As of late, no-fault car insurance systems can’t seem to catch a break from negative press. Some might say that when it rains it pours, but it’s also possible this is for good reason.
In just the span of a couple of months, we’ve seen New York seeking ways to stamp out staged accidents; Michigan looking for answers on solving high premium costs their drivers are subject to due to being the only state in the nation that mandates all drivers must carry unlimited healthcare coverage; and of course, there’s Florida, once again trying to tackle a massive amount of insurance fraud that seems to continually sizzle and simmer year-round in the tropical heat on their roadways.
Beyond the commonality that each of the three states we just mentioned employ no-fault car insurance systems, the issues that plague each of them relate directly to medical coverage, despite the differences in those coverages from state to state. In no-fault insurance states, medical coverage comes in the form of Personal Injury Protection (PIP).
In Florida, the issue has revolved around the $10,000 in PIP coverage all drivers must carry as part of the state’s coverage requirement. This coverage is blamed for most of the premium increases Florida drivers have seen in the recent past. More specifically, fraud involving this coverage, where shady doctors and clinics, fed by ambulance chasers, see patients yet never perform medical services they bill insurers for, is normally blamed for the state’s issues.
Florida’s Office of Insurance Regulation spelled out just how bleak the situation in Florida is back in April. Their data indicated that from 2008 to 2010, payouts under PIP increased by a billion dollars. And in the last five years, pending lawsuits in the state had increased by 387 percent.
We’d think removing the fraudsters would sound like the natural course of affairs, but some in the state, including Florida Governor Rick Scott, believe the answer is to just remove PIP from the coverage requirements. Same insurance system, but drivers/policyholders would no longer be required to carry PIP coverage.
We aren’t quite certain that’s the right call or if it is not, but it does seem obvious that changes are needed and lawmakers in Florida will be weighing in very soon. We’ll continue to watch and report as the situation develops.