Proposed legislation targets auto insurance, PIP payments

The Florida Legislature is once again considering changes to the state’s no-fault auto insurance law. The focus of at least one proposal is limiting attorney fees in personal injury protection (PIP) suits. Insurance companies say the current law encourages high lawyer fees in even low-value injury suits. Personal injury attorneys counter that the measure will limit accident victims’ ability to go to court to demand their benefits.

The lawyers groups say the insurance companies will use any fee limit as a way to delay paying legitimate claims. In fact, they say, the costs of lawsuits have gone up in large part because insurers are denying or delaying claims. This legislation would provide another incentive to do so — insurers, with no limit to the amount they can spend to fight a claim, will have an unfair advantage over their policyholders.

Florida law mandates that all drivers carry PIP insurance to cover the costs (up to $10,000) of medical care following a car accident. In the past two years, the top 10 auto insurers in the state have increased rates as much as 83 percent, and they’re saying that PIP lawsuits are one of the reasons.

But PIP claims only go to litigation if there is an unreasonable denial or delay in processing the claim. Insurance companies in Broward County reported a 137 percent increase in PIP claims from 2008 to 2010, but they offered no further analysis. In response to the Legislature’s interest in the issue, the Office of Insurance Regulation will survey insurers about costs associated with PIP claims and litigation during this session.

The one thing both camps agree on is that the overriding goal is to lower consumers’ insurance premiums.

Source: Orlando Sentinel, “Florida lawmakers seek to reduce lawsuits over auto insurance disputes,” 01/22/11

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