While legislatures across the country have been grapplingwith many thorny issues this year such as tight budgets, jobs andthe economy, education and transportation, several importantinsurance issues also have been on the table.

One of the key issues of importance to insurers in 2012 has beencurbing the billions of dollars in costs that go to pay for autoaccident fraud, abuse and inefficiencies in no-fault states. Forseveral years the insurance industry has worked with lawenforcement, elected officials, the business community andconcerned citizens to transform no-fault laws in Florida, New York,New Jersey, Michigan and Minnesota.

In recent years, Florida has been hit by a “fraud tax” of nearlya billion dollars, which helped Florida earn the dubiousdistinction of being the nation's most fraud-riddled state.According to the National Insurance Crime Bureau (NICB), stagedaccidents and the activities of unscrupulous medical providers andunethical personal injury attorneys placed Tampa, Miami, Orlandoand Hialeah among the U.S.'s top 10 for personal injury fraud.

Related: Read the article “CFA: Auto Market NotCompetitive; Coverage Too Expensive” by Mark E. Ruquet.

This year the effort to transform Florida's no-fault system waschampioned by the Put the Brakes on Accident Fraud Coalition of lawenforcement, consumers, businesses and insurers. The coalitionworked to provide the Florida legislature with options to considerthat would bring comprehensive, cost-saving auto insurance fraudsolutions to address the state's escalating problem. At the centerof transforming the state's no-fault system were these essentialelements:

• Allowing reasonable investigations of suspectedfraud
• Eliminating incentives for filing frivolous lawsuits
• Providing greater oversight of clinics
• Preventing fraudulent buildup of unnecessary medicaltreatment.

Early in the legislative session Fla. Gov. Rick Scott expressedstrong support for addressing PIP fraud and played a key role insecuring passage of H.B. 119. The bill contained a number ofchanges to state law that touch upon the elements identified by Putthe Brakes coalition as essential to transforming Florida nofault.

While the new law does containanti-competitive rate language, it positively addresses many of thecost drivers in the state's PIP system and hopefully arrests theescalating PIP fraud.

Meanwhile, Fraud Costs New York has worked for the past severalyears to raise the profile of no-fault reform in New York. Thecoalition stands more than 90 strong and consists of consumers,district attorneys, small businesses, elected officials andinsurance trade associations committed to reform.

In February, the need for reform was punctuated when the U.S.Justice Dept. announced a $279 million no-fault insurance fraudbust, the largest single case ever charged. The case displayed howexpansive fraud has become as it involved more than 100 clinics,thousands of patients, 10 doctors and three lawyers. The fraudproblem is especially notable in New York City, where drivers payfrom 74 percent to 335 percent more than the statewide average,largely due to fraud and abuse.

Although there has not been comprehensive legislative change,N.Y. Gov. Andrew Cuomo and Dept. of Financial Services (DFS)Superintendent Ben Lawsky announced a statewide initiative to stopdeceptive doctors and shut down medical mills that plague NewYork's no-fault insurance payment system and cost New Yorkershundreds of millions of dollars in insurance costs.

Related: Read the article “Featured Fraud: StoppingStaged Accidents” by Melissa Anne Wuske.

At the governor's direction, the DFS issued a new regulationthat will enable it to ban doctors who engage in fraudulent anddeceptive practices as part of the no-fault system. The regulationimplements a 2005 law that gives DFS the power to regulate doctorparticipation in the no-fault system.

At the property-casualty insurance industry's legislative actionday in Albany, Supt. Lawsky continued the Cuomo administration'saggressive program to end no-fault auto insurance fraud and madenews by announcing regulatory reforms that close loopholes thatallow lawbreakers to exploit the system. The new regulation:

1. Ends requirements that mandate insurers pay for treatments thatwere never actually provided, or pay more than the established feeschedule for a given service
2. Prevents healthcare providers from ignoring requests forevidence that the treatments they are providing are medicallynecessary by setting a 120-day deadline to provide requestedinformation
3. Closes the loophole that allows courts and arbitrators to forceinsurers to pay fraudulent claims simply because the insurer mademinor paperwork errors when processing a claim.

