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Group urged to take a "rough" look at Florida's no-fault auto insurance law

Christine Jordan Sexton , Florida Tribune

September 15, 2011

Florida’s insurance consumer advocate announced on Thursday that she wanted members of a work group to “get rough” during their discussions on personal injury protection (PIP) insurance.

It didn’t take long for Robin Westcott to get her way.

Representatives from insurance companies, physician organizations, and the state's trial bar traded barbs at an all-day meeting of the Insurance Consumer Advocate PIP Working Group. Westcott assembled the group this month to examine fraud and abuse in PIP, a no-fault insurance system that pays upward of $10,000 to cover health care costs associated with car wrecks.

The group kicked off its discussions early in the day with a presentation about staged wrecks in Florida from Ron Poindexter, director of the National Insurance Crime Bureau. But the meeting quickly segued into a back and forth between panel members on the thorny issues of attorneys’ fees, and utilization and fee schedules.

Insurers at the table argued that unlike health insurance and workers compensation, which rely heavily on managed care to hold down costs, Florida’s PIP system doesn’t allow automobile insurers to “manage” the care and costs are high. As such, said State Farm's Allen McGlynn, injured drivers get “less treatment for the same dollar.”

The Florida Legislature did enact a cap on PIP charges effective Jan. 1, 2008, something Florida Medical Association General Counsel Jeff Scott called an “abomination.”

Insurers, though, testified that providers have sidestepped the caps by ordering more tests and providing more care. Information collected in an Office of Insurance Regulation “data call” in April showed that the number of health care services for PIP claims in Florida has increased since the caps were put in place.

The data call also shows that although the number of accidents in the past six years has decreased and the number of licensed drivers remained stable, PIP paid benefits have increased from less than $1.5 billion in 2008 to $2.3 billion in 2010.

Insurers also reported a 100 percent pure loss ratio for PIP, meaning the premium the carriers collected covered the costs of claims. The combined loss ratios -- which take administration and other costs into effect -- is 140 percent, meaning companies lost 40 cents on every dollar of premium they collected.

PIP is expected to be the most significant insurance issue the Legislature tackles in 2012 and two bills, SB 254 by Sen. Michael Bennett, R-Bradenton,and HB 119 by Rep. Jim Boyd, R-Bradenton, have been filed for the 2012 session.

Gov. Rick Scott said earlier this summer he could support eliminating no-fault insurance but later said he will seek recommendations from Florida Insurance Commissioner Kevin McCarty.

Chief Financial Officer Jeff Atwater also has made the issue a priority. Westcott is appointed by Atwater.