Editorial: Hold auto insurers to their deal on PIP reform

Sep 23, 2012

The following article was published in The Palm Beach Post on September 23, 2012:

Hold Auto Insurers to their Deal on PIP Reform

By Randy Schultz



This year, state legislators and Gov. Scott made a deal with Florida’s auto insurers: We will pass a law that cracks down on fraud and overbilling in Personal Injury Protection (PIP) cases. In return, premiums will decrease.

Based on the insurers’ early responses, you wonder if the companies already are trying to back out of the deal.

House Bill 119 made major changes to the no-fault system that Florida started 40 years ago. The law kept damage limits for emergency cases at $10,000, but reduced the limit to $2,500 in non-emergency cases. PIP no longer will cover acupuncture and massage therapy. Clinics that take PIP cases must be licensed. Lawyers no longer can seek double or triple their fees in PIP cases. Sen. Joe Negron, R-Stuart, who sponsored the original bill that had mandatory premium decreases, reiterated in an interview that the elimination of acupuncture and massage therapy alone “is $350 million” out of the roughly $2 billion annual figure for PIP claims.

Under the law, the Office of Insurance Regulation had to ask a consultant for a report estimating the savings from the law. That report went to the Legislature eight days ago, and the guess was PIP savings of just 14 percent to 24.6 percent. Since PIP is just 20 percent of the overall premium, the forecast seemed underwhelming in terms of possible relief for Florida drivers, who pay the highest premiums in the country.

The companies further warned that savings might be lower in some parts of the state — read that to mean South Florida — and that other areas of auto coverage might get more expensive. Also, insurers seem ready to back down even from those numbers, predicting that chiropractors and other providers would find new ways to overbill, and that lawyers would find new loopholes.

Yet Sen. Negron remains optimistic because he remains unpersuaded by the insurers’ arguments. “We spent dozens and dozens of hours,” he said, listening to the industry’s reasons for why PIP costs have increased roughly $1 billion annually in the last six years. Sen. Negron says the Legislature addressed all the cost factors. He envisions savings of between 30 and percent. “Some (companies) are saying that, well, maybe there’ll just be a reduction in the increase” of premiums. “We’re not going to stand for that.”

Insurance Consumer Advocate Robin Westcott also remains hopeful. Because there never was a distinction between emergency and non-emergency cases, she says, the test will come when a lawyer challenges the definition of “emergency.” Since the definition — potential loss of life or limb — comes from federal health regulations, Ms. Westcott believes that it will stand up in court. If it doesn’t, such an outcome “has a chance to blow up this bill.”

The changes took effect July 1, and it will take time to measure the savings. Ms. Westcott predicts that it will be spring before customers see lower bill. Sen. Negron’s guess is July. The legislation does say that companies must cut rates 25 percent by January 2014. You can see why this newspaper supported such a provision. The insurance industry already is preparing to shift into reverse on its deal.

View the original article here:  http://insurancenewsnet.com/article.aspx?id=358473#.UGB3fa5dBEd