Report Questions Validity of Data Cited in Florida PIP Reform Talks

A new report commissioned by the Florida Consumer Action Network (FCAN) questions the reliability of insurance provider data supplied to state regulators and used to support the case that the state’s no-fault auto insurance system must be overhauled.

The report, written by Lorilee Medders, a Florida State University professor and expert in insurance and risk management, takes issue with an April report compiled by the state’s Office of Insurance Regulation (OIR) based on information about personal injury protection (PIP) coverage submitted by 31 companies.

Regulators made clear in that report that the data was submitted voluntarily by insurers and was not audited by state officials.

The OIR report cited, among other things, a 40 percent increase in the number of PIP claims filed between 2006 and last year and a 66 percent hike in the amount of payment on claims over the same time frame.

“Care must be taken in judging the data’s accuracy where it was based on voluntary information supplied by” companies, Medders writes, adding that “accuracy cannot be assumed.”

Insurers, state officials and industry experts say inflated claims, staged accidents and other misuses of the system are spiraling out of control, increasing costs for coverage providers, who in turn raise policy rates, making premiums for the auto insurance Florida drivers are legally required to carry expensive for all motorists.

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

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.

Medders and FCAN, meanwhile, say the insurer-supplied PIP data contained in the OIR report is purposefully misleading and has not been properly interpreted by state officials who are pushing for changes to the no-fault system that would benefit coverage providers.

The OIR report cited a 28 percent increase in claims opened or recorded from 2006 to 2010, but Medders says that statistic is misleading because it fails to take into consideration the number of claims that were subsequently closed without payment.

The FCAN study also notes that some of the data supplied to regulators came from “one large, national, unnamed carrier.”

“The Medders study shows that OIR’s data is unreliable and, worse, that OIR is too close to (the) industry,” Bill Newton, executive director of the nonprofit FCAN, said in a news release. The “industry is working overtime to convince our elected leaders that massive reforms are in order–reforms that are anti-consumer, anti-healthcare provider, anti-attorney–and unfortunately, some legislators are buying the story.”

Newton claims that a working group assembled earlier this year by OIR to look at problems involving PIP coverage included “little or no consumer participation” despite his organization asking to take part in meetings.

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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