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 inthe state’s no-fault system.

He says fraud is “estimated to cost Floridians $900 million. Ifwe do not act, the Office of Insurance Regulation (OIR) predictsthat costs for consumers will continue to spiral out ofcontrol.”

Scott asserts that pure premium costs increase about 30percent “year after year” and that these costs “are being driven upevery day all around our state by scams that are ultimately paidfor by Florida’s working families.”

“If we are going to be serious about keeping the cost of livinglow for Floridians we must get tough on the fraud and abuse in theauto insurance system,” he adds. “It is the consumers in our statethat we must protect, not trial lawyers or those involved in theseschemes. Floridians cannot afford another year of this fraud andabuse or the cost that will come with it.”

In November 2011, Scott and Florida CFO Jeff Atwater outlined four steps to reform thestate’s no-fault law, first enacted in the early 1970s, whichrequires drivers to have PIP that provides $10,000 in coverage perperson for medical bills, regardless of fault in an accident.

The proposal included measures to prevent fraud, and reform therole attorneys and medical providers play in the PIP system.

A report on the no-fault law in Florida published by theNational Association of Mutual Insurance Companies says the state’slawmakers have “always seemed a step behind trying to combat thelatest healthcare tactics,” resulting in “runaway increases in PIPcosts.”

For years the industry has alleged fraud by the state’shealthcare clinics, along with outrageous attorneys’ fees andorganized staged-accident rings to take advantage of holes in thesystem. The Property Casualty Insurers Association of America (PCI)asserted in an October 2011 special report on Florida’s no-fault systemthat false claims have cost the state’s drivers more than $800million.

Furthermore, the National Insurance Crime Bureau (NICB) has said that Floridaled the U.S. in staged motor vehicle accident “questionableclaims” between 2007 and 2009. Four out of the 10 U.S. citieswith the highest rate of questionable auto claims are inFlorida.