Chuck Grimsley: Uncontrolled Personal Injury Protection fraud

Oct 3, 2011

The following article was published in the Miami Herald on October 3, 2011:

Uncontrolled PIP fraud

The recent meeting of the Florida Cabinet brought the bright light of truth to a huge financial burden on Florida drivers: The uncontrolled rise in expenses for personal injury protection (PIP) automobile insurance. PIP-related payments and lawsuits have skyrocketed 70 percent in the past three years, even as the number of Florida drivers and accidents haven’t changed.

As a result, every Florida driver is paying an average $500 annual penalty for PIP fraud and abuse. Gov. Rick Scott characterized PIP fraud as an $800 million tax on Florida consumers. There have been huge increases in PIP premiums during the last few years, yet insurers still pay $1.40 for every dollar they receive, resulting in huge loses for this coverage. The resultant fraud-driven rate increases needed to cover those losses directly hit consumers’ pocketbooks, while the fraud-perpetrators get rich.

Without significant legislative reforms, insurers will be forced to raise mandated PIP premiums.

The Legislature needs to reform PIP laws and regulations to force fraud perpetrators out of our state. Florida has the highest number of questionable claims of any state in the nation. That won’t change until there is strong, swift action.

The Legislature considered several bills that would reform PIP laws in the last session. Under intense pressure from trial lawyers and the medical community, none passed into law. Those proposals deserve reconsideration at the next legislative session.

At the Cabinet meeting, Florida Insurance Commissioner Kevin McCarty suggested that the state might adopt a fee schedule and controls like the ones that brought down workers’ compensation premiums for businesses.

Without better laws and enforcement, PIP fraud will continue to grow as an economic and criminal problem, to the detriment of all Floridians.

Charles J. Grimsley, chairman and president, Florida Property & Casualty Association, Fort Lauderdale

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