Fla. Group’s Report Quantifies Extent of No-Fault Problems

A working group appointed by Florida officials to assess what insurers say are problems with the state’s no-fault auto insurance system has delivered a report blaming unscrupulous billing and overcharging by policyholders, medical practitioners and attorneys, among other issues.

“In the last two years, the no-fault system has been stressed to a point that is inflicting staggering rate increases on consumers, which is compounded by a time of economic uncertainty,” the group’s report, issued this week, states.

The group has reported that–despite the fact that no-fault systems are supposed to reduce litigiousness–the amount of personal injury protection (PIP) lawsuits filed in the first 10 months of the year more than doubled between 2010 and 2011, from  22,000 to 47,000.

The report says abuse of the system has insurers paying out more for accidents than is appropriate, and consumers are seeing rising premiums because of this.

With the combination of abuse and medical cost inflation, the average paid PIP loss per insured car per year has risen 66 percent in the last two-and-a-half years, according to Fast Track data cited in the report.

As a result, data presented in the report show that PIP rate increases since 2009 for the state’s top five PIP insurers has risen between 35 percent and 72 percent.

“If this trend continues, PIP premiums will double every three years,” the group says.

No-Fault Data Called into Question

While the report contains extensive data documenting no-fault trends, the validity and relevancy of the data used by the working group has been called into question by the Florida Consumer Action Network (FCAN).

The author of a report commissioned by FCAN called data included in a similar, previous working group report says some information cited by the state-commissioned group is flawed and may be overgeneralized.

“Care must be taken in judging the data’s accuracy where it was based on voluntary information supplied by insurance carriers,” cautions Lorilee Medders, the author of the FCAN report.

Medders also noted that “none of the data were audited by the (Florida Office of Insurance Regulation) but were taken as provided.”

“Accuracy cannot be assumed,” Medders wrote.

Problems in Florida’s No-Fault System Have Been Widely Reported

Insurance trade groups and state officials have said for several years that staged accidents, padded medical bills and other charges were forcing providers of the auto insurance Florida residents are required to have to increase their premiums in order to avoid losing money.

The Sunshine State is one of 12 with no-fault systems that are designed to reduce the need for motorists to file lawsuits to cover injuries resulting from accidents. Florida law requires drivers to carry a minimum of $10,000 in PIP coverage, which covers policyholders up to that limit no matter who caused an accident.

But insurers claim that unscrupulous claimants, lawyers and medical professionals actually target that $10,000 limit in lawsuits.

An Insurance Information Institute (III) report released earlier this year says that the $10,000 minimum has become a “dollar target” aimed at by those looking to game the system. The state’s insurers are being forced to pay 70 percent more each year to cover bogus accidents and other costs, according to III.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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