Florida will likely keep PIP for at least the next 18 months. Here is what to do.

Florida will likely keep PIP for at least the next 18 because Ron DeSantis vetoed the bill that would have repealed PIP.

This means that the house and senate would need to override his veto for this bill to go in effect. Because the Florida legislature is out of session, and is unlikely to have a special session because of this particular veto, the legislature cannot address PIP concerns until next winter, and unlikely will they make any law that does not give insurance companies time to prepare. So, I believe the earliest we could see any type of change to auto insurance law is December 31, 2022.

This means that FL PIP, in its current form, will be in effect for at least the next 18 months.

What should you do?

Contact Your Legislative Representatives

If you are a citizen of Florida, I urge you you to contact your legislative representatives and demand attorney fee reforms with regards to PIP. Explain to the representatives that the biggest problem with auto insurance is that a claimant can assign benefits to a third party (such as a medical clinic) and that this clinic can sue an insurance company and collect one-way attorney fees. For example, Person A is in a car crash. Person A can go to Medical Clinic B. Person A signs a form allowing assignment of benefits to Medical Clinic B. Medical Clinic B then assigns the case to Lawyer C. Lawyer C takes all PIP claims from Clinic B and files individual lawsuits on EACH claim. It costs the lawyer very little to do this; he/she just uses a template for each claim, only changing a few details for each lawsuits. However, if Lawyer C wins any of the claims, he/she can claim attorney fees for the claim. If your legislative representatives want to understand further, point out to them that the PIP statute itself contemplates assignment of benefits, as seen at Florida section 627.736 (10)-b-1, and that once assigned, if the lawyer (suing on behalf of the medical clinic) wins, he/she receives fees per 627.428, but if the insurer wins, it receives nothing and still bears the cost of defense.

Explain that the easiest way to bring premiums down for auto insurance is for 627.428 to be amended to say “this section does not apply to attorney fees where the attorney represents a third party who received the claim via an assignment of benefits.” Not only would this lower auto premiums but, such a statute would dramatically improve the homeowners situation as well. However, if they want to limit it just to automobile claims they could pass “this section does not apply to claims brought under PIP coverage when benefits have been assigned to third party vendors, such as medical clinics, supplying services to the claimant.”

Explain to your representative that Florida had 400k of these type of lawsuits in 2020 and will likely have more than 500k in 2021.

If You Work for an Insurance Carrier, Consider These Steps

a) Review your incoming claims for patterns of abusive lawsuit behavior. We have a free tool available for this. It can rate an incoming claim for this very behavior based on the NPI of the PIP bill. We will gladly give you a username for free, and there is no expiration date or hidden fees. Determine if there are clinics that are abusing the process to make an unusual number of claims against your carrier, and whether these clinics using the threat of lawsuits to coerce you into paying questionable claims.

b) For clinics who appear to be abusing the process, consider other information you have about the incoming claim and evaluate whether 627.736 (6)-g applies. This statute says:

An insured seeking benefits under ss. 627.730–627.7405, including an omnibus insured, must comply with the terms of the policy, which include, but are not limited to, submitting to an examination under oath. The scope of questioning during the examination under oath is limited to relevant information or information that could reasonably be expected to lead to relevant information. Compliance with this paragraph is a condition precedent to receiving benefits. An insurer that, as a general business practice as determined by the office, requests an examination under oath of an insured or an omnibus insured without a reasonable basis is subject to s. 626.9541.

Based on the fact pattern of the individual claim, coupled with the activity of the clinic, it may be prudent for you to withhold payments until you are able to have an examination under oath with the claimant. I have found that in some cases, the claimant will actually disavow the billed medical services saying that he/she was unaware that the clinic billed for all of that activity. This allows you to withhold payments and also helps you build a criminal case against the clinic.

We have an affordable commercial tool, for which we offer free usage for evaluation (this is a beefed up version of the free tool discussed above) which can help you determine if a claim is a good candidate for an examination under oath. I have seen excellent results from this process.

