Florida Automobile Joint Underwriting Association Board of Governors Approves Payment to Cover PIP Endorsement Updates

Dec 5, 2012


At its meeting yesterday, December 4, 2012, the Florida Automobile Joint Underwriting Association (“FAJUA”) Board of Governors (“Board”) unanimously voted to pay up to $5,000 for a professional review and any necessary changes to FAJUA’s current proposed Personal Injury Protection (“PIP”) endorsement.

The meeting materials are attached.

The Board had decided earlier this year to include a fee schedule in the endorsement, necessitating the need for revision.  Dovetail Insurance Corporation (“Dovetail”), which provides technology and back-office services to FAJUA, estimated the cost to change the current PIP endorsement proposal to be between $3,800 and $4,175, according to Board members.

Effective January 1, 2013, House Bill 119 (“HB 119”) will change the methodology for payment of benefits including medical bills for PIP claims.  HB 119 includes provisions regarding clinic operations and ownership modeled in part after a Hillsborough County ordinance.

The FAJUA’s proposed PIP endorsement was lacking a fee schedule, so it was decided that the fee schedule should be included in the endorsement.

The FAJUA is waiting to receive wording from the Insurance Services Office (“ISO”) to incorporate in the revised endorsement, it was explained.

In other business, Board members said the FAJUA has been hit hard in recent months with numerous claims expenditures, resulting in the need for a $5.5 million assessment.   Claims for the fourth quarter resulted in a November 2012 payment totaling $1.4 million, up from first and second quarter payments of approximately $450,000 to $550,000, it was noted.

 “We did have the faucet turned on, if you will,” one FAJUA member stated.  “We became aware the tax position probably wasn’t going to be satisfied with the bank balance we had, with the losses we were seeing coming through.”

If the trend toward high costs continues through 2013, the annual assessment could be somewhere in the range of $20 million, it was noted.

As a result, Board members voted unanimously to allow assessments as necessary up to once per quarter as driven by the cash flow needs.

The issue of fraud fueled much discussion.

A representative from FAJUA claims administrator York Claims Service said claims have spiked dramatically in the past three months, most notably in volume, not in individual payment averages.  Special Investigative Unit (“SIU”) insurance investigators working on one case at a time will not solve the problem, the representative said.

 “What we need to do is coordinate a much larger push in trying to deal with the large influx of new claims that have started coming in,” the York representative stated.

A tangible, physical SIU presence capable of attacking the fraud issue on a global basis—not case-by-case—is essential to move forward, it was stated.

After some discussion, the Board voted unanimously to implement a SIU Plan to combat the fraud issue.

With no further business before the Board, the meeting was adjourned.


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