PIP changes might not lower insurance bills for Florida drivers

by Tia Mitchell, Times/Herald Tallahassee Bureau

Saturday, August 4, 2012

TALLAHASSEE — No-fault auto insurance premiums could indeed dip as Gov. Rick Scott and Republican lawmakers promised, a company hired to evaluate Florida's latest round of auto insurance reforms says.

But don't get too excited.

The decreases likely will come in 2013, not in October, as lawmakers had originally suggested. And the reduction may not reduce your overall car insurance bill but instead simply offset other increases.

The findings are part of a draft report detailing changes to the state's no-fault auto insurance law, called Personal Injury Protection (PIP). The report was released Friday by the state Office of Insurance Regulation as part of a Times/Herald public records request.

Generally speaking, the report — completed by Bloomington, Ill.-based Pinnacle Actuarial Resources — says the changes agreed to by legislators should reduce the amount insurance companies pay out in PIP claims.

That, in turn, could reduce PIP premiums — which comprise about 20 percent of a typical car insurance bill.

As part of the legislation, HB 119, people injured in a car accidents starting in 2013 will have only 14 days to seek initial treatment and may be eligible for just $2,500 in coverage.

Those changes could reduce claims by as much as 12 percent, the report says.

Excluding massage therapists and acupuncturists from participating in PIP — another provision in the legislation — could lead to another 10 percent reduction.

Overall, the report says, the changes could reduce the amount insurance companies pay out in PIP claims between 14 and 23 percent.

The bottom line for drivers, however, may not change that much.

In a press release accompanying the report, insurance regulation spokesman Jack McDermott cautioned reporters not to assume that a reduction in PIP claims will translate into lower auto insurance premiums.

"This projected savings may actually mitigate premium increase(s), not reduce premiums," McDermott wrote.

As part of the law, insurers must either reduce PIP premiums by 10 percent or explain why they cannot by Oct. 1.

Sen. Joe Negron, the Stuart Republican who led the charge to reform the state's no-fault auto insurance laws, says the law was written to reduce car insurance rates, not just stop increases.

"We worked closely with all the stakeholders to look at the cost-drivers, and I expect PIP rates to be significantly reduced," Negron said Friday. "… I'm going to be watching that like a hawk over the next year or two."

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