Effectiveness of Law to Put Skids on PIP Growth Could be a Year Away
Nov 28, 2012
The following article was published in The Sunshine State News on November 28, 2012:
By Jim Turner
The new state law designed to tackle the growing cost of no-fault auto insurance has resulted in an average 2.5 percent drop in that portion of new filings from private firms.
But while actuaries anticipate that House Bill 119 — approved last spring — will over time result in 14 percent to 24.6 percent savings, not everyone is seeing a decrease.
And it could be another year before the effectiveness of the effort to curb the personal injury protection coverage, known as no-fault, is fully realized.
Florida Office of Insurance Regulation Director Sandra Starnes said during the Florida Chamber of Commerce’s sixth Annual Insurance Summit on Wednesday at Disney’s BoardWalk Inn that several companies were approved for increases after they were asked to come in with 10 percent reductions after Oct. 1 because the new rates wouldn’t have been deemed adequate for the coverage.
“Unfortunately, we won’t know the full impact of the law until 2014,” Starnes said.
Companies were required to cut rates by at least 10 percent starting Oct. 1 or demonstrate why they couldn’t. A second filing, where rates are expected to drop 25 percent, is Jan. 1, 2014.
The law was designed because officials said crashes were being staged in order to quickly recoup the no-fault $10,000 coverage through scam massage and medical services.
The fraud had become so rife that premiums in Florida have grown by $1 billion, officials said, and unless dramatic and decisive action was quickly taken, the costs would continue to skyrocket.
According to state records as of Nov. 16, of the 44 rate filings that have been approved, the average change has been a decrease of 2.5 percent. But approvals have ranged from a negative 25 percent to as high as 41.5 percent.
Starnes said the majority of large insurance providers came seeking decreases and the majority of approvals have been to drop rates.
The big savings is still expected after Jan. 1, when the law fully kicks in, but some chiropractors, who may no longer be eligible to receive the full $10,000 payments for those seeking post-crash treatment, are challenging the law in court.
Steve Lehmann, a consulting actuary with Pinnacle Actuarial Resources Inc., said the projected adjusted rates did factor in the state’s litigious environment.
What is expected is that because of the new law, people may reduce dependence upon massage therapists for non-emergency medical treatment and begin to again employ chiropractors, he said.
The new law drops the cap on the low-cost coverage from $10,000 in all cases to $2,500 for non-emergency treatment.
The coverage no longer pays for massage or acupuncture treatments.
The law also gives insurers 90 days to pay claims, and an organization within the Division of Insurance Fraud would be created to combat motor vehicle insurance fraud.
Health-care practitioners found guilty of insurance fraud would have their licenses revoked for five years and be banned from seeking PIP reimbursement for a decade.