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Sha'Ron James

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Push for legislation to fight auto insurance fraud already under way

By Julie Patel, Sun Sentinel

August 16, 2011

About five months before the start of Florida’s 2012 legislative session, efforts are already underway to promote policies that could fight personal injury protection insurance fraud.

Only a few provisions in bills proposed this year cleared the state Legislature. At a Cabinet meeting Tuesday, Insurance Commissioner Kevin McCarty, Gov. Rick Scott and Chief Financial Officer Jeff Atwater expressed support for new PIP legislation.

Atwater said the state should “stop throwing consumers to the wolves” and Scott urged McCarty to meet with legislative leaders to “have something happen this session.”

Robin Westcott, the state's new insurance consumer advocate, announced recently that she plans to develop PIP legislative proposals by December. She'll issue recommendations after meeting with a working group of legislators and others.

Personal injury protection, or PIP, pays medical bills for policyholders injured in auto accidents, regardless of which driver is at fault. It's intended to protect Floridians who don't have health insurance and to avoid lawsuits and their costs for minor injuries. Florida drivers are required to carry $10,000 worth of coverage.

The proposed legislation this year would have, among other things, made it more difficult for people to file claims and for lawyers to collect huge fees. A broad coalition including insurers supported most of the proposed changes. But legal and healthcare industry representatives pushed only for those changes that they felt wouldn't hurt people with legitimate claims.

McCarty provided information from a report his office did to support the need for legislation. He said:

PIP claims payouts increased more than 50 percent from under $1.5 billion in 2006 to about $2.3 billion in 2010 even as the number of licensed drivers has increased only slightly and the number of crashes have dropped.

Rates increased for PIP coverage by anywhere from 35 percent to 72 percent for Florida’s five largest automobile insurers. PIP premiums make up a portion of most policyholders' automobile insurance premiums. One insurer reported that a typical annual PIP premium for a married 40-year-old woman in Miami increased nearly 80 percent from $450 in 2005 to over $800 in 2011.

“Your rates are going up astronomically [because of] fraudsters and hucksters,” McCarty said.

Laws to fight fraud lost their effectiveness. Legislation in 2001, 2003 and 2007 worked for a while but McCarty said it’s like “Whack a Mole:” The problem is attacked with new laws but it “pops up in an another place.” Courts have taken away some tools insurers used to fight fraud such as examinations under oath, McCarty said.

Atwater said if regulators don’t allow insurers to raise rates because of the higher PIP costs, then the companies could leave the state.

McCarty agreed: “Companies have got to make a profit.”

He said most policyholders and health care providers are honest and file legitimate claims so lawmakers will have to strike a balance to minimize hurting them while helping insurers reduce their auto claims costs.