Shady Claims Drive Up Car Insurance Rates

Jan. 18--Florida drivers pay through the nose for car insurance. A recent study by consumer website insure.com ranked Florida's rates third-highest in the nation: A driver with a clean record and a new car pays more than $2,000 a year, the site found -- more than 11 percent over 2017 rates.

The site singled out two factors as the key culprits in Florida's high rates: The large number of uninsured drivers (an estimated one in four drivers lacks the minimum coverage required by law), and the state's broken no-fault "personal injury protection" system.

The original concept behind personal injury coverage -- commonly known as "PIP" -- was to simplify claims and avoid litigation. Florida law requires drivers to carry at least $10,000 of PIP coverage, which goes to pay their own medical bills for relatively minor injuries. Because the coverage amounts were relatively low, insurance companies were required to process claims swiftly and punished if they fought legitimate claims.

Unfortunately, this has opened the door to those seeking to take advantage. In October, The News-Journal's Frank Fernandez documented more than 12,000 personal injury claims filed in Volusia County -- with 8,400 filed by one law firm alone. And Volusia County pales in comparison to some South Florida counties, where PIP cases have completely overwhelmed civil court systems.

It's easy to see why lawyers are eager to pursue these cases: If they win -- and they usually do -- the insurance company has to cover legal fees, which can outstrip the actual claims by thousands of dollars. Though fees in individual PIP cases look puny in comparison to the bills incurred in a full-fledged courtroom battle over liability, they definitely add up.

Across Florida, regulators and insurance companies have identified shady medical providers that work with attorneys who handle large volumes of PIP claims. Some diagnose nearly identical courses of treatment for most of their patients -- regardless of their actual injuries. The clinics convince their patients to sign "assignment of benefits" forms that take them out of the decision-making, and then work with attorneys who sue insurance companies for close to the $10,000 cap, racking up big legal bills along the way. Then there are cases of outright fraud, where accidents are staged or claims expanded to include so-called "ghost riders" who were not actually in the car.

Overall, state regulators have concluded that PIP abuse tacks an additional $250 a year to Floridians' insurance bills. Repealing the requirement to buy PIP, and replace it with bodily-injury liability coverage, would result in an estimated net savings of more than $80, legislative analysts say -- though that number is in heavy dispute. Florida is one of only two states that doesn't require injury liability coverage, but legislation proposed last year would .

Lawmakers should tread cautiously. Killing PIP altogether would put large numbers of responsible Floridians at risk if they're hit by someone who doesn't have insurance at all. Furthermore, in many accidents it's unclear who exactly is at fault. Without the PIP option, many more cases might go to truly costly litigation.

Lawmakers should aim their efforts at the truly bad actors, starting with the closure of the assignment-of-benefits loophole (a change that's also needed for property and casualty insurance) and giving law enforcement and state regulators better tools to go after scam clinics and shady law firms. Those changes might be enough to stem the flood of abuse; if not, the Legislature will have to look to more drastic options, such as killing PIP altogether.

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