Florida No Fault (PIP) a Hot Issue for Legislature!

In an article published April 3rd by the National Underwriter, it was reported that the insurance industry itself is sharply divided over the merits of either reforming or abolishing Florida’s no-fault auto insurance system, and the Florida legislature is grappling with the issue under tight time constraints.

If the Legislature takes no action this year, Florida’s No Fault, or Personal Injury Protection (PIP), system will disband in October of 2007 and the state will revert to a traditional tort system where the courts determine fault and liability in major accidents. That’s why late last week insurance committees in both the Senate and House approved moving the so- called “sunset date” to 2009 and 2012, respectively, from its currently set 2007. Whether such a movement passes the legislature remains to be seen, as positions are highly polarized.

The Property Casualty Insurers Association of America recommends maintenance of the system, but with certain reforms. PCI spokesman Jeff Brewer has stated, “At the present time, the bills contain some important provisions, but we would like to see more comprehensive reforms including a medical fee schedule and additional litigation controls to curb frivolous lawsuits”.

At the other extreme, the National Association of Mutual Insurance Companies believes the current system is beyond repair and that scrapping it remains the best option, citing soaring costs stemming from fraud as one of the main reasons the system is not working. For example, statistics from the National Insurance Crime Bureau reflect that three of the top cities for staged accidents are in Florida, with Miami topping the list.

Florida Insurance Council President Sam Miller said that his organization will remain neutral – it is made up of both repealers and reformers, and a subset of reformers, mainly health insurers, who want to expand the system in ways the auto insurers oppose.

However, the industry remains strongly united against so-called “re-enacters” who want to make permanent the current system without any sunset date. This group consists primarily of state trial lawyers and medical groups.

Florida was the second state in the nation to enact a no-fault system that authorized first-party injury protection benefits up to $5,000 to policyholders sustaining bodily injury in auto accidents, regardless of fault. Yet, the law has been reformed at several junctures since then, most recently in 2001 and 2003, when the Legislature enacted reforms in response to widespread personal injury protection fraud found by a grand jury convened in 2000. Some states, after trying valiantly to make such a system work, have given up and returned to a system of liability in tort. That’s essentially what happened in Colorado earlier this year. Will it happen in Florida? We'll know in a month or so.

James W. Greer, CPCU<br>
AE21 Incorporated<br>
Association of Property & Casualty Claims Professionals (PCCP)
Association of Workers’ Compensation Claims Professionals (WCCP)