Law Enforcement, Auto Insurer Partner in Major Crackdown on Staged Car Crashes

TAMPA, Fla., April 29 /PRNewswire/ -- The recent eight-month investigation and dismantling of an organized "crash ring" highlights Direct General Insurance Company's ongoing collaboration with law enforcement agencies to thwart the dramatic rise of auto insurance fraud in Central Florida.

Operation Crash for Cash is spearheaded by the Hillsborough County Sheriff's Office, with the assistance from the Florida Department of Insurance Fraud, the National Insurance Crime Bureau (NICB), Direct General and other auto insurers.

To date, the ongoing joint probe has resulted in more than 50 arrests and the investigation of four medical clinics. Authorities have thus far filed charges ranging from racketeering to staging auto accidents to insurance fraud.  

The operation underscores Direct General's "zero tolerance" policy toward auto insurance fraud, as well as the company's enhanced efforts in partnering with law enforcement agencies to crack down on criminal activity, wherever it occurs, said Jim Sclafani, Direct General's Chief Claims Officer.

"Particularly in Central Florida, where the number of staged auto accidents is soaring, Direct General will continue to invest in corporate resources and explore new ways to collaborate with law enforcement agencies to help combat auto insurance fraud," Sclafani said. "Reducing fraudulent claims is a key aspect in keeping auto insurance rates down for honest drivers."

Florida auto insurers are forced to charge higher premiums and impose tighter underwriting guidelines due to escalating losses from fraud, which directly impacts the affordability and availability of insurance coverage for all Florida drivers.

As auto insurance fraudsters have migrated from South Florida into Central Florida, Direct General has strengthened its fraud detection training for claims personnel and adjusters and increased resources in its Special Investigations Unit, Sclafani said.

Today, Florida is the nation's epicenter for organized auto insurance fraudsters, who deliberately crash vehicles and falsely report injuries from auto accidents. As part of these schemes, "injured" drivers and passengers seek treatment from crooked medical providers, who file false insurance claims in order to max out the $10,000 in Personal Injury Protection (PIP) coverage that Florida law requires all drivers in the state to carry.  

Typically, members of these "crash rings" – including drivers and passengers who falsely claim injuries, "runners" who solicit those involved in crashes, and unethical medical providers who overutilize treatment – gain financially by sharing fraudulently-obtained insurance money. Most concerning, these professional shysters don't think twice about injuries they cause to unsuspecting drivers and passengers as a result of their staging crashes.

While there were no legitimate injuries caused by fraudsters identified in Operation Crash for Cash, investigators estimate that insurance companies would have been fraudulently billed $18 million due to fake injuries and claims.

Here's a look at auto insurance fraud in Florida, according to reports issued by the NICB and the Insurance Information Institute (III):

• Florida has ranked number one in insured losses from staged accidents and questionable claims in the United States since 2007. (NICB)
• More than 27% of the nation's staged accidents reported in the first half of 2009 occurred in Florida. (NICB)
• Five of America's 10 worst cities for losses related to staged accidents and questionable claims are in Florida: Tampa (#2), Orlando (#4), Miami (#5), West Palm Beach (#7) and Hialeah (#10). (NICB)
• Central Florida accounts for more than 25% of the questionable claims in the state. (NICB)
• Staged accidents in Tampa and Orlando represent 83% of Central Florida's fraud. (NICB)
• Florida's drivers already pay among the highest auto insurance premiums in the U.S. (III) Left unchecked, the current trend will continue to increase the cost of auto insurance.

To learn more about how law enforcement and the insurance industry are fighting back against this criminal trend, contact Ron Bartlett at (813) 775-6203 or [email protected] to schedule an interview or obtain additional fact sheets.

About Direct General Insurance Company

Direct General Insurance Company is a wholly-owned subsidiary of Direct General Corporation, a Nashville, Tennessee headquartered insurance holding company that offers non-standard personal automobile insurance, motorcycle insurance, premium financing services and other insurance and non-insurance products, all through its family of companies. Direct General Insurance Company writes and sells auto insurance policies in Florida under the Florida No-Fault Auto Insurance and Cash Register Insurance brands through 100 affiliated retail storefronts statewide.

SOURCE Direct General Insurance Company