Florida Insurance Chief Raises Possibility Of Ending No-Fault System

October 29, 2015

The state insurance commissioner said Wednesday the time might be right to end Florida’s “no-fault” auto insurance system, but lawmakers aren’t expected to focus on such a change during the 2016 legislative session.

Insurance Commissioner Kevin McCarty, appearing at a Florida Chamber of Commerce Insurance Summit at Disney’s Grand Floridian Resort, tossed out the idea of, “Let’s just repeal PIP and do nothing,” as a way to further reduce fraud in the personal-injury protection coverage system.

While some lawmakers have suggested replacing PIP with a requirement for bodily-injury coverage, McCarty said most motorists already have such coverage. As a result, lawmakers might not have to do anything to replace PIP, which is also commonly known as no-fault.

“I’m not so sure that I’m ready to move to a more litigious auto system, but I think one thing to consider, particularly if we get an adverse decision on PIP, let’s fix it or flush it,” McCarty said. “We have done everything to fix PIP you could have possibly have done. We’ve had seven sessions on PIP. … A $10,000 benefit, really. Is it worth this amount?”

Under the no-fault system, motorists are required to carry personal-injury protection coverage that includes $10,000 in medical benefits.

When lawmakers crafted legislation in 2012 to reduce fraud in the system, average motorists in Florida were paying $180 a year for the personal-injury protection portion of their auto coverage, according to the Office of Insurance Regulation. The state agency in January estimated the average no-fault annual payment stood around $125.

The law, which set benchmarks for insurers to lower rates on personal-injury protection coverage, continues to face legal challenges. It required people involved in crashes to seek treatment within 14 days and allowed up to $10,000 in benefits for emergency medical conditions, while putting a $2,500 cap on non-emergency conditions.

A Leon County circuit judge in 2013 ruled the law illegally prevented injured people from using PIP coverage to pay for treatment by acupuncturists and massage therapists and limited the services from chiropractors. The ruling was eventually overturned. Still, some lawmakers believe the law will eventually fail a court challenge and have suggested the state replace PIP with bodily-injury coverage.

State Chief Financial Officer Jeff Atwater and Gov. Rick Scott championed the 2012 changes, saying that fraud, primarily in the Tampa and Miami regions, had resulted in the cost of auto-insurance coverage spiking for Floridians.

Atwater said Wednesday he wants to be convinced before calling for additional changes.

“Two years after the passage of the PIP legislation, it’s time for the insurance industry to bring forward evidence that shows whether or not rates are going to come down,” Atwater said in a prepared statement. “If consumers aren’t going to get the relief the legislation intended, then the time to repeal has arrived.”

An Office of Insurance Regulation report in January said the average medical cost paid through PIP claims has dropped 14 percent statewide from 2011 to the first three quarters of 2014, with the average payment down 28.7 percent in South Florida in the same time. But the numbers are still considered too preliminary to show the full impact of the law.

McCarty said ending no-fault wouldn’t impact many motorists, as “only a handful of people” buy just the minimum coverage, while those engaged in fraud would look for other outlets.

“We talk about the whack-a-mole. Fraud is rampant in this state,” McCarty said. “Fraud looks for its weakest link. And if you eliminate (PIP), even if for just two years, in two years you would cut the pipeline off of PIP. You’d cut the supply of capital going into PIP.”

But PIP doesn’t appear to be a priority for lawmakers as they hold committee meetings in preparation for the 2016 legislative session, which starts in January.

House Insurance & Banking Chairman John Wood, R-Winter Haven, said Wednesday he expects to address reform to workers’ compensation insurance, continue efforts to reduce the size of Citizens Property Insurance Corp. and deal with the proliferation of “assignment of benefits” lawsuits. Such lawsuits involve disputes about homeowners signing over policy benefits to contractors.

Rep. Larry Lee, a Port St. Lucie Democrat who is an insurance agent and member of Wood’s subcommittee, said Wednesday that lawsuits involving Citizens and water-damage claims are a good example of the increase in assignment of benefits cases.

“If the consumers could understand how some of these things we deal with, that we wrestle with in the Legislature, impact their premiums, they would have a better understanding of why we make certain decisions,” Lee said.

Lawmakers have been reluctant to tackle the assignment of benefits issue, but pressure has been growing.

The insurance industry argues for reform, saying the system allows contractors to set costs and demand payment for work. The building industry contends that assignment of benefits helps property owners quickly hire contractors who can perform emergency repairs and later seek payment from insurers.

On Monday, a three-judge panel of the 1st District Court of Appeal in Tallahassee, in rejecting a court challenge involving an assignment of benefit case, said it is up to state lawmakers — not the court system — to tackle the controversial issue.

