Michigan needs to get serious about fighting fraud

by R.J. Lehmann on November 15, 2011

As the Michigan House of Representatives continues to consider legislation to overhaul the state’s no-fault auto insurance system, lawmakers should also focus attention on measures to reduce rampant fraud that unnecessarily add costs to the system, according to Eli Lehrer, The Heartland Institute’s vice president of D.C. operations and director of the Center on Finance, Insurance and Real Estate.

In a new white paper, Lehrer lays out the case for following the model of the Pennsylvania Insurance Fraud Prevention Authority, a special entity funded with insurance industry contributions whose task would be focus exclusively on insurance fraud.

Since its creation, the PIFPA has saved Pennsylvania consumers more than $113 million. In Michigan, where the number of questionable personal injury protection claims has grown from 373 in 2008 to 936 in 2010, uncapped PIP claims make fraud potentially even more lucrative, and efforts to crack down even more cost-effective.

The full paper, “The Case for Creating a Michigan Auto Insurance Fraud Prevention Agency,” can be found here.

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