FPCA Automobile Division: Governor Scott Directs Florida Insurance Commissioner to Work On Personal Injury Protection Insurance Anti-Fraud Legislation

Aug 16, 2011


Florida Property and Casualty Association Automobile Division Members:

The News Service of Florida is reporting that Governor Rick Scott has asked Florida Insurance Commissioner Kevin McCarty to work on legislation that would combat personal injury protection fraud in Florida.  The subject was discussed at a regular meeting of the Florida Cabinet held today, August 16, 2011.

A report by The News Service of Florida is reprinted below.


Should you have any questions or comments, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass.







THE CAPITAL, TALLAHASSEE, Aug. 16, 2011…..Insurance Commissioner Kevin McCarty should work with legislative leaders to come up with a bill related to personal injury protection auto insurance that can pass and will reduce fraud that is costing Floridians hundreds of millions of dollars, Gov. Rick Scott said Tuesday.

Scott said the losses in the PIP system from fraud, such as staged accidents, amount to an $800 million tax on Florida residents, a cost that has to be lowered.

“It’s a tough environment,” for Florida residents, even without such a huge hit, Scott said during a Cabinet discussion of PIP coverage, which is required for Florida drivers to cover medical costs in the state’s no-fault system. “This costs Floridians a lot of money.”

How much?

Car insurance customers in Florida have seen increases in some cases approaching 100 percent in the last five years or so, McCarty told Scott and the Cabinet during their regular meeting Tuesday. A 25-year-old male driver in Tampa, for instance, on average, has seen his car insurance premiums go from $340 in 2005 to $629 this year, McCarty said.

It’s also a problem for insurance companies, McCarty said, noting that the claims to premium ratios for the companies are getting to the point where more rate increases – which Scott clearly doesn’t want to see – are inevitable, or companies will leave. In some cases companies are paying out more than they’re taking in.

“That’s clearly unsustainable,” McCarty said. “They’re not going to lose money.”

“They’re going to raise rates … or they’re going to find ways to deploy their capital elsewhere,” McCarty continued. “The companies have got to make a profit.”

The situation now – where some companies are paying out more than they’re taking in – is now bad enough it is becoming akin to the state’s problem with property insurance. Some companies soon may flee the state, leaving drivers with fewer choices, and presumably, leading to even higher rates.

Scott strongly suggested that something must be done in the coming legislative session.

Scott had floated the idea earlier this summer of doing away with the PIP coverage requirement, though he has declined to follow up with specifics and made it clear Tuesday that his office will let McCarty take the lead on coming up with a fix.

McCarty told Scott and the Cabinet that he plans to meet with legislative leaders soon to discuss the issue. The Legislature tried to tackle the problem earlier this year, but failed.

Among the ideas looked at, and then rejected, by lawmakers were new limits on fees for attorneys who sue insurance companies when PIP claims are disputed, and allowing insurers to offer discounts for customers who use certain networks of trusted providers.

Part of the obstacle McCarty will face is lack of agreement among insurance companies about what the fix should be.

“There is not a consensus among the major insurance groups, except that we have to do something,” said Sam Miller, executive vice president of the Florida Insurance Council. “Some insurers say we can salvage PIP … there are other insurers that say it can’t be saved, that we need to repeal it.”

The industry is trying to come together on a position, Miller said.

Florida Chief Financial Officer Jeff Atwater warned that the issue will be heavily fought, as it has in the past.

“All the players come crashing through the door looking to protect their specific piece,” said Atwater.

Atwater also noted the enormous cost to drivers, and the fact that previous efforts to reduce fraud have failed. He said if something can’t be done, the system needs to be eliminated.

“The focus has to be on the consumer,” Atwater said. “We owe it to them to … either fix it or flush it.”

Tuesday’s discussion of the topic in the Cabinet was informational. As both McCarty and Scott noted, any fix would likely have to come from lawmakers.

McCarty also noted Tuesday that the problem has extended in geographical scope. PIP fraud – either billing for services that were never rendered by unscrupulous, or fake, providers, or staged accidents – for years has been thought of as primarily a Miami problem. It is still a huge problem in Miami-Dade County, McCarty said.

But when adjusting for population, it is growing in other regions, too, particularly in the Tampa Bay area and in central Florida, he said.

“This is a contagion that’s going on across the state,” McCarty said.


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