NU Online News Service, March 12, 10:24 a.m.EST

The last day of the Florida Legislature on Friday saw thepassage of a measure to help bring reform to the state'sauto-insurance system.

The insurance industry and others praised the approval of a billto fix what the industry has called a significantly brokenauto-insurance system plagued by abuse and fraud, which costsSunshine State residents $1 billion annually.

The no-fault, personal injury protection (PIP) reform bill, HB119, easily made it through the state House, but only narrowlypassed through the Senate, 22-17.

According to the National Association of Mutual InsuranceCompanies (NAMIC), the bill was close to death on severaloccasions.

"PIP reform was a brutal, hard-fought battle in the FloridaHouse and Senate, right down to the final day of session," says LizReynolds, state affairs manager for NAMIC, in a statement. "Whilethe final PIP legislation does not contain every measure needed tofight PIP fraud and abuse, it is still a win for companies writingauto business in Florida and especially a victory for thepolicyholders they represent."

HB119 requires claimants to seek treatment within 14 days of anaccident, with initial treatment from a hospital or physician. Thebill bans treatments from acupuncture and massage facilities.

The bill also limits attorneys' fees, establishes stiffpenalties for doctors who commit fraud, and requires that claimantssubmit to an examination under oath.

"This legislation will curb the systemic fraud and abusecommitted against motorists by unscrupulous parties who will nolonger be able to take advantage of the current system," says RayFarmer, region vice president for the American InsuranceAssociation, in a statement.

The final measure also establishes rate-reduction benchmarks toensure insurers pass expected savings to consumers.

Gov. Rick Scott, Insurance Commissioner Kevin McCarty and ChiefFinancial Officer Jeff Atwater pushed hard for reform, holdingpress conferences and demonstrations of how staged auto accidentsare done.

However, McCarty has said he was not impressed with the Senate'sversion of the bill because it would not result in the kind offraud prevention and consumer protections needed. The Office ofInsurance Regulation is evaluating the final language of the bill,says a statement. The OIR's input will likely influence thedecision by Scott to sign the bill into law.

Nevertheless, the OIR says it commends lawmakers for getting thebill passed, a signal that they "recognize it is critical that wechange incentives in the system to reduce PIP fraud."

McCarty has called the current auto insurance system a "potof gold for unscrupulous providers and fly-by-nightclinics."

The industry says it also saw positive news in the passage of abill to limit the ability of the state's last-resort insurer tolevy assessments. However, reforms to the Florida HurricaneCatastrophe Fund (FHCF) were not passed.

The FHCF, a state-run provider of reinsurance, should have beenmore of a priority, says think tank The Heartland Institute.

"The state has enjoyed a remarkable string of luck, with sixsuccessive seasons without a hurricane strike, but that could endat any time," says R.J. Lehman, deputy director at Heartland. "TheCat Fund is dangerously overexposed and undercapitalized, and theclaims it would face in the wake of a major storm could threaten tobankrupt insurance companies, leave consumers without the claimspaid, and devastate the state's economy."

A report last year by independent-financial advisor RaymondJames says the FHCF will not be able to raise enough money in thecapital markets via post-event bonds to cover all of itsclaims-paying obligations. The fund potentially faces a $3.2 billion shortfall if a large storm hits.