No-fault insurance reforms appear to be lowering costs [updated]

personal injury protection insurance auto (Large)

Legislation targeting auto insurance fraud has produced savings on personal-injury claims of 17. 5 percent, and reduced premiums by a little more than 15 percent.

Claim frequency and severity were reduced, too — by 10.2 percent and nearly 11 percent, respectively, producing a reduction in total loss costs of 20 percent.

That compared to an increase in average loss costs of more than 4 percent elsewhere in the United States, according to an analysis conducted for the Florida Office of Insurance Regulation by Pinnacle Actuarial Resources Inc., a consulting firm in Bloomington, Ill.

Insurance Commissioner David Altmaier’s staff were reviewing the report and he had no immediate comment, spokeswoman Amy Bogner said. So was Gov. Rick Scott‘s staff, an aide said.

The findings represent “further proof that the 2012 PIP reforms from House Bill 119 continue to reduce fraud and abuse, while providing cost savings to Floridians,” the Property Casualty Insurers Association of America said in a written statement.

PIP stands for personal-injury protection, a form of no-fault insurance that takes claims out of the court system.

The Legislature passed HB 119 in 2012 to crack down on what then-Florida Insurance Commissioner Kevin McCarty described as the “fraudsters and hucksters” who were exploiting the no-fault system by staging accidents to secure PIP benefits.

The 2012 law changed which health care providers were allowed to provide PIP benefits by banning reimbursements to chiropractors and acupuncturists. It also banned treatment unless a doctor, nurse, dentist, physician assistant, or advanced registered nurse practitioner found that an “emergency medical condition” exists.

The Legislature was told at the time to expect between 14 percent and 24.6 percent in PIP rates.

Repealing the state’s no-fault insurance mandate would save the average driver 9.6 percent per year, or $81 per car, in liability coverage, Pinnacle said. Drivers who replaced PIP with $2,500 first-party medical coverage would save nearly 5 percent, or $49 annually. Boosting health coverage to $5,000 would decrease premiums by 1 percent, or around $9.

The analysts found “a small erosion” in the savings since 2014. Data for the year ending March 31 saw a 5 percent increase in claim severity compared to Dec. 31, 2014, and an increase in new claims of 2.3 percent, for a combined loss cost of 7.5 percent.

The only category that didn’t see a decline was death benefits. They increased by about 0.2 percent.

Michael Moline

Michael Moline is a former assistant managing editor of The National Law Journal and managing editor of the San Francisco Daily Journal. Previously, he reported on politics and the courts in Tallahassee for United Press International. He is a graduate of Florida State University, where he served as editor of the Florida Flambeau. His family’s roots in Jackson County date back many generations.


9 comments

  • Marlene Reiss

    September 14, 2016 at 5:39 pm

    If you’ll check the website of the DOI, you’ll see that PIP premiums have actually increased since the purported reforms to curb the rhetorical “fraud.” Don’t believe the propaganda. Read Charles Elmore’s 1/16/15 article in the Palm Beach Post, “Car Insurers Pocket Big PIP Money,” and you’ll see that the insurance industry has a cash cow in PIP and the legislature. Benefits are almost impossible to recover and PIP insurers enjoy a windfall with your premiums.

      • Lies

        September 15, 2016 at 1:50 pm

        And the insurance industry is not looking out for its own good? Plaintiff’s attorneys are attempting to keep insurance companies honest. Insurance companies spend millions, if not billions, of dollars “investigating fraud” by brutally harassing their insureds for the one anomaly fraud cause that they can hold up and attempt to taint the entire industry. The fact is, insurers lobbied the legislature to restrict insured’s rights and benefits under the guise of reducing insurance premiums. They didn’t reduce the premiums. If anyone thinks that removing PIP coverage from Florida policies would save anyone a single dollar, they are certifiably insane.

        • Gary

          September 15, 2016 at 9:51 pm

          Fraud is encouraged by allowing $10,000 Personal Injury Protection coverage to be used to build rear end “whip lash” claims. It allows all the creepy personal injury lawyers, their crooked doctors and chiropractor associates to get rich on your premium dollars. They talk about their dogs, their motorcycles, have little kids do their advertisements, ask Gary, 411 pain….all at our expense. But the lawyers run the legislature…it will never change…they have a golden goose and those big strong mean insurance companies are powerless to stop this scam.

  • Tom W

    September 15, 2016 at 9:35 am

    I wonder who got to benefit from the savings…I’ll give you a hint: it wasn’t consumers. GEICO recently raised rates claiming, among other things, that “No-fault claim costs in Florida have also skyrocketed over the past 5 years”, that “costs of medical treatment are higher now than in times past” (even though most medical bills are now paid at a reduced fee schedule rate), and increased fraud. They based all of this on old studies that took place several years before the law in its current form was in place. Simply put: GEICO justified taking more money from the consumer by cherry-picking old and obsolete data. I think there’s a word for this scenario…when someone takes money by deceit….starts with an F….the insurance lobby uses it all the time…it was used in this article a few times…..Oh no, never mind, that “F” word doesn’t apply to big companies.

    It’s long past time the State starts cracking down on fraud and deceitful practices by insurance companies.
    If the legislature really cared about consumers, they’d be all over this.

    GEICO’s rate increase info is available directly from them, on their website:
    https://www.geico.com/information/states/fl/florida-rate-increase-information/

  • Mike

    September 15, 2016 at 11:30 am

    Are these saving really significant? Replacing pip with other coverages creates a savings of $9 on a six month policy? That a nickel per day? How much was this study?

  • Not Insurance Fraud Attorney David Bronstein

    September 15, 2016 at 1:43 pm

    And the insurance industry is not looking out for its own good? Plaintiff’s attorneys are attempting to keep insurance companies honest. Insurance companies spend millions, if not billions, of dollars “investigating fraud” by brutally harassing their insureds for the one anomaly fraud cause that they can hold up and attempt to taint the entire industry. The fact is, insurers lobbied the legislature to restrict insured’s rights and benefits under the guise of reducing insurance premiums. They didn’t reduce the premiums. If anyone thinks that removing PIP coverage from Florida policies would save anyone a single dollar, they are certifiably insane.

  • Richard Q. Parillo

    September 15, 2016 at 3:47 pm

    $81 savings does not account for the increase we will have get in our health insurance or the increase in taxes we will have to pay to help fund the hospitals. At the end of the day there will be NO savings. PIP provides $10,000 in immediate coverage for medical bills, lost wages and lost earning capacity. Health insurance will not cover my passengers or the pedestrian I hit. PIP is great low cost coverage. I way keep it.

  • Gary

    September 15, 2016 at 9:43 pm

    Fraud is encouraged by allowing $10,000 Personal Injury Protection coverage to be used to build rear end “whip lash” claims. It allows all the creepy personal injury lawyers, their crooked doctors and chiropractor associates to get rich on your premium dollars. They talk about their dogs, their motorcycles, have little kids do their advertisements, ask Gary, 411 pain….all at our expense. But the lawyers run the legislature…it will never change…they have a golden goose and those big strong mean insurance companies are powerless to stop this scam.

Comments are closed.


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