Michigan, another state facing significantno-fault fraud challenges, also took action this year, passing SB298 which criminalizes hiring so-called runners who recruitpassengers in auto crashes to file bogus injury claims. Acting as arunner also would be a specific insurance crime. This legislationis part of an ongoing effort to overhaul cost drivers of Michigan'sauto insurance system.

Clearly, no-fault transformation is a key issue in severalstates and the industry is working diligently to advance solutionsand control premiums for consumers.

Other auto insurance issues

A wide range of other auto insurance issues such as auto bodyand glass repair, aftermarket parts, labor rates, steering andsalvage have been addressed across the country. Some of the mostnoteworthy battles have involved auto body repair and glass issues.Arizona, Connecticut and South Carolina produced some of thetoughest legislative battles on auto glass repair which addressedthird party administrators and the ability to communicate withconsumers.

Legislation in Arizona and Connecticut was defeated. In SouthCarolina compromise legislation passed with amendments to addressmany of the industry's concerns and anti-fraud protections forconsumers. At this writing, the bill was awaiting action by thegovernor. Outcome of legislation in Rhode Island designed toincrease body shop revenues by forcing more vehicles that are badlydamaged to be repaired rather than totaled and provide an incentivefor litigation is still pending.

Related: Read the article “Florida Gov. Scott Signs'Milestone' PIP Reform” by Chad Hemenway.

PCI has been successful in opposing legislative efforts thatrestrict insurers' ability to make consumer recommendations onindividual repair facilities or impede insurers' ability to managethe claim repair process and control costs on behalf of consumers.But these are perennial issues and the grassroots support of agentsand other insurance professionals are essential to our success.

Workers' compensation sees activity

In addition to auto issues, election years produce many workers'compensation bills, although major legislation is seldom enacted.This year is no exception. So far only Louisiana, Maine,Mississippi and Tennessee have enacted significant reform.Additionally, legislatures have had to focus on budget shortfallsas employment struggles to make a comeback. In their search forrevenue, legislatures in several states attempted to raid statefunds.

In terms of the workers' compensation systemsthemselves, rising medical costs continue to be the major concern.In addition to traditional concerns about price and utilization,efforts to curb physician dispensing of drugs at above fee scheduleprices has been a major legislative effort for both PCI andemployers. However, well financed and entrenched interests haveblunted our legislative efforts so regulatory approaches arebecoming a major tool for our reform effort.

The over prescribing and over-use of narcotics continues to be aPCI focus. Approaches to addressing this issue are broadening aspolicymakers understand more about this societal issue. At the sametime, PCI is watching for unintended consequences of proposedsolutions. In California, some are turned off from using drugtesting designed to monitor narcotic usage as a new revenuesource.

While temporary total duration is leveling off as the countryemerges from recession, PCI is closely monitoring the apparentleveling off, and in some states reversal, of the decline in claimsfrequency.

Coastal property issues are addressed

Coming on the heels of yet another active hurricane season, the2012 legislative sessions brought numerous bills in states impactedby Hurricane Irene. Many called for changes in the use of hurricanedeductibles, greater policy “transparency” and restrictions on theconsideration of weather-related claims in the underwritingprocess. PCI and others in the industry worked to minimize anynegative impact of these legislative and regulatory proposals oninsurance operations.

In Alabama, several positive bills will aid consumers and theindustry. Bills addressing catastrophe savings accounts, anti-fraudmeasures and premium tax credits for insurers writing coastalhomeowners insurance policies were signed by the governor.

In the past few years there has been significant storm damageand insurers worked with lawmakers to advance legislation to helpprotect homeowners from contractor fraud and abuse. Alabama,Arizona, Colorado, Indiana, Iowa, Nebraska, Kentucky, South Dakotaand Tennessee passed legislation this year that contains consumerprotections and provides for notices and contract terminationrights and prohibits rebating or other compensation to induceconsumers to enter into contracts. These bills will be particularlyuseful after severe weather when crooked contractors enterneighborhoods and attempt to take advantage of unsuspectinghomeowners.