“We again conclude … that it is for the legislative branch to consider this public policy problem, not the courts, at this juncture,” said the ruling, written by Judge Scott Makar and joined by judges Stephanie Ray and Ross Bilbrey. “Legislative review provides a more detailed inquiry into the current situation in the industry and greater flexibility in achieving meaningful reforms, if deemed necessary. On the other hand, courts are ill-equipped to pass judgment on the merits of the policy debate at hand, and less likely to be able to formulate a remedy that is mutually beneficial to insureds and insurers.”

by Jim Turner, The News Service of Florida


Comments

10 Responses to “Florida Insurance Chief Raises Possibility Of Ending No-Fault System”

  1. Mark Ritchie on November 3rd, 2015 7:01 am

    The Medical re-imbursement is crazy . I was rear – ended , I had to be back boarded out of a full sized Cadillac , that was totaled by a commercial truck going 40 m.p.h. , while I was stopped at a red light . The cost for 1 M.R.I. was $11,400 , and just the gurney ride from the E.R. to the M.R.I. room was $800 . I now have 5 hits on my credit report , and over $30,000 in medical bills . The Insurance co. (Progressive )offered me $7000 to settle . this law is a joke . I called the hospital (Sacred Heart ) and asked for a quote to get the exact same M.R.I. and was quoted $2,400 . I wrote to the Fl. Atty. Generals office and asked if this was legal, and 7 weeks later I received a reply on what a complex issue this was . The Insurance lobby owns Florida

  2. Bill on October 31st, 2015 8:44 am

    You folks much have State Farm to.

  3. SAD on October 30th, 2015 2:01 pm

    I agree with CW! $10,000 does not cover the initial ER visit & this is without an ambulance ride! I recently had to go to the ER (not due to a car accident) CT scan, blood work, 1 bag IV fluids, Dr wrote antibiotic script=$14,657!!! (Thank God I have great Insurance)!

    I am very perplexed as to how you are punished for being the VICTIM of an accident & your insurance rates go up this high & you are required to to carry FAJUA Insurance? This goes right along with everything else in America, you follow the law, work to support yourself without any type of subsidy and it seems you are the one punished while the ones that do not work nor follow the laws are the ones rewarded? I’m not real sure how this country became so corrupt but just like Bob C said…follow the money!!! *someones usually ALWAYS getting their pockets padded for one reason or another! We could ONLY wish we would have a GREAT President elected in the near future but it would take them decades to clean up all the corruption that’s been allowed for YEARS!!! The wealthy become more wealthy while the middle class are barely getting by…SAD!!!!

    @ Agent, maybe you can explain this one to us?

  4. dman on October 30th, 2015 11:42 am

    Pensacola has the worst drivers ever. I’ve traveled extensively across Europe, Canada and Mexico…and even in Mexico…people drive better. The Germans can handle an Autobahn because they actually have to prove themselves behind the wheel. And I don’t mean on a closed course driving 15 MPH.

  5. john on October 30th, 2015 5:51 am

    @one who knows

    I know just what you are dealing with. With Florida no-fault laws and insurance subsidies it keeps bad drivers on the road. Driving around P-cola there are plenty of idiots that we need to get off the road!!!

    If you cause wrecks, let’s make it more expensive for you to drive to where you can’t afford it!

  6. agent on October 29th, 2015 1:54 pm

    As an agent I will tell you that tag insurance (PIP and property Liability) is very popular in this state. Bodily Injury Liability should be added as a requirement.

  7. SWD on October 29th, 2015 10:57 am

    The Florida legislature created the Florida No-Fault Law or personal injury protection (PIP) in the 1970s. More recently, since the late 1990s, PIP insurance fraud and medical abuse have become major issues and of concern for all Floridians. The fraud and abuse has historically caused insurance premiums to rise at an exponential rate. More recently, the PIP statute was amended in 2012 to get rising premiums under control, and to deal with the fraud and abuse. The new statute requires that any person claiming PIP coverage must seek treatment within 14 days of the accident. That puts that all claimants arising out of a motor vehicle accident on the radar. Then the insurance companies have opportunity to investigate the claim to include the use of an examination under oath, independent medical examinations, etc. That also deals with fraud and abuse. Otherwise, when the charges come in they are subject to the allowable amount under the applicable fee schedules, and are also subject to the Medicare coding and payment methodologies. All of the foregoing is essential to combat auto accident insurance fraud and medical abuse.

  8. Bob C. on October 29th, 2015 9:31 am

    Follow the money….

  9. One Who Knows on October 29th, 2015 6:53 am

    Florida’s no fault insurance system is horrible. I have had no tickets in 20 years, however, as luck would have it, I have been rear ended 2 times in the 1 1/2 years and T-boned 1 time in the last 1/1/2 year. 3 accidents mind you, none of which I was at fault, ruptured discs in the neck, back, torn rotator cuff in the shoulder to included surgery and multiple injections. Under Floridas law, I am now required to carry to FAJUA insurance which shot my insurance premiums up from $1000 yearly for a truck and a boat to $5000 a year for just a truck, yes good people you read that right, $5000 yearly for just a truck, courtesy of negligent drivers and the good ole State of Florida. And let me repeat myself, I still have no tickets on my record, I was not charged in any accident, the other drivers were ticketed, I was the injured party, they kept their insurance with a modest increase in premium, while I was cancelled for filing PIP claims, and must carry this FAJUA insurance for the next 4 years. Thanks Florida No-Fault System.

  10. cw on October 29th, 2015 4:43 am

    We’ve had seven sessions on PIP. … A $10,000 benefit, really. Is it worth this amount?”

    A “required” insurance that only pays $10,000 is useless. That will not even pay for emergency care at today’s medical rates.

Written by William Reynolds · Filed Under News