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OIR report: No-fault auto insurance reforms causing rates to drop

The reforms to no-fault auto insurance -- formally called personal injury protection, or PIP -- passed during the 2012 legislative session are saving Florida motorists money, according to a report from the Office of Insurance Regulation. Because PIP is just a small fraction of auto insurance policies, the savings are slight, but they still pose a reversal of a yearslong trend of rate increases and could temper calls to eliminate PIP all together.

Here is more from the News Service of Florida:

Auto insurance costs will come down slightly, more than a year after reforms aimed at reducing fraud in the state's "no-fault" auto insurance system were implemented, according to a preliminary analysis of rates by the state.

The Office of Insurance Regulation announced Wednesday that Personal Injury Protection coverage is projected to drop an average of 13.2 percent based upon on a review of 20 insurers that provide coverage for more than 75 percent of the Florida market.

The result of the decrease would be an overall 1.2 percent reduction in rates, because "no-fault" accounts for a small portion of auto coverage, the state insurance regulatory office stated in a release.

A spokesman for Chief Financial Officer Jeff Atwater, who was a proponent of the 2012 law, called the report a "positive trend" for consumers.

"PIP fraud remains a criminal activity that we are vigilantly fighting, but the positive progress being made suggests that the recent PIP reforms should be allowed to continue working to help improve Florida's auto insurance market," Atwater spokesman Chris Cate said in an email.

According to OIR, the drop is in line with the projections from legislation (HB 119) that targeted what officials said had become a $1 billion overall increase in rates due to fraud.

"The estimated average statewide savings reflect a positive trend in comparison to 2011, when 86 percent of auto filings were for proposed increases in 'no-fault' premiums -- the vast majority for double digit increases," the study declared.

The report is expected to further temper efforts to dump the requirement that Floridians purchase "no-fault" coverage and instead allow them to carry just bodily injury coverage, which a vast majority of motorists in Florida already purchase.

Senate Banking and Insurance Chairman David Simmons, R-Altamonte Springs, has been moving towards such legislation, but his effort was slowed after the 1st District Court of Appeal in Tallahassee rule on Oct. 23 that a challenge to the 2012 law needed to offer a "factual" motorist who is harmed by the law.

The challenge to the law presented an acupuncturist, a chiropractor, two massage therapists, along with a hypothetical "John Doe" representing health-care providers and a hypothetical "Jane Doe" representing motorists.

The case has been appealed to the Florida Supreme Court.

Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, said the reduction in rates could have been even better, but some insurers may have been unsure how to proceed because of the lawsuit.

"That case causes mass confusion in the marketplace," Brown said.

Still, Brown expects the debate to continue over the future of "no-fault" as the full impact of the new law may not be known until later this year, when the results of the second round of premium filings take hold.

"When these reforms are fully implemented, then we'll have a better idea of what the true impact will be from the changes in 2012," Brown said.

Staff analysis of the 2012 legislation projected a 13.2 percent drop in rates after October 2012 rate filings based upon the new law. The savings are projected to be between 14 percent and 24.6 percent when filings are calculated from the Jan. 1, 2014 filings.

Leading the charge in the rate reductions were Progressive Select Insurance and Progressive American Insurance, with reductions in "no-fault" coverage by 34.6 percent and 32.3 percent, respectively, with overall auto coverage down 15 percent and 11.7 percent.

Geico General Insurance Co., the state second largest auto insurance provider, had a 25 percent drop in "no-fault" coverage, while auto coverage grew 0.6 percent.

The state's largest auto insurance provider, State Farm Mutual Auto Insurance Co., had its "no-fault" coverage down 1.7 percent, while overall auto coverage decreased 3.3 percent.

Not every company submitted decreases in "no-fault."

A 58.1 percent increase in "no-fault" was filed by 21st Century Centennial Insurance, with overall auto premiums going up 26.9 percent, and Esurance Property & Casualty Insurance has "no-fault" increasing 20.9 percent with overall rates up 17 percent.

In the House, Rep. Carlos Trujillo, R-Miami, has filed two measures (HB 267 and HB 269) directed at repealing the "Florida Motor Vehicle No-Fault Law" and allowing Floridians to carry only bodily injury coverage.

Neither bill has been reviewed by a committee.

Comments

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ed jenkins

The citizens greatly appreciate this reform and the lower rates it has produced. They would like to see this replicated across all areas of insurance by reducing lawsuits and lawyer fees that only increase insurance rates.

Ted Roberts

Couldn't agree more ,Ed. I think our wise and farsighted legislature, is just the group to determine who may or may not have access to the courts of our State. I bet insurance rates would plummet if we could only make sure to limit that pesky Seventh Amendment from cutting into the profits of All State, Geico, et al.

ed jenkins

As the somewhat wise Ted agrees rates would plummet under these conditions and while the profit margins of the insurance companies would remain the same, his lack of understanding of economics may not allow him to know that their dollars of profit would plummet proportionally with rates since they are simply pass through entities which earn the same margins over a cycle no matter what their costs are.

Mia

So I saved $30 on my car insurance to be denied $7500 in PIP benefits that I paid for. This legislation had nothing to do with fraud, but discrimination of Chiropractors , Acupuncture Physicians and Massage Therapists. Crafted by politicians with pockets lined from the insurance industry and it looks like they are ready to do it again.

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