Sullivan: “Absent All Auto Fraud, Insurance Rates Won’t Go Down!”
By: Tom Duggan – March, 2004
Lawrence – Mayor Michael Sullivan says that even if police investigations are capable of eliminating all auto insurance fraud in the City of Lawrence, “auto insurance rates still won’t go down.”
Sullivan, touting the hard work of Police Chief John Romero and the Lawrence Police Department, said that the investigations into auto insurance fraud in Lawrence were producing startling results but added, “If you call the Board of Insurance today and ask, just for example, ‘if the auto fraud goes away completely (in Lawrence) at what point will the rates go down?’ What they will tell you is what they told me last week, they won’t.”
For years, State Legislators, previous mayors and police chiefs have been telling Lawrence residents that the high auto insurance rates in the city (the third highest in the state) are the result of insurance fraud. Sullivan says that simply isn’t the case.
“What we are finding out is that, what will cause rates to go down (in Lawrence) is for the rest of the cities and towns in the state to tackle fraud in their communities as well. It would have to be a statewide effort. I think the insurance companies, years ago should have been doing the investigative work that the Lawrence police are doing this year.”
Asked why insurance companies have done nothing to curb fraud, Sullivan replied, “The insurance companies have been too quick to settle these cases because they don’t want big legal bills. These large insurance companies have the tools to really go after fraudulent accidents. They haven’t done that but I think that’s starting to change.”
“I’m going to tell you how easy it would be for these insurance companies to investigate the fraud. Insurancecompanies keep a name log of all accident victims and anyone who has filed a claim. If they just analyze who was in more than 4 accidents in a 12-month period throughout the state, as the Lawrence police are doing now, they can break down the data on those accidents and take a lead role in investigating these cases. The only way Lawrence rates are going down is for fraud to go down throughout the state. That has to start with the insurance companies themselves.”
The Lawrence police have been arresting business people who have been profiting from fraudulent injury claims. Sullivan says there are even more arrests coming and it isn’t just chiropractors participating in the fraud. “In the next couple of weeks you are going to see more information come out about attorneys and (other) chiropractors involved in this, it isn’t just the drivers involved,” he said of the ongoing investigation.
One local attorney who asked not to be named, said that even lawyers and auto shops are cashing in, paying people to file false claims and charging for work that is not needed.
Since the death of a Lawrence grandmother during a staged auto accident last year, the Lawrence police have been investigating “hundreds of cases of fraud” according to Police Chief John Romero. Romero said a task force has been formed including the FBI, Essex County District Attorney Jon Blodgett, Attorney General Tom Reilly, the State Police, and insurance investigators from every company doing business in Massachusetts.
”We are unmasking new cases every day,” Romero said. “My advice to people is this: If you, or someone you know, were involved in auto fraud or a staged accident in the last few years, you are better off coming to us and talking to us because, eventually, we will be coming to talk to you,” he said.
“We have signed affidavits from people who admit their involvement in staged accidents.” Romero says that in the short time they have been investigating insurance fraud the Lawrence police have also uncovered some startling information regarding other crimes. In the ninety days after it was reported in the press that Lawrence police were making arrests, car thefts in Lawrence decreased a full 33%.
”This shows that about one-third of the cars stolen in the City of Lawrence are taken specifically for the purpose of staging accidents to defraud the auto insurance companies,” Romero told the residents of Mount Vernon at a neighborhood meeting. If the city stops auto fraud completely tomorrow,” he said, “in the eyes of the state
that will still not effect a decrease in our auto insurance rates. We need to shine a light on this problem and convince other communities to start combating the problem or auto rates in Lawrence will never go down. It’s that simple.”
Mayor Sullivan said once this case is over he is afraid the media attention will go away and the problem will go on as it has for years throughout the state. “We have to put a stop to this. This is my $3,000 dollars I pay for insurance, just like everyone else who pays auto insurance in the city.”
For his part, Mayor Sullivan says he has a plan for decreasing insurance rates for Lawrence residents. “I am working with our legislators to change the structure on how our policies are drafted in the first place. It shouldn’t be based on your zip code. It should be based on your driving record. I want to see legislation that says, ‘it doesn’t matter where you live, if you are a good driver in Lawrence or a good driver in Haverhill, your rates should be the same. If you are a step nine, your rates should be the same regardless of zip code.”