Crime pays, but increasingly it's Tampa Bay's law-abiding drivers who are footing the bill. Enterprising criminals are taking Florida's no-fault auto insurance law for a ride, fueling soaring insurance rates for everyone else. Now the only question is whether state lawmakers — consumed with casino gambling and redistricting plans — will give this pocketbook issue the attention it deserves during next year's legislative session. Any solution should seek to reduce fraud and preserve no-fault insurance to protect victims of car accidents, not repeal no-fault as some have proposed.
The statistics are striking. The number of Florida drivers has been fairly stable since 2004. The frequency of car crashes has actually decreased since 2005. And safety efforts — from better seat belt compliance to improved air bags — should have curbed medical costs from auto crashes. Yet benefits paid by insurers under the state's no-fault law, called PIP for personal injury protection, have jumped 70 percent since 2008.
Florida Insurance Commissioner Kevin McCarty estimates the trend has led drivers to pay $900 million more in insurance premiums. And still, McCarty says, insurers are losing money under PIP claims, paying $1.40 for every $1 collected in premiums even though most companies have raised their PIP premiums by 50 percent or more.
Auto insurance fraud was initially a problem largely confined to South Florida. Under the no-fault law, economic damages from an accident up to $10,000 are covered by each driver's own insurance. So criminals would stage an accident and, with the complicity of a medical clinic, bill their own insurer for up to $10,000 for procedures they never obtained. Other fraud, investigators say, occurs when unscrupulous lawyers or medical clinics exaggerate injuries for victims from legitimate crashes to bilk the insurers.
As the economy has soured, the staged accident scam has spread north to Tampa and Orlando. In 2010, Hillsborough County had an estimated 739 staged accidents; Orlando, 394; and Miami, 292. Some of those responsible were caught. But many more weren't. Law enforcement officials say that such crimes aren't terribly hard to investigate but that they lack resources to deal with so many questionable claims.
All this has prompted some in the insurance industry to argue that Florida should join the majority of states that make the negligent driver responsible for economic and noneconomic damages from accidents. But no-fault insurance evolved for a reason that remains valid. It ensures that victims of accidents can get immediate medical attention and that medical providers aren't left uncompensated as legal battles drag on over who's at fault in an accident.
A work group formed by Florida's insurance consumer advocate is scheduled to release its suggested fixes on Tuesday. They're likely to include such tweaks as tightening up billing practices for PIP claims; revising police accident forms; increasing civil penalties for fraud; and limiting medical clinic ownership and litigation costs. All have potential, but no reform should lose sight of the fact that the main purpose of no-fault insurance is to help innocent victims regain their lives as soon as possible after a crash. Any advocates for new requirements on law enforcement, the legal system or the medical community should keep in mind that the vast majority of accidents involve legitimate victims entitled to the coverage they paid for.
Floridians need Tallahassee's help to curb this so-called fraud tax. But they also need to be assured that lawmakers are looking out for their interests if they are in an accident.