No-fault insurance was supposed to reduce the expense of auto insurance by cutting down on the number of accident-related lawsuits. Any Florida driver who has tracked his auto coverage premiums or counted the number of “Accident!” billboards knows that’s not the case.
“Spiraling medical costs and rampant fraud have made the system a persistent target for reform,” writes Susan Ladika of Carinsurance.com in an article headlined “Reforming reform: Fixing no-fault insurance.” The report was published on the Nasdaq’s community website in May 2012.
States that repealed no-fault insurance saw premiums fall – 35 percent in Colorado, 31 percent in Connecticut, and 20 percent in Georgia, according to the article.
The big lesson may come from a RAND Corp. study that found that costs associated with medical care in no-fault states such as Florida were 40 percent higher than in states with systems that let people sue each other.
What’s to be done? Ladika said Florida took a big step with PIP reform that was enacted in May 2012.
Michael Carlson, spokesperson for the trade group Personal Insurance Federation of Florida, said in the article that consumers “shouldn’t be paying these outrageous PIP (personal injury protection) premiums.”
James Whittle, assistant general counsel for the American Insurance Association, a trade organization, concurs. He says in the article that there’s a “real hope people will see real savings as a result of the reforms.”