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I recently came across this great piece on insurance regulations in Florida and wanted to pass it along. It was written by the editorial board of the Tampa Tribune.
Florida Should Let The Sun Set On No-Fault Auto Insurance
It made sense for Florida to mandate no-fault auto insurance in the mid-1970s when ambulance-chasing lawyers were clogging the courts with fender-bender lawsuits and driving up costs for everyone.
Today it makes sense to repeal no-fault car insurance because ambulance-chasing lawyers and unscrupulous doctors are scamming the system in new ways, forcing Floridians to pay the nation's sixth highest auto insurance rates.
No-fault will sunset in October unless the Legislature takes steps to save it. Given that the system is broken, lawmakers should let the law die.
Besides, for most people, no-fault insurance is an unneeded mandate. Most drivers already have health insurance, bodily-injury insurance and oftentimes, a rider that pays their medical bills in case of an accident.
Perhaps it's possible to reform the no-fault law, which requires people to purchase $10,000 in personal injury protection (PIP) for reasonable and necessary medical claims, as well as lost wages. But lawmakers have shown little stomach for standing up to the medical lobby and doing what's necessary: establishing fees for routine procedures and standardizing treatment protocols. Given that most claims involve soft-tissue injuries, such as a strained neck, it makes sense to routinize the tests and treatments.
No-fault's intent was to assure that people injured in an accident are compensated quickly, regardless of fault. The tradeoff was that injured parties would no longer be able to sue for noneconomic damages, such as pain and suffering.
Unfortunately, a cottage industry has grown up to grasp the $10,000 ring available in every accident, no matter how minor. And if the insurance companies challenge the quirky treatment methods required by some clinics - such as a crystalline yoga mat said to rid the body of toxins - the companies risk losing in court and paying even more, plus the other side's attorney fees.
Last year, lawmakers tried to renew the no-fault law, but Gov. Jeb Bush vetoed the bill, saying it did too little to prevent fraud. Jeb wanted true reforms, including fixed doctor's fees, agreed-upon treatment protocols and beefed-up law enforcement measures. Jeb was right.
Some risks exist if no-fault goes away. Hospitals say no-fault is the only medical coverage some car owners carry and that its demise would leave them with unpaid bills. However, Florida recently granted trauma centers a new funding stream by increasing fines for traffic violations. And the hospitals' argument that fraud could be eliminated by requiring the $10,000 be spent only at a hospital sounds unlikely to withstand a legal challenge.
Some argue that ending no-fault will generate more lawsuits against at-fault drivers, clogging the courts and forcing providers to wait for compensation. But the courts are already as crowded with PIP claims as they ever were with negligence lawsuits. Because no rules exist to explain what treatments are necessary or reasonable, the courts are left to decide.
Besides, experience says the demise of no-fault reduces auto insurance rates. The Colorado Department of Insurance says auto rates decreased 21 to 31 percent after PIP was repealed, a savings that more than offset the 1 percent increase seen in health care premiums.
If PIP disappears here, State Farm, for one, promises a 16 percent reduction in auto premiums, saving a two-car household an average $360.
Florida's no-fault system has failed. For the sake of consumers, lawmakers should let it die a timely death.