Closing Thoughts

FL PIP is currently rewarding trial lawyers and fraudsters. I understand why the legislature wanted to get rid of PIP. I also understand and agree with the governor’s assessment that the new bill would have been worse than the current law. For Florida’s rates to drop, either 1) the law needs to stop rewarding lawyers via one-way attorney fees and/or 2) insurance carriers need to improve their methods for preventing fraudulent payments.

Unless carriers are actually willing to withhold payments while they conduct examinations under oath, rates will not come down; for every fraudulent clinic owner that is put in jail, another one appears and fraudulent claims continue to be paid.

I am not exaggerating the number of lawsuits in Florida

Question: Aren’t you exaggerating the impact of lawsuits in Florida versus insurance carriers?

Answer: NO!!!

Check this out.

These are the numbers of lawsuits filed against insurance companies:

Served Year# Lawsuits
2016 192,598
2017 229,188
2018 278,739
2019 322,171
2020 400,943
2021 177,554
Total 1,601,193
2021 Projected (even with no law change) 532,662

These are the top companies they have filed against:

Defendant# Lawsuits
GEICO 266,899
Progressive 215,983
State Farm 163,164
All State71,348
Citizens Property Insurance Corporation 52,372
USAA 51,252
Universal Property & Casualty Insurance Company 38,018
Infinity Auto Insurance Company34,022
Windhaven Insurance Company*33,568
Blue Cross And Blue Shield Of Florida, Inc 30,794
Direct General Insurance Company28,290
Ocean Harbor Casualty Insurance Company25,024
Liberty Mutual Insurance Company 20,263
Infinity 18,261
United Services Automobile Association16,378
United Automobile Insurance Company16,161
Heritage Property & Casualty Insurance Company 15,679
Security National Insurance Company 13,891
United Property & Casualty Insurance Company 13,353
Tower Hill12,467

* I was a president of the company with an asterisk.

All this data is taken directly from the government’s website.

Without naming names, I can say that the lawyer who filed the most, filed 173,303 lawsuits (that is not a typo) during this time period. (Why don’t I name names? Well, these are the kinds of lawyers who file 20k lawsuits a year! Do I want them to sue me too?)

Now that you see the magnitude of the lawsuit situation, perhaps you understand why I say that the the laws favor the fraudsters. Of course there are legitimate lawsuits against insurance companies, but do you really believe the insurers of Florida are so bad that this magnitude of lawsuits was warranted? Or, do you now understand what I mean when I say that the insurers are so afraid of lawsuits that they allow hundreds of thousands of fake claims to go through their system simply to avoid the threat of lawsuit?

If your question is: Why does Florida have such high auto insurance rates? I think the stats above explain the situation. It is not the fault of the drivers, the insurance companies, or the weather of Florida. It is actually the fault of the laws that encourage this volume of lawsuits which is about to become worse with the upcoming changes.

To reiterate my concerns about this bill:

1st: The bill that is about to go to law makes no changes to the law on the books that encourages the lawsuits. The law states:

627.428(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had

2nd: The bill that is about to go into law actually affirmatively states:

The claimant owes no duty to the insured or the insurer, and the duties of the claimant’s attorney are owed solely to their client. The claimant and the claimant’s attorneys do not have a duty to comply with this subsection.

3rd: The bill that is about to go into law actually eliminates some fraud prevention techniques that insurers have and also eliminates medical fee guidelines.

Given what I just showed you, what is your guess as to how many lawsuits will be in Florida in 2022?

Florida house and senate set to pass bill which likely increases fraud in auto insurance

Florida is about to change its auto insurance laws; this will likely make fraud go up!

The State of Florida is poised to change its auto insurance laws via Senate Bill 54. It was passed by overwhelming majorities in the Florida senate and house.

The main problem is that it is unclear what this bill will do.

The bill is 124 pages long with 3754 lines of information. Additionally, on line 259 of 3754, it strikes from law about 30 pages related to no-fault insurance. Therefore, to fully understand the bill you have to read these additional pages and imagine them with a line drawn through them. So, to comprehend the bill, you should read about 150 pages of insurance law.

