Almost two years after the Florida legislature passed House Bill 119, drivers may now start to notice a slight drop in this year’s automobile insurance rates resulting from reforms that helped lower Personal Injury Protection (PIP) premiums.
Although the primary goal of PIP, also known as no-fault insurance, was to reduce court cases and payment delays for injured drivers, the number of PIP claims and PIP payments escalated, even though the number of auto accidents did not increase over the past few years.
According to an article in the April 21 edition of Highlands Today, a local edition of the Tampa Tribune, PIP premiums are roughly 2 percent of Florida’s collected insurance premiums, but questionable claims make up nearly 50 percent of fraud referrals. The Division of Insurance Fraud received over 3,000 PIP fraud complaints in 2005-06, and obtained 225 convictions in 2007, the article added.
However, as we reported on this blog on March 31, a recent National Insurance Crime Bureau (NICB) report shows that tighter legislation, enhanced public awareness, and coordinated law enforcement is having a positive effect on PIP fraud in Florida.
In calculating cost reductions to the consumer, most insurers used rates from a Pinnacle study which projected legislative reforms would save Florida policyholders roughly 14-24 percent. Typically, 25 percent of a consumer’s total auto insurance premium cost comes from PIP.
A preliminary DOI analysis of the rates submitted by the top 20 automobile insurance companies writing PIP insurance, encompassing more than 75 percent of the Florida market, showed a 13.2 percent decrease. Therefore, a statewide reduction in PIP averaging 13.2 percent would translate to a 3-4 percent savings for the policyholder, the DOI figures.
DOI’s analysis was compiled to demonstrate the cumulative effect of House Bill 119 after the first required rate filing due in October 2012 and the second rate filing on Jan. 1, 2014, the Highlands Today story said.
However, rate changes are still pending for 2014, according to Amy Bogner, Deputy Director of Communications at the Florida Office of Insurance Regulation. “The anticipated cumulative effect of these two rate filings in the legislation was a 25 percent overall decrease in PIP rates,” Bogner explained.
Auto insurers who did not decrease PIP premiums by the cumulative 25 percent were required to demonstrate why the company’s savings should vary.