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State Farm, Allstate Representatives Named to PIP-Fraud Working Group in Florida

By Diana Rosenberg, BestWeek

September 12, 2011

Representatives from State Farm, Allstate Corp., the Insurance Information Institute, and the Florida Insurance Council have been named to the working group set up by Florida Insurance Consumer Advocate Robin Westcott, tasked with developing policy ideas to combat the growing problem of personal-injury-protection fraud and abuse.

"Some people come armed with data and facts, and some come with opinions. I'll lay out what the data show," said Lynne McChristian with the Insurance Information Institute, one of nearly two dozen people chosen to serve on the group, which holds its first meeting Sept. 15.

The data the institute can provide will be a valuable resource to the group, McChristian said. The institute previously has estimated Florida residents paid a "fraud tax" of about $50 a vehicle last year, and, if nothing is done to fix the problem, the "fraud tax" could amount to $84 a vehicle this year.

McChristian said in addition to Florida, 11 other states have no-fault automobile insurance coverage, and she wants to find out what those states know that Florida has yet to learn.

Attorney Rene Hernandez, who heads the auto committee for the Florida Insurance Council and also was named to the working group, called PIP fraud a "very serious problem," adding that over the past couple of years, insurers' ability to do business in Florida "has been restricted because of rampant fraud."

Florida's no-fault auto insurance, designed to quickly provide benefits for people injured in accidents regardless of fault, was implemented in 1972. Florida drivers are required to carry PIP coverage, which provides $10,000 per person for medical bills.

Addressing the fraud and abuse plaguing Florida's PIP coverage is a "vexing problem," Insurance Commissioner Kevin McCarty has said, adding marshalling the resources to fix the problems will be "challenging" (Best's News Service, Sept. 2, 2011).

Westcott previously told Best's News Service that the group will discuss repealing PIP.

"That's certainly one of the things that could result. ... If that's a choice — and it's a choice — let's get down on paper what the result we think will be for Floridians," Westcott said (Best's News Service, Aug. 31, 2011).

The American Insurance Association, a trade organization representing about 300 insurers, is calling for the elimination of mandatory PIP coverage in Florida. The Florida Insurance Council is still developing its position on the issue, concerned with what will replace PIP if it is repealed. Two other groups, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America, have said they are reviewing all options. Alex M. Hageli, an attorney representing PCI, also will serve on the working group, along with attorneys representing State Farm, Allstate, and United Automobile Insurance Co.

Also serving on the group are Marc Slager, the deputy chief of staff for Gov. Rick Scott; a representative for the Office of Insurance Regulation; representatives of the state legislature; law-enforcement officials; and representatives of the Florida Hospital Association, Florida Osteopathic Medical Association, Florida Medical Association, Florida Chiropractic Association, and Blue Cross/Blue Shield of Florida, among others.

Asked his thoughts about the number of medical representatives in the group, Sam Miller, executive vice president of the Florida Insurance Council, said they are "key players" and the working group membership was "comprehensive."

Westcott is aiming for the group to have its recommendations by the end of October.

Despite widespread support from the insurance industry, consumer groups and the state's chief financial officer, legislation to rein in no-fault auto insurance fraud failed in the last legislative session (Best's News Service, April 28, 2011).

The top five private-passenger auto writers in Florida last year were State Farm Group, with a 20.85% market share; Berkshire Hathaway Insurance Group, with 16.27%; Allstate Insurance Group, with 13.97%;Progressive Insurance Group, with 10.92%; and USAA Group, with 5.63%, according to BestLink, which provides online access to A.M. Best's database of insurance information.

(By Diana Rosenberg, senior associate editor, BestWeek)