Filed Under:Carrier Innovations, Technology Solutions

Waking Up to the Faults in No-Fault

Florida’s Flawed PIP System Continues to Cost Consumers and Insurers

Like being stuck in a recurring dream, the people of Florida continue to face the vexing question of what to do with a no-fault automobile insurance system that forces them to pay more for insurance than necessary.

In the search for solutions, insurers have always insisted that the system get back to its original intent. When first enacted in the 1970s, no-fault auto insurance was intended to address the underlying cost drivers in a tort-liability system that had made insurance more expensive than necessary. No-fault supporters pointed to benefits such as reduced non-economic damage compensation, increased compensation for injury victims, less compensation for personal injury attorneys, and faster recovery of out-of-pocket expenses by accident victims.

What has developed in the intervening 30 years is a seriously flawed system seemingly immune to repeated attempts at reform.

Divisions on Sunset
In an April 5, 2006, article in the St. Petersburg Times entitled “Bush: Let No-Fault Lapse,” Gov. Jeb Bush showed he understood the problem when he was quoted as saying he shared insurers’ views that Florida’s no-fault law did not do enough to contain medical costs.

During the 2006 session, the Property Casualty Insurers Association of America (PCI) supported an agenda of reenactment with comprehensive reform including medical and legal utilization controls. But in the face of massive opposition from the lawyers, doctors, osteopaths, chiropractors, hospitals, clinics, and everyone else making money off the system, the Legislature chose to kick the can down the road and extend the sunset repeal by 2 years. True to his word, Bush vetoed that bill, and so the sunset countdown clock continued.

We will have some new numbers to add to the debate. In its February report, the IRC announced plans to release an update in late 2011 to better incorporate the latest closed claim data. No one will be surprised if the problems get worse.

Counting Down the Days
We do not have much time. The Legislature has already announced that interim committee meetings will begin the third week of September. The next session will convene two months early on Jan. 10, 2012, so that legislators can draw new legislative districts and deal with any anticipated legal challenges well ahead of the 2012 presidential election. This also means that redistricting and the accompanying political overtones will weigh over all other issues, even the budget, and legislators will likely prove even less interested in what they see as refereeing between interest groups. Only a public outcry that elevates the issue to the most critical level will provide the necessary impetus for decisive action.

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