Monday, 18 June 2007
Florida to Phase Out No-Fault Auto Insurance
On October 1, 2007, the 30-year-old no-fault insurance law in Florida will expire unless lawmakers take action to extend the deadline. But with Florida’s property-tax law issue pressing, no-fault insurance is not likely to make it on the congressional floor.
Because of the heated debate surrounding it, many observers are surprised that the no-fault law isn’t a higher priority for lawmakers.
Those who want the no-fault law to end include consumer advocate groups such as Floridians for Lower Insurance Costs. They believe when the no-fault law expires insurance rates will be reduced because of a reduced number of fraudulent claims.
Insurance fraud has plagued the no-fault system since its creation. Many clinics exploit the $10,000 of guaranteed personal injury protection. Some clinics are known for hiring people to stage car accidents, and then billing insurance companies for medical care that didn’t occur.
Without the no-fault law, insurance companies won’t have to offset fraud costs with higher rates. Florida’s largest auto insurer, State Farm, offered a rate reduction of 16% if the law were allowed to expire. State Farm has been lobbying for repeal of the no-fault law for several years.
Others see the expiration of the no-fault law as a catalyst for increased auto rates and even higher health insurance premiums. Critics contend Florida will see a significant jump in drivers on the road without auto insurance.
Bill Newton, president of the Florida Consumer Action Network, predicts the auto premiums that were used for the $10,000 in personal injury protection will pay for uninsured motorist coverage and liability suits instead.
“If you think your insurance is going down 16 percent, you’re dreaming,” Newton said.
If lawmakers were to address the no fault-law before the expiration date, the major insurance industry players would have to come to a compromise, commented State Senator Bill Posey.
Proponents of the no-fault law would rather see a crackdown on fraud, rather than an end to no-fault coverage.
“It’s not unmanageable, and no one has really tried,“ said director of the Association of Independent Health Care Providers, Dr. Steven Greenberg. “You don’t just hit [the no-fault law] with a big hammer and kill it. There is fraud in banking, but you don’t see us closing all the banks.”
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