Higher costs and increased frequency of medical testing and chiropractic treatment have driven up no-fault auto injury claims costs in Florida, according to the Insurance Research Council.

A study titled by the nonprofit industry research group "Florida Auto Injury Insurance Claim Environment" found that between 2002 and 2005 auto injury economic loss claims rose 18 percent on average, while average claims payments increased 24 percent.

The report comes with seven months to go before the legal framework for the no-fault system is due to expire.

IRC said from 2002 to 2005, the general inflation rate was 9 percent, and the inflation for medical services was 13 percent.

Florida's personal injury protection law, also known as a "no-fault" system, was designed to ensure that those injured in an auto accident would be swiftly compensated, but critics have attacked it as vulnerable to fraud.

The system is set to sunset in October unless state lawmakers act to extend it during the current legislative session. Former Governor Jeb Bush vetoed legislation last year that would have maintained the system until 2009, saying the bill lacked reforms including a medical fee schedule and a cap on attorneys' fees.

"The trends documented in this report--rapidly increasing costs, less serious injuries, explosive growth in the utilization of chiropractic services, and extensive attorney involvement--explain why the current no-fault system is widely viewed as broken," said Elizabeth A. Sprinkel, senior vice president of the IRC.

In compiling its data, the IRC examined detailed claim information from more than 4,000 claims closed with payment during 2005. Ten insurers, representing roughly 60 percent of the 2005 private passenger auto insurance market in Florida, participated in the study.

Among the specific factors contributing to rising costs, the IRC found, is the increased use of magnetic resonance imaging.

The percentage of claimants who underwent an MRI rose from 26 percent in 2002 to 33 percent of all claimants in 2005. The costs of computerized tomography, or CT, services also played a significant role, rising 31 percent between 2002 and 2005.

The use of chiropractic services also increased dramatically between 2002 and 2005, according to the IRC. The study found that the percentage of PIP claimants receiving such treatment rose from 33 percent to 44 percent during that time period, with increasing charges from chiropractors magnifying the cost increase for insurers.

According to the IRC, the average total charge for chiropractic services increased by 35 percent between 2002 and 2005.

While the costs of PIP claims increased, the IRC found that the number of serious auto accidents in Florida actually decreased.

Seventy-one percent of PIP claimants had no disability resulting from their injuries in 2005, compared with 67 percent in 2002 and 66 percent in 1997, according to the study.

The percentage of claimants who suffered fewer than 10 days of restricted activity also increased to 87 percent in 2005 from 81 percent in 1997 and 86 percent in 2002. Those who were injured in an accident were more likely to hire an attorney in 2005, however, according to the study. The IRC found that 45 percent of claimants had hired an attorney in 2005, compared with just 34 percent in 2002.

Special Reports /

Report Details Fla. No-Fault Cost Drivers

Related Stories

Recommended For You