Of the top 5 states that have the most numbers of OGA Organized Group Activity Claims, three of them require no-fault PIP coverage. The five states that have the highest numbers of such claims are as follows: Florida (3,600 claims); California (2,700); Michigan (1,100); Texas (1,000); and New York (800). Among those states, New York, Michigan and Florida require their drivers to have PIP auto insurance coverage at different levels. Texas too has PIP auto insurance coverage but policyholders can opt-out from the coverage.  Four out of the five cities identified also by NICB to have the most numbers of OGA claims belong to states that requires PIP auto insurance coverage. The top 5 cities with highest number of OGA claims are as follows: (Los Angeles (760); New York City (600); Miami (600); Detroit (550); and Tampa (550).

Criminals who are taking advantage of the generous no-fault insurance and PIP auto insurance coverage staged accidents, forged and medical and treatment records, and among other things just to defraud the industry. The state of Florida and New York had been making some efforts to combat the fraud. Last year, Florida instituted a couple of changes to their PIP system, while New York City just recently convened prosecutors and councilman to discuss how they can effectively address the problem.


Michael E. Dortch
President &  Senior Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 206