Most people don’t have an interest in reading 150 pages of insurance law, and, even if they did read it, they may not have the background to understand what the law changes mean.

In 2017-2020 I was a president of a Florida top ten auto insurance company. I also went to law school and passed the bar (I don’t practice law). And I am a practicing actuary who is a member of two actuarial professional organizations. Even with this background, it took me all day to read the bill and digest it, and I am not 100% sure I understand all the implications even if it were to remain in the form I read. It hasn’t stayed in that form; it has already been amended twice since I read it. If you want to track the different forms, click here, and look at floor amendments.

Even though some legislative representatives who voted for this law may not understand what they are passing into law (the Florida legislature ends regular session on Friday), it does appear that some form of this bill will become law. Even though it is unclear what form the bill will take.

In the final hours of the legislature, changes have been made to make medical payments coverage (“med pay”) be mandatory, then changed to not mandatory but must be offered, then changed to have death benefits be mandatory but medical payment coverage no longer be mandatory. Some forms of this bill have different bodily injury (“BI”) limits based on the income of the customer!

How does such a bill come about?

First, you may be wondering how such a large, complicated bill becomes law with few citizens asking for it and many legislative representatives not understanding it. The key politicians pushing the bill make no mention of it on their websites as a priority, for example. They did not run on making these changes.

I don’t know for sure how this type of bill happens. I was not there. I don’t even reside in Florida. But based on other legislative activity for which I did have some inside knowledge (in a different state), I would guess that this bill came together based on a sincere desire by lawmakers to combat fraud and on proposals by the largest companies. The big law firms want to have every accident be a potential lawsuit and every lawsuit have potential bad faith settlements; the hospitals want to have quick and certain payments (they lobbied for the med pay, but who knows if this will be in the final bill); and the largest insurance carriers are not concerned about increased costs because they just pass the costs onto customers. From the point of view of the largest insurance carriers, the more complicated the insurance law, the less potential competition they have, and the easier it is for them to maintain market dominance. If the insurance premium is at a higher rate, it is easier for them to turn a profit. The main concern a big insurance company has is whether a bad faith settlement includes punitive damages which are tied to the size of the carrier. This bill protects them from that issue.

The public on the other hand, ostensibly wants lower premium charges and higher coverage limits.

An additional constituency was not a part of the discussion. They are the fraudsters of Florida, and there are lots of them. They cause huge costs to the system that are passed on to the consumer. The fraudsters were not a part of the conversation, and it is unknown to me if people who work to stop the fraudsters were a part of the conversation either.

Without further ado, let me explain the bill changes, and then I will give my opinion about the consequences.

Personal injury protection as abolished

As discussed above, line 259 abolishes personal injury protection (“PIP”), otherwise known as no-fault insurance. This includes abolition of the fee guidelines and other procedures that have been built up over the last 50 years. This means that in Florida there will be no legal guidance regarding how much of a medical bill should be reimbursed. While working as a workers’ comp actuary, I saw massive issues associated with property and casualty carriers trying to navigate a no-fee-guideline-based health care claim. Unlike health insurance providers, P&C carriers are not experts at negotiating with doctors and they end up being easy targets for fraudsters.

Med pay coverage is provided, and in some incarnations of the bill, made mandatory

Lines 2449-2547 (of the version of the bill that passed the senate) establish what med pay is. Many other lines adopt PIP like language for med pay, such as lines 1260-1702. In general med pay will function like PIP for the first $5k of medical payments except:

  • There is no fee guideline, so doctors can charge what they want.
  • The insurer no longer has statutory methods of investigation such as examinations under oath.
  • The med payments function independently of lawsuits and do not bar third-party lawsuits from occurring. The lawsuits can begin at the same time medical payment claims are being made.
  • Medical establishments (including fraudster medical establishments) can sue insurance companies for late payments.
  • Insurance companies only have one cause of action against the medical companies, and that is fraud.
  • Insurance companies can subrogate each other for med payments based on fault related to the accident but can only do so if the insured (meaning all payments to medical clinics, including potential fraudsters) is already made whole by the other coverages.

