Groups: PIP Fraud Has Cost Drivers $800 M in Premium Hikes

By: Michael Peltier, The News Service of Florida
By: Michael Peltier, The News Service of Florida

Tallahassee, FL - October 28, 2011

With top Florida officials expected to be briefed next week, groups with skin in the personal injury protection game on Thursday began releasing information of their own in preparation for what could be one of the biggest legislative battles of the 2012 session.

Tagged by business groups and insurers as a major cost to consumers forced to pay the fraud-amped premiums, Florida's 39-year-old system of no-fault insurance coverage has become one of the most expensive such systems in the country.

Two groups, the Property Casualty Insurers Association of America and the Florida Chamber of Commerce, released reports on Thursday. The reports come days before the PIP Working Group established by lawmakers is scheduled to brief the governor and Cabinet on Tuesday.

The Working Group, a panel that includes a cross section of interested parties from victims' attorneys and consumer advocates to insurers and fraud investigators, has met on several occasions over the past few months. The meetings, which at times have been contentious, provided a glimpse at how controversial the issue is. Panelists have been largely unable to reach consensus on what needs to be done to provide coverage while curbing costs that have skyrocketed since 2007.

According to the National Insurance Crime Bureau, Florida led the nation in staged accident "questionable claims" from 2007-2009. During the same period, Tampa, Miami, Orlando and Hialeah were among the 10 U.S. cities with the highest rate of questionable auto claims.

The severity of Florida claims has also risen rapidly.

The result, the insurance group concluded, is that Florida consumers have paid $800 million in premiums since 2006 to offset PIP losses, an "unsustainable" amount that will soon have the no-fault system crashing in upon itself.

"If PIP is not transformed this year, Florida will continue to lead the nation in questionable automobile claims, inviting even more criminal activity and putting Floridas consumers and businesses at risk," said Paul Blume, PCI's senior vice president.

The insurers' group set out a number of recommendations that includes caps on attorney fees, limits to treatment options and extending the time insures have to pay claims without risking bad faith charges.

Those recommendations, however, have been criticized by plaintiff's attorneys and victims' advocates, and the medical community.

The Florida Chamber, meanwhile, released its own findings showing that despite decreases in the number of crashes and steady population growth, PIP claims have risen from under $1.5 billion in 2008 to nearly $2.5 billion last year.

The number of staged crashes also appears to be rising based on the number of claims that have been referred to fraud investigators, which has more than doubled since 2007. Companies have responded by raising PIP rates from 35.5 percent to 72 percent since 2009.

"Floridas no-fault law and its accompanying mandatory Personal Injury Protection (PIP) insurance have become Floridas billion dollar problem and its impacting businesses and families alike, said David Hart, Executive Vice President of the Florida Chamber of Commerce, in a statement. A quick glance at the numbers behind these costs reveals troubling trends that should be investigated.

Lawmakers are expected to see several PIP related bills during the session that begins in January. More than a half dozen proposals have already been filed, dealing with patient brokering (SB 400), referral advertising, (H485, SB 134), fraud prevention (HB 119, SB 254) and staged crashes, (SB 286.)

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  • by Anonymous on Oct 28, 2011 at 10:34 AM
    It is about time that car insurance hits the political platform. If they can also throw in there something about how bogus it is to run your credit to dictate your premiums, I may just have some hope for our system yet.
    • reply
      by Bo on Oct 28, 2011 at 04:49 PM in reply to
      Wh do you say it is bogus to use your credit score in determining your premium?
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