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Lower Rates Yet to Appear in PIP Filings

August 2, 2012 - 6:00pm

State legislative leaders say it remains too early to judge if this years auto insurance overhaul will bring anticipated savings to Florida motorists, because filings since the new law was made may not offer much hope of reform.

As of July 25, only a single rate filing to the state Office of Insurance Regulation has been approved that reflects any savings that could be linked with House Bill 119.

But Office of Insurance Regulation officials stated that other filings pending will include lower rates.

"Similar to current pending filings that address HB 119 savings, this filing demonstrates a significant change in the cost trajectory of PIP premiums," the office reported.

The weekly report from the office to Gov. Rick Scott for the week ending July 26 -- the most recent report currently available -- states that 111 filings have been made by insurance companies regarding the new law that went into effect July 1.

Of the overall filings, 89 have been approved that address the medical fee schedule in the bill.Another 13 have been withdrawn.

A draft of the report due Sept. 15 on HB 119 -- prepared by Pinnacle Actuarial Resources, Inc. -- predicts preliminary savings of 12 percent to 20 percent.

Jack McDermott, director of communications, for the Florida Office of Insurance Regulation, noted that the report is not final, additional data is needed and that the savings is based only on the PIP portion of an individuals premium.

Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, expressed concern about the draft report and cautioned people to let the law take effect before drawing conclusions.

PCI has some concerns with the studys conclusions and the fact that it is based on a law which does not fully take effect until next year and may be interpreted by a court differently than the Florida Legislature intended, Brown stated in a release.

However, we believe this is a good start in discussing what the 2012 PIP legislation, when fully in place, could potentially accomplish in reducing fraud.

Chief Financial Officer Jeff Atwater, who along with Gov. Rick Scott was a champion of the effort to reduce the fraud that had driven up premiums, has said he doesnt expect the rate to decline until 2013.

Companies must reduce rates by at least 10 percent Oct. 1 or demonstrate to OIR why they cannot. A second filing, where rates are expected to drop 25 percent, is Jan. 1, 2014, when the new law will have been implemented.

Because of the timeframe, legislators arent expected to again have to address major changes to PIP in the 2013 session.

There may be a PIP glitch bill next year, Sam Miller, executive vice president of the Florida Insurance Council, the state's largest insurance company trade association, responded when asked last month what issues will arise next year.

Major provisions in the House bill, including the caps on attorney fee reform, did not pass and the industry still thinks those are important. It probably is unlikely anything other than a PIP glitch bill will come up next session.

Created in 1972 to ensure that anyone injured in an auto accident would be able to pay for treatment regardless of who was at fault, costs have grown $1.4 billion since 2008. State officials have blamed fraud in the form of staged accidents and receptive health-care providers for the bulk of the increase in premiums.

The new law is also directed at reducing fraud by dropping the cap on the low-cost coverage from $10,000 in all cases to $2,500 for non-emergency treatment.

The law also gives insurers 90 days to pay claims and an organization within the Division of Insurance Fraud would be created to combat motor vehicle insurance fraud.

Health-care practitioners found guilty of insurance fraud would have their licenses revoked for five years and be banned from seeking PIP reimbursement for a decade.

In the weekly report, the office noted an independent consultant has been hired to estimate the savings by Sept. 15.

Jose L. Gonzalez, Associated Industries of Florida vice president of governmental affairs, in an email, expects property insurance may be a bigger focus than auto insurance.

Due to the sweeping changes made in the automobile insurance market this past session, we anticipate the Legislature might address the looming crisis foisted upon Florida by Citizens Property Insurance Corp. should the state encounter a catastrophic event that triggers assessments upon Citizens 1.5 million policyholders, Gonzalez wrote last month.

Reach Jim Turner at or at (772) 215-9889.

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