Skip to main content
Business Observer Friday, Jun. 22, 2012 8 years ago

Capitol Chatter: June 22

The weekly roundup of what's happening in government and how it affects business.
by: Rod Thomson Staff Writer

No-fault law savings to be measured
After a battle lasting several years, Florida lawmakers feel like they fixed the state's soaring no-fault drivers insurance law.
Now they're going to pay $150,000 to find out if a consultant thinks they did.

The program requires all drivers to purchase no-fault car insurance, also known as PIP for personal injury protection, to provide up to $10,000 in immediate medical coverage to bridge the first weeks and sometimes more when insurance companies are determining payments but medical care is required.

But the law has been plagued with widespread fraud that has been driving up premium costs levied by insurance companies to try to keep up with soaring claims.

Proponents used statistics by the National Insurance Crime Bureau, which estimated that no-fault fraud costs auto policyholders nearly $1 billion in premiums — about $100 per two-car household.

But instead of simply waiting to see what the savings will actually be, a provision requiring the consulting study was included in the waning days of the legislative session as lawmakers tried to get the reforms passed.

So the Florida Office of Insurance Regulation signed a $150,000 contract with Pinnacle Actuarial Resources to study the full impact of the law's changes and determine how much consumers will save.

It was a tough fight, but a top priority for Gov. Rick Scott and the Legislature because of the escalating costs. From 2008 to 2010, PIP claims paid out increased from $1.43 billion to $2.37 billion, or 70%. From 2006-2010, the number of PIP lawsuits increased 387%. These numbers drove enormous PIP insurance premiums.

The new legislation continues to require Florida drivers to carry $10,000 of no-fault insurance coverage, but lowers attorney fees and cracks down on perhaps thousands of PIP clinics that had popped up around the state. It also banned PIP payments to massage companies and limited payments for non-emergency treatment — an area dominated by chiropractors — to $2,500.

Citizens insurance makes surprise hire
Citizens Property Insurance Corporation desperately needs to trim its policies. Sharply.

Which is why the Citizens' board unanimously chose to hire Barry Gilway to lead the state-run insurer. Gilway, president and CEO of Seattle-based private insurer Mattei Insurance Services, told board members that his experience in downsizing insurance companies fits perfectly with the board's desire to shrink Citizens.

The move surprised some insiders in Tallahassee, who thought that interim Citizens president and former state lawmaker Tom Grady would get the nod. Grady did not even make the final cut. That was down to Gilway and another out-of-state insurance executive — oddly enough, the head of the California Earthquake Authority.

Grady had knowledge of the history of Citizens and the state's hurricane years, plus he knew all of the players in Tallahassee and around the state.

But for those who think there is too much of the good-ol'-boy network in Florida, choosing an outsider with downsizing experience should be encouraging. Grady is a personal friend of Gov. Rick Scott, yet he didn't even make it to the finals.

Gilroy has built and shrunk companies. But his time overseeing the restructuring of Zurich North American/Canada operations, including reducing the company from 2,500 employees to 1,500, was key for several board members.

Gilway said he supports increasing premiums more than the legislative 10% cap as a necessary way for private insurance companies to compete with the state-run insurer and thus reduce Citizens' 1.5 million policies.

Gov. Rick Scott gave the obligatory thank you to Grady, but then took the opportunity to again point out Citizens' exposure for all Floridians.

“Citizens is too big,” Scott said in a statement. “No matter how you crunch numbers, the experts acknowledge that Citizens has grown too big, and doesn't have enough money to cover its policyholders in the case of a major hurricane, let alone the risk of getting hit more than once this season.”

Scott said a bad hurricane season places every Floridian at risk, not just Citizen's policyholders. “Every policyholder in the state, even those who only have auto insurance policies, will also be assessed...”

Tampa Bay state rep gets a Legg up
State Rep. John Legg, R-New Port Richey, continues to rack up strong endorsements in a primary race for the state Senate once crowded with Republican hopefuls.

Legg was backed by five Senate Republicans who are either in line to be Senate president or are in the running for out years. The group endorsement was done at the request of incoming Senate President Don Gaetz, R-Niceville, and includes such heavyweights as Senate Majority Leader Andy Gardiner, R-Orlando, who's slated to take over the chamber after Gaetz, in 2014; and three contenders for the office in 2015: Sen. Jack Latvala, R-Clearwater; Sen. John Thrasher, R-St. Augustine; and Sen. Joe Negron, R-Stuart.

The statement from the five men says confidently of Legg: “He will enter the Senate as a respected, powerful voice for the Tampa Bay area.”
Legg was already endorsed by incoming House Speaker Will Weatherford, R-Wesley Chapel.

The move is full of insider intrigue. Incumbent Sen. Jim Norman, a Tampa Republican who was expected to support Latvala as Senate president, withdrew from the race last week amid allegations about personal financial dealings. But Legg is still facing former House member, Rob Wallace, and security consultant John Korsak in the primary.

But considering the absence of Norman and the array of powerful Republican backers, Legg must be considered the frontrunner and should be able to attract considerable amounts of funding.

Related Stories