As consumers, state lawmakers, regulators, and executive officers enter the final month before the possible end of the state's automobile no-fault personal insurance protection law, more attention is being placed on just what the world may look like come the day after the law's expiration. To that end, Chief Financial Officer Alex Sink has created a new web portal for consumers and agents to learn about how the auto insurance market would work, post-PIP. The link can be accessed at www.MyFloridaCFO.com.

“The best advice we can give to consumers is to purchase enough auto insurance coverage to provide proper medical treatment for themselves and their families,” Sink said. “In the event someone is at fault in an accident after the expiration of no-fault, sufficient auto insurance coverage can help protect that family's financial assets.”

In addition to outlining a number of scenarios on how auto claims would be handled in the post-no-fault era, Sink also poised a number of policy questions on the potential impact the change in the insurance law. They are as follows:

Q: What medical payments coverage will be available to drivers after the sunset of PIP?

A: Persons injured in auto accidents will not have automatic coverage for medical treatment from their auto insurers unless the insurers offer medical payments insurance as a replacement for PIP. Auto insurers may offer an optional medical payments insurance product for Florida consumers, but specific benefits will not be legally mandated and will vary by insurer. The insurer will be able to determine the type of benefit to be offered, the kinds of exclusions and limitations on the benefit, and the cost of the coverage, subject to form and rate approval by the Office of Insurance Regulation. The availability, cost, and quality of medical payments insurance will be important for those who lack health insurance. Therefore, the issue of medical payments insurance is an important one for consumers and policymakers.

Q: What effects will the absence of the PIP law have on Floridians who do not have health insurance?

A: Approximately 19 percent of Floridians don't have health insurance, according to the Agency for Health Care Administration. Those Floridians who don't chose a replacement for PIP medical benefits and who lack health insurance will be entitled by law to receive emergency treatment. However, they may not be able to receive follow-up, non-emergency treatment, as physicians won't agree to provide such services, particularly for those drivers who are at fault and cannot compensate the doctor. In addition, if the sunset of PIP leads to an increase in the medically uninsured, additional cost pressure will be placed on our hospitals and physicians. Policymakers should consider measurers to increase the availability and affordability of health insurance for the uninsured and in ways to control health care costs.

Q: Will the resolution of auto insurance claims in the absence of the no-fault law increase red tape for insurers, health care providers, and consumers?

A: In an environment where the recovery of medical costs for the treatment of motor vehicle accidents relies on a determination of fault, including issues of comparative negligence and subrogation, there is the potential for increased red tape for consumers, medical providers, insurers, and law enforcement agencies. Specifically, Florida's law enforcement agencies will have to conduct detailed investigations of even minor auto accidents to make a determination of fault, and may be required to appear and offer testimony in legal proceedings arising out of auto accidents. In addition, the sunset of no-fault may give rise to tort lawsuits below the current $10,000 threshold and claims for non-economic damages, such as pain and suffering. Policymakers should consider measurers to avoid lawsuits, including alternative dispute resolution, as a means of controlling costs and ensuring efficiency in resolution of motor vehicle injury claims.

Q: Will the elimination of PIP eliminate some fraudulent schemes or provide opportunities for new criminal enterprises?

A: The current PIP system suffers from a considerable amount of fraud. The Division of Insurance Fraud received over 3,000 PIP fraud complaints, opened 329 cases, and obtained 225 convictions in fiscal year 2005-2006. The division will still be prosecuting PIP fraud claims years after the no-fault system expires. It is important to note that the sunset of PIP will not eliminate insurance fraud, as criminals will exploit weaknesses in the post-PIP insurance market. Policymakers should consider tools that enhance the prevention, investigation, and prosecution of new forms of insurance fraud that may arise in the post-PIP environment.

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