BI (bodily injury) coverage is now mandatory, at a limit of 25k/50k

BI is the coverage that protects you from lawsuits from other drivers who claim you are at fault in the accident. This coverage covers bodily injury, pain, and suffering. Prior to this, BI was an optional coverage. These changes can be seen at lines 751-788 and again at lines 2640-2645.

The state codifies “bad faith” lawsuits.

Bad faith lawsuits are filed when a plaintiff claims the insurance company’s behavior was so egregious that damages should be awarded beyond the policy limits of insurance. For example, your policy might have $100k coverage, but because of bad faith the insurer owes $1 million. This concept may make sense when an insurance company has a pattern of egregious behavior, but the legal concept has devolved to a game of gotcha, where lawyers make unreasonable demands and if these demands are not completely complied with, the insurer is said to have committed “bad faith”. I personally participated in a situation in Florida where our company was compelled to pay out a million-dollar claim, even though our limit was only $10k, because a payment was made one day late.

The bill codifies this concept for first party lawsuits at 1703-1753 and for third party lawsuits in lines 1754 – 2073. There are a few important features.

  • It imposes no duty of good faith on the third-party plaintiff. Lines 2006 through 2010 read: “The claimant owes no duty to the insured or the insurer, and the duties of the claimant’s attorney are owed solely to their client. The claimant and the claimant’s attorneys do not have a duty to comply with this subsection.”
  • It allows no punitive damages on third party claims (see line 2073). (This is a very good cost containment measure and particularly important to large insurers who would otherwise see their damages increase because they are larger carriers.)
  • It has 18 pages of rules about the timing and manner of conducting claims handling, the violation of which can be considered as evidence of bad faith. It sort of creates a rule book for how the game of bad faith will be played.

What does all of this mean?

It is hard to say. Most of the big actors, like big law firms, insurance companies, and hospitals, are not fraudsters. This bill seems written to please them and most of them will act honorably. But will this bill actually halt the root cause of high premiums—fraudulent claims and excess litigation? Not likely. Here’s why.

The fraud and excess can basically be divided into two categories.

  1. Numerous fake or exaggerated small accidents which receive payments in the $5k to $10k range. In Florida, these are VERY common, and fraudsters make hundreds of millions of dollars off of these claims. This is what is driving up the cost in Florida. Either with or without mandatory med pay, there is nothing in this bill to address the rampant small dollar fraud ongoing in Florida. The new law will increase the number of nuisance small claims, especially when considering that each of these new small claims could turn into a bad faith claim. Additionally, this bill takes away some of the tools insurance carriers have to fight this type of fraud.
  2. Large claim settlements. These types of claims are made when someone greatly exaggerates the harm of a real or fake claim, and often uses legal mechanisms to inflate the award. These are the $1 million verdicts. At the present time, these are not what is driving the high costs in Florida but soon they will be. By having everyone carry BI, and removing medical payment exhaustion as a prerequisite, it is a near certainty that more time-limited demands for full limit claims will be made. Many more full payment limits will be made to avoid the legal setup of “bad faith” which is now codified and heavily based on time demands. Large carriers have the financial cushion to absorb this while they increase rates, but small carriers may not and will be forced to close.

So, Florida insurers will be paying more because the two activities described above will become more common, not less.

So what have we solved?

I’m not sure. I guess lawmakers will have the ability to say “We abolished PIP. We wanted to do something rather than nothing. This is what large law firms, large hospitals, and large insurance companies told us to do.” Note, I have no inside knowledge of who contributed to this bill. It is very possible that there was no lobbying activity going on. My suspicions are based on other life experiences, which suggest that either through the actions of lobbyist or just based on friendship among lawmakers and big businesses, that laws tend to address big business needs without considering the root issues. It is a fact that the largest businesses are being taken care of with this bill (large law firms, large hospitals, and large insurance carriers), and no particular measures are being put in place to combat fraud.

