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Driver Savings Trail Goals As PIP Benefits Shrink

By Charles Elmore, The Palm Beach Post, Fla.
McClatchy-Tribune Information Services

Dec. 31--Starting Tuesday, a law that was one of Gov. Rick Scott's top legislative priorities aims to slam the brakes on what he calls $1 billion in auto insurance fraud, but drivers may have to squint hard to find touted savings in their bills.

Target under the law: 10 percent reduction in Personal Injury Protection rates by the start of 2013.

Average reduction after 93 rate approvals: less than 1.5 percent.

Because PIP accounts for about 20 percent of the typical car insurance bill, that works out to less than 0.3 percent savings overall. Moreover, PIP savings can be offset by increases in other parts of the bill under requests by some insurers such as Geico.

Florida requires a driver to carry $10,000 in PIP coverage designed to cover his own medical costs, even if he is at fault. The new law is designed to reduce the amount insurers pay out for fraud and staged accidents, backers say. In return, it requires insurers to cut PIP rates 10 percent effective Jan. 1 and 25 percent by 2014 or tell regulators why not. The promised savings helped win support for the bill in the waning hours of last spring's legislative session.

Now some insurers say it's too soon to know what will really happen by eliminating massage and acupuncture benefits and reducing nonemergency care to $2,500. Lawyers have gone on record as saying they plan to file suits challenging the law in the new year -- at least one was filed in 2012 -- and insurance groups say medical providers are advertising ways around the rules.

"Medical doctors and companies that employ them are already advertising that they will provide the diagnosis of emergency medical condition necessary to increase policy benefits from $2,500 to $10,000," said Charles Grimsley, chairman of the Florida Property & Casualty Association, which represents Florida-based car and property insurers.

"With massage therapy no longer being covered by PIP, medical doctors and chiropractors will take advantage by providing more treatment so that the higher resultant billing from these providers will cause loss severity to stay the same."

Scott predicted in May that "this legislation will benefit the pocketbooks of every Florida family who drives an automobile."

But the first round of filings have been all over the map, from a 25 percent PIP reduction approved for Foremost Insurance Co. (motor homes, antique and collector cars) to a 100 percent increase for American Bankers Insurance Co. of Florida (antique cars, approved premiums range from $6 to $16).

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The Palm Beach Post calculated a 1.2 percent average reduction based on approved filings through Dec. 20. It represents a simple average, not weighted by the number of policies for each carrier -- that data is not available in a summary provided by the state's Office of Insurance Regulation.

In response to an inquiry from the Post, the Office of Insurance Regulation said it calculated a 1.4 percent average reduction for the carriers approved through Dec. 20, but cautioned a nonweighted average could be misleading. It said it a weighted average was not available.

"The straight average was provided to show that while the range of rate changes being approved varies significantly from company to company, the majority of the filings are resulting in overall statewide decreases in PIP premiums, and all of the companies are recognizing the significant decreases in losses that are expected due to HB 119," OIR spokeswoman Amy Bogner said.

Allstate Insurance was among those with a PIP rate dropping 10 percent while Agency Insurance climbed 26.3 percent and 21st Century Centennial Insurance jumped 41.5 percent. Forty nine insurers decreased PIP rates by at least 0.1 percent, while 22 insurers stayed the same and another 22 got approval to raise PIP rates, by the Post's count.

On Friday, Scott's communications director Melissa Sellers said the law was moving things in the right direction.

"Governor Scott's PIP reforms are working to decrease automobile insurance costs for Florida families," Sellers said in a statement. "Since the bill passed, a majority of auto insurance company filings (77 percent) with the Office of Insurance Regulation either decreased or stayed the same -- compared to a majority of rate increases in prior years."

In a summary, regulators included information about what insurers said their requests would have been without HB 119. That information was not required or requested under by the law, which refers to a reduction in current rates, not a 10 percent reduction in what insurers projected rates might have been without the law.

Bill Newton, executive director of the Florida Consumer Action Network, has questioned whether state officials are "making excuses" for insurers.

Sellers said, "Because of the Governor's PIP reforms, Florida essentially avoided falling off the 'PIP Cliff' which would have been an estimated increase in rates between 25 to 29 percent, according to the same figures used by The Palm Beach Post. The longer the law is in place, the more money it will save Florida families."

The state's summary did not say how many filings were left to approve.

Let's make dreams come true.

An actuarial firm reported to the state that PIP savings should range from 14 percent to 25 percent.

One Miami insurer gave a $100,000 contribution to Scott's Let's Get to Work committee two days before the bill passed, and critics call the law a favor to the insurance industry that cuts benefits and boosts profits while promised savings for drivers take a back seat.

"The legislature did nothing to increase the number of prosecutors and law enforcement personnel assigned to fight fraud," Newton said. "It is law enforcement that is going to get criminals off the street and discourage fraud. If we just tweak the law, the fraudsters find a way around it, but consumers give up major benefits."

At least one legislator has said the biggest lie of 2012 was that PIP rates were going to come down, and industry groups at a recent Orlando insurance summit braced for patches of awkward public relations before the whole thing plays out more fully.

"Since the end of the session we're playing a really tough expectations game," said Michael Carlson, executive director of the Personal Insurance Federation of Florida, which represents some of the larger car insurers.

Staff researcher Niels Heimeriks contributed to this story.

PIP changes

In the name of curbing fraud, the rules are changing for Florida drivers under their Personal Injury Protection insurance coverage. For new policies or those renewing after Jan. 1:

-- To qualify for the full $10,000 benefit, treatment must be by ambulance or at a hospital, or from a physician, dentist, supervised physician's assistant or advance registered nurse practitioner.

-- Treatment must begin within 14 days.

-- Nonemergency benefits limited to $2,500.

-- No massage or acupuncture.

-- Benefits can be denied if the insured refuses to be examined under oath about information relevant to the claim.

-- Insurers can take 90 days instead of 30 to review claims they suspect of fraud.


(c)2012 The Palm Beach Post (West Palm Beach, Fla.)

Visit The Palm Beach Post (West Palm Beach, Fla.) at

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Distributed by MCT Information Services

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