PIP Debate…All About Wasted Time!

Now that 2014 is almost here, to still be debating repeal vs. reform of No-Fault is like déjà vu all over again.

I  remember walking the halls of the “old” capital building in 1971 distributing talking points on why lawmakers should implement one of America’s first No-Fault systems. I was, of course, too young and inexperienced to fully understand what was going on.

Insurance Commissioner, Tom O’Malley, was just elected having campaigned on the concept. The Governor supported No-Fault and the Chairman of the Senate Commerce Committee, Fred Karl, along with his Vice Chairman, Dempsey Barron were equally committed to reducing litigation that was smothering Florida’s auto accident system.

After much consternation HB-1821 was handed to Governor Rueben Askew who signed into law what was touted as “..the most far-reaching, meaningful, no-fault reform in the country.”

However, both the celebration and a 15% rate reduction were surprisingly brief.

In 1973 I was handing out more reform flyers and did so again to reform those reforms in 1976 and in 1977.  Always it was to fix what the courts and the emerging throng of cottage fraudsters had eroded, and …always accompanied by the plea to give the previous reforms a chance to work.

In 1978 the venue shifted to the “new” capital building and the flyers, titled “300-Words or Less About Insurance” featured talking points on reform needed to shore up the  verbal threshold enacted as part of the 1976 reforms.  (See NOTE#2 below).

Each time, every time, almost every year …lawmakers implemented reforms amidst plea’s to “…give the previous reforms a chance to work!”

In the ’80’s it was déjà vu all over again, again. (See NOTE #3 below)

Then, from 1989 to 1997 even more changes were needed as PIP was increasingly embraced by those traditionally opposed to it. This lead to the anti-fraud provisions implemented with HB-3889.

In 1999 HB-295 further modified PIP and was accompanied by major tort reform in HB-775, much of which directly targeted fraud which had continued to skyrocket.

Abusers continued to proliferate and by the turn of the century organized crime involvement and staged accidents fueled a  startling grand jury report and another major rewrite yielding another chorus of “give the previous reforms a chance to work!”

In a 2003 Special Session even more major PIP reform was implemented and, believe it or not, I was involved with more talking points–some of which sounded like those I had distributed 30 years prior.

Finally…in 2012 lawmakers proved once again they didn’t have the stomach for “real” reform by enacting a watered down version of CS/HB-119 which is now (surprise, surprise) besieged by legal challenges. (See NOTE #5 below)

So, “what’s the point?” you ask.

Well, when I hear there are some in the insurance industry who still believe, despite the above, that we should give the previous reforms a chance to work, I can only say…

                  ARE YOU KIDDING ME!?!

I get it…we don’t want to replace a horrible system of mandatory $10,000 PIP with an equally horrible system of mandatory $10,000 Medical Payments, but …desires don’t erase facts!

And the facts prove two things: one, the current system doesn’t work, and; two, it cannot be made to work on any permanent and material basis.

What does it take for those who want a working system to realize this?

What is it about the last forty years they don’t understand?

Earlier this month Chairman of the Senate Banking & Insurance Committee David Simmons (R-Seminole, Volusia) said that out of $3.4 billion in auto premiums over $1 billion is for PIP fraud.

“We’ve had 40 years of fixes trying to resolve the PIP problem and here we are again!”  he lamented.

Data reveals that 92.1% of insured Florida drivers already carry Bodily Injury coverage and that 25.4% of the same insured’s also purchase Medical Payments. Chairman Simmons simply wants that to be the law of the land minus PIP. (See NOTE #4 below).

It’s hard to believe some insurers can still oppose him on this.

Forty years of history confirms that time spent giving previous reforms a chance to work is nothing more than time wasted!

It’s time to stop wasting time defending the indefensible and invest time reforming Florida’s abusive bad faith statutes. Nothing could lower costs for consumers more than that! (See NOTE #6 below)

The industry should unite behind Senator Simmons and other like-minded lawmakers to repeal the last vestige of America’s regrettable No-Fault mistake.


NOTE 1: For a complete review of the current debate regarding No-Fault and many relevant documents see my previous blogs, as follows:

“PIP…Now’s the Time!”.

“Auto PIP Analysis-Be Careful”

“No PIP or the PIP we’ve got”

“PIP Reform…A Big Week”

NOTE #2: No-Fault reforms in the 1970’s included: 1972–$25,000 in B.I. required (ch. 72-297); 1973—Repealed the $25,000 B.I. requirement and replaced it with 15/30 (ch. 73-186); 1976—Changed 15/30 to 10/20/5 and replaced $1,000 tort threshold with a verbal threshold and added PIP deductible of $2,000. (ch. 76-266); 1977- Benefit changed to 80% medical, PIP deductibles of $3,000 and $4,000 were added, with only $5,000 in PIP required.  Eliminated the compulsory nature of BI and PD unless subject to FR law (first bite of apple is free).  (ch.77-468); 1978—Tightened verbal threshold and the minimum raised to $10,000 from $5,000,  deductibles of $6,000 & $$8,000 added.

NOTE #3: From ’82 to ’88 the law was fine-tuned numerous times, including increasing funeral benefits to $1,750 from $1,000. In 1988 lawmakers again passed major reform requiring proof of financial responsibility in addition to  PIP and including property damage liability of $10,000.  In 1989 death benefits were raised to $5,000.

NOTE #4: Some highlights of Senator Simmons proposal are:

  • Repeals  No-Fault  and requires Financial Responsibility (FR) of either $60k for combined single limit or $25k/$50k/$10
  • Proof of FR in lieu of a policy must be in the amount of $60k (up from $30k); private individuals who self-insure private passenger vehicles possess a net unencumbered financial worth of at least $60k (up from $40k)
  • Also being considered is the requirement of $10,000 of Medical Payments limited only to   ambulance services, emergency room  and medically necessary services from a licensed hospital.

NOTE #5: In the most recent development over the 2012 PIP reforms the chiropractors, massage therapists and acupuncturists previously rebuffed for lack of standing, have filed a motion  arguing that the previous DCA three-judge panel erred. More to come.

NOTE #6: In Colorado, which repealed its no-fault law in 2003, the average injury payment per vehicle decreased 27 percent the year after the change to $223. Average premium costs also fell 15 percent to $476 in the two years. Reforming bad faith statutes and returning to a tort based system is anticipated to have an even greater impact on Florida’s costs.

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