There is no reason to believe fraud will decrease because of this bill, but there is every reason to believe that there will be lawyer billboards everywhere!

What are things that could have been done instead?

Small medical claims

Weirdly, the already existing PIP statute seems better than the med pay replacement. It has a fee guideline, and it prevents lawsuits while the medical payments are being exhausted.

So, rather than replace PIP, why not reform it?

The big problem is lawsuits related to assignment of benefits. This occurs when a claimant receives services from a medical clinic or other vendor and signs a document allowing that clinic or business to sue the insurance company. These clinics or businesses have received “assigned benefits” and can sue insurance companies. If they win, they receive lawyer fees, and if they lose, there are no consequences. This has created an entire industry with tens of thousands of these types of lawsuits being filed per month. Insurance companies do not know how to deal with them; if they fight them and win, they still have spent considerable money on attorney fees; if they fight them and lose, they now must pay the full claim and attorney fees (on top of the fees they already paid their own attorneys). Many insurance companies simply surrender and pay whatever medical bills or other fees are demanded without question. This surrender has allowed a massive industry of fraudsters to grow in Florida, whereby fraudsters use assignment of benefits to bill for services never provided. It is a volume game. The fraudsters send so many small claims that they end up making hundreds of millions of dollars off of these small, fraudulent claims.

I would have proposed this amendment:

“For any lawsuit brought as an assignment of benefits, the defeated party must pay the prevailing party’s court costs.”

This would drastically change the situation in Florida. Legitimate clinics and businesses would continue to do legitimate business, but fraudsters would now face the consequences of lawyer fees for their frivolous claims.

In the assignment of benefits situation, the original injured party (the person in the car crash) is already whole. He or she has already been treated. It is only a question of whether or how much the insurance company should pay the doctor or other vendor. These are two businesses fighting over fees, yet the current law makes one side fight with its hand tied behind its back. If this one-way attorney situation were removed, fraud would shrink in Florida.

If one-way fees for assignment of benefit situations were eliminated in Florida for homeowners claims it would likewise reduce premiums for homeowners insurance. Here is a proposal from Florida experts related to homeowners:

Bad faith—large claims

With regards to bad faith, here are some ideas from an article in the Florida bar review:

As a condition precedent to bringing a civil action under this subsection:

The insured/claimant must establish it acted in good faith in attempting to settle the claim by:

1. Making a timely and specific settlement demand;

2. Allowing a reasonable time for acceptance;

3. Identifying the type of release of liability the insured/claimant is prepared to provide to the insurer and insured(s); and

4. Cooperating fully in the timely submission of medical bills, accident reports, and other information needed by the insurer to investigate the claim.

What is unreasonable about this? It came up in my first Internet search. I assume the legislature has seen this article. Why do they not only ignore it, but actually codify against it?

It should also be noted that many states don’t even allow bad faith lawsuits on third party claims. Why is it so important to allow it in Florida?

And my own personal solution: why not allow insurance companies, as a measure of good faith, to pay all medical and pain and suffering to date, while they continue to investigate the accident? Why must the claim be completely and finally settled in a short period of time when individuals often do not know how seriously injured they really are? Time pressured demands for full and final settlement are just a negotiation tactic and can lead to bad decisions. (Ironically, this is similar to the time pressure to pass Senate Bill 54.)

I believe that if these types of reforms were in place with regards to bad faith, that a mandatory BI coverage could be put in place and perhaps costs would even go down.


I feel sorry for the consumers of Florida who are going to see their rates go up. Perhaps some of the measures I discuss above can be considered in two years. It is strange to me to see lawmakers whom I respect pushing through such a bill in such a hasty manner. It is strange to me that they would not go for small, obvious tweaks that would disadvantage fraudsters and not harm the public.

In the meantime, I am in the process of altering our “PIP Radar” software to make it “Claims Radar” and incorporate the changes that will come. This is currently hard to do, though, because the bill seems to change every few days. We’ll have to wait, along with other elected representatives, until the bill is passed to see what is in it. 😊