Let's start by putting this reform into a proper context. If you look across the USA, there are about 6.5 million traffic accidents every year. People are injured in about half these accidents, with some 2 million having some degree of permanent disability. Overall, about 40,000 die each year. Florida is one of the twelve states (plus Puerto Rico) with a no-fault insurance scheme. In theory, this should keep costs low by avoiding disputes as to liability. Unfortunately, the reverse has happened as fraud on personal injuries has soared to record levels. As a result, the premium rates have risen far faster than inflation as the insurers passed on the cost of this fraud to policyholders. As a result, many drivers have been on the roads without adequate cover to pay for any personal injuries they might cause. Worse, the actual enforcement of the mandatory insurance law has been poor. For the responsible driver, carrying uninsured or underinsured insurance was a must. There is hope for the future following the passing of a consensus bill through the Florida legislature in March 2012, which is all thanks to the efforts of Chief Financial Officer Jeff Atwater and Governor Rick Scott.
This is a major victory as the history of insurance has been blighted by often angry disagreement about what should be done. The first signs of improvement came in 2002 when the Florida law enforcement agencies began to collaborate with the National Insurance Crime Bureau to put more effective strategies in place to crack down on the amount of fraud. The Medical Fraud Task Force began to analyze the volume of claims submitted to Florida auto insurance companies. As you can imagine this was an enormously demanding task. However, over time, patterns were identified. At first only individuals were prosecuted. Then entire criminal organizations were taken down, sometimes including medical professionals who were colluding to provide fake reports in support of the claims. The first step in the reform package has been a requirement that all clinics be registered and have a licensed physician as the medical director. The second step requires an alleged accident victim to request treatment within 14 days and for a licensed physician to certify that this is an emergency response to an accident. Without this certificate, the claimant will not receive the full PIP benefit of $10,000. Only $2,500 will be paid. Given the Insurance Information Institute has evidence showing Florida leads the country in staging accidents, reducing the payout to $2,500 is not going to solve the problem. Longer queues in both hospitals and clinics is the only thing that this will generate.
However, given that some reform is better than no reform, this is some progress. So long as the collaboration with the NICB continues to identify fraudulent claimants, the level of fraud will decline a little. Hopefully, in this breathing space, the Florida government can devise a better long-term solution. This level of fraud forces up the auto insurance quotes every year, burdening local drivers with ever higher rates to pay the fraudsters. HB19 is not a perfect law and not everyone got what they wanted, but auto insurance rates should stabilize as payouts are reduced. The first battle to be won is that there is, at least, an agreement that something has to be done between the public and their representatives in legislature.