Motorists could eventually see the no-fault portion of their auto insurance drop 14 percent to 24.6 percent, according to a $150,000 commissioned report released Tuesday by the Office of Insurance Regulation.
But the state is quick to note that while personal injury protection premiums have skyrocketed by $1 billion, due in large part to fraud, the coverage accounts for only about 20 percent of most auto insurance bills.
And any savings will not be seen until after new policies are written following Jan. 1, 2013.
State Chief Financial Officer Jeff Atwater --who along with Gov. Rick Scott championed the legislation, House Bill 119, last spring --maintained his view that motorists will see their rates drop.
Through reforms passed last legislative session, we were able to target the fraud in Floridas auto insurance system that has caused rates to skyrocket for Florida drivers, Atwater stated in a release.
The independent analysis released today reflects my firm belief that getting at the root of the fraud in our personal injury protection system will give Floridas consumers the rate relief they deserve.
I am eager to see these projected savings, if not more significant savings, passed on to Floridas insurance consumers. Floridas drivers deserve to see the full impact of these policy changes through lower auto insurance rates.
The independent report from Pinnacle Actuarial Resources Inc., was due Sept. 15, but released Tuesday to give companies time to consider these findings before making their PIP filings on Oct. 1 as required by HB 119.
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.
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 had stated that other filings pending will include lower rates.
A draft of the report released three weeks ago had preliminarily shown savings of 12 percent to 20 percent.
The revised numbers reflected input from Floridas Insurance Consumer Advocate Robin Smith Westcott.
However, we fully expect that premium savings will be even greater than these estimates, which ultimately will be determined by actual loss experience after the law goes into effect on Jan. 1, 2013, Westcott noted in a release.
It is important to note that, historically, past legislative reforms of the workers compensation and medical malpractice systems required independent actuarial studies that significantly under-estimated the reduction in loss costs that were actually realized.
Only time will tell whether the actual savings in PIP loss costs will exceed the estimated savings, but we are optimistic that reforms enacted by the 2012 Florida Legislature will have significant, favorable results for Florida consumers.
Reach Jim Turner at email@example.com or at (772) 215-9889.