Will Florida let PIP no-fault insurance go away?

08/20/07 Seán Kinane
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Florida’s no-fault automobile insurance requirement is set to expire on Oct. 1. Personal injury protection, or PIP, covers up to $10,000 of medical expenses for someone injured in an auto accident, regardless of who is at fault.

Because of fighting between different interest groups and lobbying by the insurance industry, renewal of PIP without major changes is unlikely to happen.

If the Legislature does not renew PIP, auto insurance rates may go down. But some consumer groups say that these savings will not be enough to cover the increased costs of medical care and insurance.

The insurance industry says that under the existing PIP no-fault law, fraud often occurs.

Allison Norris Jones is the spokesperson for Floridians for Lower Insurance Costs, a group that is advocating for the elimination of Florida’s no-fault law. She calls it "a coalition of over 10,000 individual consumers, businesses, and trade organizations." The FLIC website lists at least five insurance companies, including State Farm as part of the coalition.

“Well, Basically, we think the system is broken; it’s rife with fraud and abuse. And lawmakers have been trying for over a decade to make this system viable for consumers. And unfortunately, because there’s no cost controls in the system and there’s varied special interests who make a lot of money off of the system, any attempts to reform the system have been blocked.”

Bill Newton, executive director of the Florida Consumer Action Network, doesn’t dispute that fraud exists, but said that consumers would lose if no-fault insurance went away.

“We agree that there is fraud in the PIP system, but the way to get rid of fraud is not taking away benefits, it’s to go after the criminals. I mean, why are we, the citizens, being punished instead of the criminals? Well, the answer is because it’s easier to take benefits away from us than it is to root out the fraud.”

Alex Sink, the state's chief financial officer, said the problems can be fixed.

“Yes, there is a way to keep PIP and do something about fraud. The first thing we ought to do is implement a fee schedule, which outlines the payments to be made for certain injuries. We have fee schedules for Medicare, for Medicaid, for private insurance companies ... as well as under our worker’s comp system.

"PIP is the only system that does not have a fee schedule, so we need that. And we need some utilization requirements … and that would help keep the costs down and keep the fraud down, because people couldn’t just rack up health insurance bills at these clinics that are operating illegally,” Sink said.

In other states that have terminated their no-fault requirements, according to Newton, drivers have had to purchase additional uninsured motorist coverage. In addition, health insurance costs have gone up and hospitals have had to raise fees and turn away more patients who don’t have insurance, Newton said.

“That’s going to cause a shortage in health-care funding for hospitals throughout the state. That’s what happened in Colorado and we would expect that to happen here.”

Sink said it was “quite possible” that health insurance rates would go up once the PIP requirement expires.

“When PIP sunsets, which it is scheduled to do on October first, then if someone gets hurt in an automobile accident, if they haven’t purchased medical payment insurance, then their injuries will be handled under their health insurance policies. And we already know that 20 percent of Floridians have no health insurance. So the health insurers are anticipating, and I’ve heard anywhere from 3 to 5 percent increase in health premiums. And this would go back to the employers who are sponsoring health insurance or the individual policyholders.”

WMNF asked Newton who he thought would benefit if the PIP requirement goes away in October.

“State Farm benefits. They’re one of the primary groups that’s pushing this. Insurance companies are behind getting rid of this. The doctors don’t want to get rid of it. Consumer groups are not in favor of getting rid of no-fault. So, it’s mainly the insurance companies and they didn’t even gain that much. They claim they’re paying for indigent health care now, and to some extent, PIP insurance money probably does go to help do that. And they say, well, that’s not their role. But how much do they really save by not paying that? Well, not very much.”

WMNF contacted State Farm for comment and they referred us to Allison Norris Jones’ group, Floridians for Lower Insurance Costs.

Jones said that any increases in the costs of health care or insurance would be offset by decreases in auto insurance rates.

“Well, those claims are just scare tactics that are being used by those who want to maintain the system because they make a lot of money off of it. One thing for us as a consumer coalition we’re glad to see that the major auto insurers in the state have already started to file rates with the Office of Insurance Regulation; and it basically shows that there’s an average 16 percent decrease in auto insurance rates statewide, so that’s good news for Florida’s consumers. And the other thing is what we’ve seen in other states that have eliminated this system is that there have been minimal increases in health insurance costs, about 1-2 percent at most.”

Nonetheless, Newton said no-fault insurance should be saved.

“Well, our organization would like to see PIP renewed as it is, but we’re really afraid of these backroom deals that are being made on this right now and consumers and the public are excluded. We would rather not have them do anything and we’ll just see what the reality is rather than have to put up with some horrible backroom deal that would be really horrible for consumers.”

Sink said she hopes the Legislature will come “back in special session and give Florida’s drivers the protections they need.”

“…people are waking up to the possibility of PIP sunsetting. And if the only way that something can be done is if individuals start getting on the phones, calling their legislators, calling the governor’s office and demand that this situation get addressed. If PIP sunsets and there’s nothing to replace it, then we’re all basically on our own when it comes to injuries in an automobile accident.”

For more information:


Floridians for Lower Insurance Costs

Florida Consumer Action Network

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