Chief Financial Officer Jeff Atwater

If Florida lawmakers can’t fix the state’s skyrocketing, fraud-ridden personal injury protection (PIP) insurance system, it should be abolished, Chief Financial Officer Jeff Atwater said Tuesday.

“It’s my thought that in this session (2012), if we can’t come up with a package we believe will be able to arrest the growth rate of premiums on the people of Florida ... that we need to consider the alternative,” Atwater said after a Cabinet meeting.

State statutes require all vehicle owners to carry a minimum of $10,000 of PIP insurance. Florida and nine other states have a “no fault” system requiring such insurance, but 38 other states have a tort system where auto accident claims are managed by the courts.

Rising instances of PIP claims, driven in large part by fraud, are causing insurance companies to seek larger premiums from customers. While the number of drivers and the number of per capita crashes has remained relatively stable over the past five years, the amount of PIP claims paid has increased by 70 percent in the past two years, rising from $1.43 billion in 2008 to $2.37 billion in 2010.

Office of Insurance Regulation Commissioner Kevin McCarty told the Cabinet that reforms need to be made to the system, but that previous attempts at reform have only pushed those attempting to defraud insurers to other “weak points” in the system. He acknowledged some of the increase in costs over the last two years was due to health-care cost inflation, but said it was mainly due to fraud.

“Some of that is attributable to increased benefit costs, but not 70 percent,” McCarty said.

That led Atwater to float the possibility of returning to a tort system as other states have.

“My hope would be that if they can’t feel like they’re coming to a conclusion on what’s the best, they’ll look at a sunset date or they’ll look at the alternative this very session,” Atwater said.

Previous efforts to reform PIP met with frustration. After a grand jury report in 2000 on the subject, lawmakers attempted to clamp down on fraud, mandating clinic licenses and restricting third-party access to crash reports. Yet the PIP claims and costs continue to escalate.

“It’s like whack-a-mole -- you close it down one place and it pops up someplace else,” McCarty said.

Gov. Rick Scott said he wants to see McCarty "hash out" a plan to reform PIP once and for all with lawmakers, but didn’t say whether mandatory PIP insurance should be scrapped in favor of a tort system, or whether drivers should be required to carry bodily harm insurance if the PIP mandate is repealed.

“The commissioner (McCarty) has been here a long time, he knows how to fix this. I think he needs to sit down with the Legislature and come back with something that can pass so we can get it fixed,” Scott said.

Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.