The personal injury protection (PIP) piece of a Florida auto insurance premium is expected to decrease before the end of this year, even
though the state’s new PIP reform law doesn’t mandate that insurers do so.
Advocates of the reform measure point to several
stipulations of the anti-fraud bill that will pressure insurers to give rate
relief to auto insurance customers.
The law requires insurers by Oct. 1 to submit rate filings
that reflect reductions of at least 10 percent in PIP rates, or actuarially show
the Office of Insurance Regulation why it cannot give such relief. In January,
another filing by insurers is required, this one showing an additional 25
percent reduction unless, once again, they can show loss history that precludes
lower rates.
Legislators in House and Senate who backed the reform—and
backing in the House exceeded that of the Senate—are assuming that as the
Florida car insurance law’s reforms take effect, excessive litigated
settlements will occur less frequently. That expectation is why advocates were
willing to guide insurers toward lower premiums instead of forcing them to
reduce.
Reform features of the law include requiring accident
victims to seek treatment within two weeks of the accident. The $10,000 benefit
is reserved for “acute” medical conditions, with $2,500 being the top payout in
other cases. Attorney fees are not capped—which the legal fraternity
resisted—but admonitions to charge only “reasonable” fees, combined with
strengthened fraud investigation tools, are expected to mitigate against
rampant overcharging and other abuses of the system.
According to the National Insurance Crime Bureau, a
nonprofit group funded by insurers, Florida topped state listings for staged
accident claims in the years 2007-09. In that period, some 3,000 “suspicious”
claims were reported by insurers.
Officials in Florida’s Division of Insurance Fraud have said
cases of possible PIP insurance fraud increased by 53 percent over 12 months
ending June 2010. Suspicious cases during that period totaled more than 5,500.
Some observers saw a tie between the rise in fraudulent claims and the rise in
Florida’s unemployment rate.
Florida’s Insurance Consumer Advocate, Robin Westcott, said she
believes the requirements and language of the bill will produce the desire
effect—less filing of fraudulent claims and lower premiums for Florida auto
insurance customers.
“This is a significant bill and it should result in
significant rate reform,” she is quoted saying in an Insurance Journal report.
For nearly two decades, Westcott has worked in one department or another of the
state Department of Insurance, becoming Consumer Advocate in 2011.
