Florida Insurers Present Senate Committee with PIP Fixes

Representatives of the Florida insurance industry, including the National Association of Independent Insurers (NAII), outlined to a Senate committee an all-inclusive package of reforms designed to address the state’s pernicious auto insurance fraud problem.

The meeting with the Select Senate Committee on Automobile Insurance/PIP Reform came in response to Senate President Jim King’s charge that the PIP/no-fault auto insurance system be fixed or “flushed,” said Jim Taylor, counsel for the NAII, who attended the meeting. “We agree with Sen. King’s determination that we must address the PIP problem as soon as possible, and hope the fact that the insurance industry is on the same page about fraud will help facilitate a fix,” he said. “Although reform legislation was passed in 2001, it falls far short of what is needed to effect a change in the Florida PIP market.”

The Select Senate Committee on Automobile Insurance/PIP Reform met last week to take a preliminary look at the Florida fraud issue. Presenters included lobbyists from the medical and legal communities, and spokesmen from NAII and the Florida Insurance Council (FIC).

Representatives of the insurance industry recommended the following as a way to effectively fix the current PIP system:
• A full medical fee schedule and a system of utilization protocol and review.
• Alternative dispute resolution and attorney fee reform.
• A stronger verbal threshold to sue for bodily injury losses.
• Enhanced anti-fraud criminal penalties and civil remedies for insurers.

According to FIC statistics, PIP severity, which represents claim costs, has been nearly three times the severity for bodily injury (BI) since 1996. FIC pointed out that PIP indications for 2002 were 55.8 percent, meaning that PIP required a 55 percent rate increase to pay for future losses. A 0 percent indication means the premium is adequate to pay future losses. At least 10 companies have been through or are in rehabilitation or liquidation with the Department of Insurance as a result of PIP, according to FIC. Representatives of the trial bar, chiropractors and the medical community opposed the insurance industry’s recommendations. The Academy of Florida Trial Lawyers particularly opposed any change in the attorneys’ fee statute, and the Florida Medical Association (FMA) opposed an expanded medical fee schedule and other reforms.

“It’s no surprise that these groups don’t want to rock the boat when it comes to legislative reforms that will cut into their profits,” Taylor noted. “But Florida insurers have agreed to put their own interests aside in a good-faith attempt to craft a legislative fix that will best serve the state insurance market and the Florida insurance consumer.”

The committee, chaired by Sen. J.D. Alexander, R-Winter Haven, may hold its next meeting the week of January 20, although a final decision has not been made.

Topics Florida Carriers Fraud Market Politics