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(Transportation-News.com, May 12, 2013 ) Philadelphia, PA -- For those states that have no-fault auto insurance policies, holders of personal injury protection are reimbursed for accidents by their insurance companies without any proof of fault. These individuals are also given compensation in exchange for not seeking higher levels of the compensation in courts from the other parties. While that may sound like a deal for both parties, the loss ratio in no-fault states reflects an overall higher frequency of fraud being perpetrated by owners.
“Premiums are higher in no fault states,” said Douglas Pawlowski, an analyst with Fitch Ratings in Chicago. “When you track loss ratios over five years, these 12 states have a higher loss ratio than all the other states. Losses are 12 % higher.”
There are, as of the start of 2013, twelve states that have a no-fault law. They include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New York, New Jersey, North Dakota, Pennsylvania and Utah.
“Critics of no fault insurance believe insurers are not adequately charging their more reckless drivers, are under compensating victims of fraudulent accidents and charging honest drivers higher premiums,” Pawlowski said. He noted that the upside of the policy type is that it avoids the time-consuming and costly litigation process. This was considered to be saving everyone involved money, including the state. The reimbursement of insured individuals for injuries helped avoid the risks of uninsured motorists.
Unfortunately, with fraud apparently growing in the states that allow for no-fault insurance, the disadvantages of PIP now seem to outweigh the gains. “Auto insurance is a significant area for us because it takes up a high percentage of the types of fraud we’re seeing occur on the streets,” said Howard Goldblatt, director of government affairs at the Coalition Against Insurance Fraud in Washington, D.C.
Nefarious fraudsters are those individuals who intentionally stage an accident, then feign injury. Some even go as far to ensure they do sustain considerable injury in order to compensate financial gain.
“They target luxury brand cars, such as Lexus and Cadillac, because their drivers tend to have better insurance coverage,” said Lou Beniamino, executive vice president with GlobalOptions Inc. He continued “These con artists load their car with multiple people and claim all the occupants suffered subjective types of back and neck injuries, which are physically hard to disprove.”
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Source: EmailWire.Com 
Source: EmailWire.com
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