Count Dick Natalizio of Palm Beach Gardens among Florida drivers who are sick of the government mandate forcing them to buy $10,000 of Personal Injury Protection to cover minor injuries in car accidents. Why? They see PIP as a costly, fraud-prone albatross that needlessly duplicates coverage they already have from Medicare or private health plans.
Florida drivers pay among the five highest car insurance premiums in the nation, for some of the lowest required coverage amounts, a state Senate panel heard in January. And drivers like Natalizio have had enough.
“I think it’s a joke,” said Natalizio, a former owner of an independent insurance agency in Wisconsin now retired in Florida. “It’s absolutely ridiculous. In Colorado, they got rid of no-fault and their premiums went down 35 percent.”
PIP puts responsible Florida drivers on the hook for rate increases averaging 25 percent since the start of 2015 — even if they never get in an accident.
But as far as Natalizio and other PIP critics can see, state leaders seem to be in no hurry to do much of anything when there is an obvious solution staring them in the face.
Florida drivers would save an average of $81 per car, or close to $1 billion a year, by getting rid of PIP, an actuarial study commissioned by the state last fall found.
That is a net savings after a projected increase in other premiums such as bodily-injury liability coverage, the analysis said. About a dozen states still have no-fault systems like the one Florida created in the 1970s, but the vast majority of states require bodily-injury liablity coverage instead.
“It is time for Florida to abandon this failed experiment in exchange for common sense reform and consumer relief,” said state Rep. Bill Hager, R-Delray Beach, sponsor of a bill to end PIP. “This bill provides more coverage, more affordably, and in a manner that cuts out much of the waste, fraud, and abuse of the current system. To me, providing consumers more product for less money is a win-win.”
But similar bills made little progress last year against a lobbying wall of interests that want to keep PIP, including hospitals, an array of medical providers and clinics, and specialty insurance companies and lawyers who make their living on PIP.
Supporters argue PIP provides needed money to cover the injuries of a driver or passengers regardless of who is at fault in an accident. They cite uncertainty about the future of the Affordable Care Act as another reason to keep PIP.
“At least there will be some coverage for patients in the emergency room,” Jeff Scott, general counsel for the Florida Medical Association, told legislators.
But PIP proponents typically do not want to require it only for those without health insurance — they want to keep forcing everyone to buy it.
Gov. Rick Scott has supported keeping but “reforming” PIP in the past. The Palm Beach Post asked him about it during a visit to Riviera Beach Wednesday.
“I know there’s going to be a lot of things that come through the legislature and lots of things they are going to look at,” Scott said. “What I’ve focused on is what we can do to drive down the costs. That’s why we did what we did a few years ago, a lot of things like that. Whatever they are trying to do that actually reduces costs, I’m going to look at it very seriously.”
Reforms in 2012 for which Scott personally lobbied were supposed to wring fraud out of the system and help families save money. Non-emergency benefits were slashed to $2,500. Massage and acupuncture were banned.
But state investigators have continued to uncover fraud rings in Palm Beach County and elsewhere, with cases documented on national cable TV. A much higher percentage of PIP claims now feature “emergency” injuries to capture the full $10,000 benefit, legislators heard.
PIP was designed to reduce litigation, but the courts have become clogged with tens of thousands of PIP lawsuits, many from medical providers suing insurers to get paid, lawmakers learned.
The 2012 cutbacks on benefits certainly seemed to help insurers, though the effect on overall consumer bills was virtually zero. Florida insurers collected an average of $1.3 billion more a year in PIP premiums than they paid out in direct losses between 2013 and 2015, records show.
After all that, PIP rates have increased an average of 25 percent among Florida insurers since the start of 2015, state insurance officials said.
SB 156, sponsored by Sen. Jeff Brandes, R-St. Petersburg, would repeal PIP by 2020 and impose no new requirements. It has been referred to three committees in the legislative session that starts March 7 and ends May 5.
And HB 461, sponsored by Hager, would repeal PIP by 2018 and require $25,000 bodily-injury coverage for one person, and $50,000 for bodily injury to two or more. That bill is now in the House insurance and banking subcommittee.
Requiring bodily-injury coverage would replace one government mandate with another, but a far less burdensome one for the vast majority of drivers. State insurance officials testified last year that more than 90 percent of drivers in Florida, and in Palm Beach County, already buy some level of bodily-injury liability coverage.
Florida’s previous insurance commissioner Kevin McCarty publicly questioned why the PIP requirement was worth keeping at a 2015 industry conference.
“What do you do?” McCarty said. “Here’s an idea. I’m just throwing it out there for discussion. Let’s just repeal PIP and do nothing.”
Seven legislative sessions have tried to fix PIP’s problems with fraud and high premiums for a relatively low benefit: “A $10,000 benefit, really. Is it worth this amount?”
But his successor as commissioner, David Altmaier, pumped the brakes at the Florida Chamber Insurance Summit in Miami earlier this month. He ranked repealing PIP below worker’s compensation and other issues on the priority list he saw legislators tackling.
“Let’s make sure we’re doing it for the right reasons and the expectations are reasonable,” Altmaier said.
For example, drivers savings could be reduced to less than 1 percent if the state requires medical-payments coverage, to cover car-accident injuries, instead of PIP, he said. Some medical groups want the state to impose a med-pay requirement if PIP goes away.
There is a big difference between offering medical-payments coverage as an option for those who want or need it and the state’s forcing drivers to buy it. The latter does nothing to relieve the frustration of drivers who see it as akin to an unjustified double taxation for health insurance they already have.
Asked by The Post outside the meeting why the state would need to require medical-payments coverage and why he would downplay potential driver savings, Altmaier said, “We’re not actually taking an official position on it. We’re saying let’s do it very carefully.”
The net annual consumer savings from dropping PIP would be about $67 or 4.5 percent of the overall car insurance bill in Palm Beach County, according to a $125,000 study state officials commissioned from Pinnacle Actuarial Resources Inc. of Bloomington, Ill. Relief for families would be even bigger in other parts of South Florida and on average statewide.
In Palm Beach Gardens, Natalizio said the state’s requirement makes little sense to him.
“I have Medicare,” he said. “They force me to buy PIP. It’s so ridiculous.”
Want to kill PIP or save it? Tell them
Gov. Rick Scott
Florida Insurance Commissioner David Altmaier
Phone: (850) 413-3140
Florida Senate President Joe Negron
Phone: (850) 487-5229
Florida House Speaker Richard Corcoran
Phone: (850) 717-5000
Florida Senate Banking and Insurance Committee Chair Anitere Flores
Phone: (305) 270-6550
Florida House Insurance and Banking Subcommittee Chair Danny Burgess
Phone: (850) 717-5038
Note: In several cases, email access is available through prompts on websites listed.
What is PIP?
Personal Injury Protection coverage pays to treat injuries of the driver or passengers regardless of who is at fault in an accident. Florida requires $10,000 in PIP coverage. Individual bills vary, but PIP often accounts for 20 percent to 25 percent or more of the total car insurance premium despite its relatively low required coverage amount.