In his state of the state address on Jan. 10, Florida Governor Rick Scott laid out the case for auto-insurance reforms that would crack down on fraud abuse in the state’s no-fault system.
He says fraud is “estimated to cost Floridians $900 million. If we do not act, the Office of Insurance Regulation (OIR) predicts that costs for consumers will continue to spiral out of control.”
Scott asserts that pure premium costs increase about 30 percent “year after year” and that these costs “are being driven up every day all around our state by scams that are ultimately paid for by Florida’s working families.”
“If we are going to be serious about keeping the cost of living low for Floridians we must get tough on the fraud and abuse in the auto insurance system,” he adds. “It is the consumers in our state that we must protect, not trial lawyers or those involved in these schemes. Floridians cannot afford another year of this fraud and abuse or the cost that will come with it.”
In November 2011, Scott and Florida CFO Jeff Atwater outlined four steps to reform the state’s no-fault law, first enacted in the early 1970s, which requires drivers to have PIP that provides $10,000 in coverage per person for medical bills, regardless of fault in an accident.
The proposal included measures to prevent fraud, and reform the role attorneys and medical providers play in the PIP system.
A report on the no-fault law in Florida published by the National Association of Mutual Insurance Companies says the state’s lawmakers have “always seemed a step behind trying to combat the latest healthcare tactics,” resulting in “runaway increases in PIP costs.”
For years the industry has alleged fraud by the state’s healthcare clinics, along with outrageous attorneys’ fees and organized staged-accident rings to take advantage of holes in the system. The Property Casualty Insurers Association of America (PCI) asserted in an October 2011 special report on Florida’s no-fault system that false claims have cost the state’s drivers more than $800 million.
Furthermore, the National Insurance Crime Bureau (NICB) has said that Florida led the U.S. in staged motor vehicle accident “questionable claims” between 2007 and 2009. Four out of the 10 U.S. cities with the highest rate of questionable auto claims are in Florida.
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