Despite distractions provided by the Cat Fund and redistricting, the rhythm of PIP reform is picking up.  Business and industry groups vary on the details of reform but, never the need for it.  Those pushing repeal merely believe “real” reform is impossible…politically.

CFO Jeff Atwater keeps hauling in PIP thieves announcing last week a handful of arrests in connection with another fake accident enterprise in Miami Springs. He said… “My office is cracking down on this costly crime.  The perpetrators will be caught; they will go to jail, and we will work to get Floridians the relief they deserve on their auto insurance premiums.”

All were charged with insurance fraud, grand theft and accident staging.

Take note: as is typical, after faking the accident the participants rushed to Doral Center Rehab and Justin Medical Services, which were both located at the same address, which in total submitted fraudulent claims close to $83,000…for one accident. If convicted the five defendants face 35 years in the big house…each.

The complacent don’t realize Florida is approaching the number of suspicious auto accidents that occur in New York and California…combined! In an effort to expose the breadth of the problem, the Florida Chamber of Commerce dispatched its Fraud Fact Friday report; calling PIP a “billion dollar problem” and citing troubling trends that complement data in my last PIP report.

Hopefully the high profile arrests by CFO Atwater, a cooperative effort between business and insurer groups and the following trends, will prompt vigorous reaction from lawmakers during the 2012 session.

Troubling Trend #1: Staged Accidents Are Rising
According to the National Insurance Crime Bureau, the number of suspected staged accidents reported from Florida increased a whopping 119% from 2008 to 2010.

Tampa shows the greatest increase in the number of staged accidents – 491% – over the same period.

Staged accidents lead to phony medical treatments and demands for PIP benefits, driving costs upward for all consumers.

Source: National Insurance Crime Bureau; Florida Questionable Claims: 2008, 2009, 2010; March 22, 2011 www.nicb.org/File%20Library/Public%20Affairs/Florida-Questionable-Claims-08-10.pdf

Troubling Trend #2: PIP Claim Costs Are Rising
PIP claim “severity” has risen 39% from 2008 to 2010. Severity refers to the average cost for a PIP claim, and the numbers are rising. In 2008 the average cost per PIP claim was $5,808, in 2010 the average cost was $8,096 and the sharp upward trend continues.

According to the Insurance Research Council, the increase in PIP severity has outpaced the growth to the Consumer Price Index (CPI) and the national medical CPI.

Source: Insurance Information Institute, No Fault Auto Insurance in Florida: Trends, Challenges & Costs, January, 2011 http://www.insuringflorida.org/assets/docs/pdf/No-Fault%20Paper_0125111.pdf

Source: Insurance Research Council, PIP Claiming Behavior and Claim Outcomes in Florida’s No-Fault Insurance System, February, 2011 http://www.ircweb.org/News/IRCFloridaPIP_020911.pdf

Troubling Trend #3: PIP Premiums are Rising
According to the Office of Insurance Regulation (OIR), the 2011 annual PIP premium in Miami for a married 40-year-old female with a good driving record is over $800.  In 2008, the same coverage was just below $600.

The annual premium for an unmarried 25-year-old male Miami resident is $900; in 2008 the same coverage was below $700.

The 2011 annual PIP premium for a married 40-year-old woman in Tampa is more than $550 and is higher still – above $600 – for an unmarried 25-year-old male.  The 2008 premiums for these drivers were approximately $325 and $400, respectively.

Based on official OIR data, consumers in Tampa and Miami are paying $100 more a year since 2008 for the same coverage.

Source: Florida Office of Insurance Regulation, Cabinet Presentation, August 16, 2011 http://www.floir.com/siteDocuments/PIPPresentation08162011.pdf

Stay Tuned: In my next report on PIP we’ll look at filed legislation that might address the problem.



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