TALLAHASSEE, Fla., March 13 – Insurance associations are pushing the Florida Legislature to allow the states no-fault system to sunset, contending that fraud and abuse have rendered the system unworkable.

The National Association of Mutual Insurance Companies (NAMIC) Liz Reynolds, state affairs manager for the Southeastern region, said, It is clear that the no-fault system isnt working in Florida due to fraud, waste, and abuse. Thats why NAMIC strongly supports the no-fault sunset.

The states no-fault system was enacted in the mid-1970s and requires those injured in automobile accidents to pay for their own injuries, regardless of who is at fault. But the system has resulted in Florida having some of the highest insurance rates in the country, with the average family paying about $250 more for auto insurance than it should, according to NAMIC.

The association maintains that, rather than taking care of medical bills for injured motorists, Floridas no-fault insurance:

Forces drivers to pay 20 percent of their medical expense in an auto accident up to $2,000, even when the accident wasnt their fault, which drives up insurance rates for good drivers;

Results in drivers with health insurance paying for coverage twice over;

Allows unscrupulous chiropractors to charge the no-fault system twice what they charge others for the same services;

Permits personal injury lawyers to game the system, filing lawsuits over trivial disputes in order to rack-up large attorney fees.

NAMIC was joined by the Property Casualty Insurers Association of America (PCI) in calling for the sunset. PCI said that despite many reforms to the system over the years, persistent problems with personal injury protection (PIP) claims fraud and abuse continues to force consumers to pay more for insurance than they should.

Citing a recent Insurance Research Council study, called Florida Auto Injury Insurance Claim Environment, 2007 Final Report, PCI pointed to trends toward rapidly increasing medical costs, less serious injuries, explosive growth in the utilization of chiropractic services, and extensive attorney involvement which helps explain why the current system is so costly.

In previous years PCI supported comprehensive reform of the system, but, unfortunately, such efforts failed, said William Stander, assistant vice president and regional manager for PCI. As a result, it would be more beneficial for consumers if Florida joined the other 38 states that operate tort or fault-based insurance systems. The sunset of no-fault will reduce rates and consumers could save an average of $250 or more per year. This change would not only leave consumers with more dollars in their pockets, but also provide more options regarding how they spend their insurance dollars and greater ability to purchase the insurance products that best fit their individual circumstances.

The system is scheduled to sunset in October of this year. Last year, PCI noted a bill that would have moved the sunset date to 2009 was vetoed by then-Governor Jeb Bush. Speaking for PCI, which supported the veto, Stander said, That bill did absolutely nothing other than perpetuate a system that everyone agrees, is riddled with fraud and abuse. PCI called for a medical fee schedule and utilization controls, attorneys fee reform, strengthening the verbal threshold, bad faith reform and many other important revisions. However, we were very clear then and continue to hold the position that simply re-enacting no-fault without making significant reforms would only perpetuate the problems. Due to the costs involved in the no-fault system, Florida drivers currently pay among the highest insurance premiums in the country. Maintaining the status quo is not the answer.

A story which appeared in the Bradenton Herald notes that doctors, hospitals, and trial lawyers are opposed to the sunset without replacing it with another mandatory medical coverage. The story also states, Public health officials warn that outright elimination of the no-fault system could create a financial crisis for the states public hospitals, where indigent and uninsured drivers that no longer had mandatory personal injury protection would be treated.