Robin Westcott, Florida’s insurance consumer advocate, says that the current system no-fault auto insurance may not be sustainable.
The cost of Personal Injury Protection (PIP) is rising so rapidly that it is becoming unaffordable. At the same time, auto insurance companies continue to lose money on PIP coverage, raising doubts about whether they will continue to do business in Florida.
Families with two teenage drivers that State Farm insures in Tampa saw premiums rise from $1,279 in 2008 to $1,997 this year. according to Insurance Journal’s article on Westcott’s report to the Florida Cabinet.
“We’re talking $2,000 out of someone’s budget for a $10,000 benefit,” Westcott said.
Florida has two choices — reforming the system or seeing fewer companies providing the coverage at higher rates, Journal reported.
“To keep companies here, we are going to have to make this business model work or the insurance commissioner will have no choice but to approve premium increases,” said Atwater.
The way that injured individuals are treated and insurance companies are billed makes it all but impossible to check PIP claims for fraud. Insurers and regulators cannot monitor certain health care clinics and their services due to loopholes in a previous PIP reform measure.
Westcott said lawmakers must weigh the costs and benefits of monitoring the clinics to eliminate fraud.
“We have a dramatic system to police for a $10,000 benefit,” she said.