Florida CFO Atwater to auto insurers: Quit whining

Aug 7, 2012

The following article was published in The Florida Current on August 7, 2012:

Atwater to auto insurers:  Quit whining

by Gray Rohrer


CFO Jeff Atwater thinks auto insurers should get on board with rate reductions and “quit whining.”

“Quit the whining. This is about your consumers; it’s not about you,” Atwater told reporters Tuesday after the first meeting of a strike force aimed at rooting out auto insurance fraud.

The strike force is part of a bill passed by lawmakers this year that was designed to clamp down on personal injury protection (PIP) fraud. HB 119 keeps in place the $10,000 PIP coverage for medical coverage resulting from an auto accident, but places a $2,500 cap on non-emergency coverage, eliminates massages and chiropractic services from covered care, requires patients to seek care within two weeks of an incident, and calls for those involved in accidents to give testimony  under oath.

The law also calls for a report to be compiled detailing the expected cost savings to be gained from the law. The final report is to be submitted to legislators by Sept. 15, but a draft report was distributed to the press last week, and initial results show that a 12 to 20 percent reduction in the PIP portion of auto insurance premiums is expected.

Industry groups and the Office of Insurance Regulation, however, urged caution in interpreting the draft report, stressing that the savings will only be realized on the PIP portion of the premium — about 20 percent of a typical auto policy — and stipulating that the savings from the law will only mitigate rate hikes, not lead to actual reductions.

“PCI has some concerns with the study’s conclusions and the fact that it is based on a law which does not fully take effect until next year and may be interpreted by a court differently than the Florida Legislature intended,” said Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, in a prepared statement after the draft report was released. “However, we believe this is a good start in discussing what the 2012 PIP legislation, when fully in place, could potentially accomplish in reducing fraud.”

Brown is also on the auto insurance fraud strike force and was elected vice chairman of that board Tuesday.

Brown said his statement was meant to point out that the report was an initial draft and that many of the law’s provisions don’t take effect until Jan. 1. Plus, the law could be knocked around by the courts, he said.

“We know the trial attorneys are going to be challenging a lot of these provisions,” he said. “Let’s let the bill take effect and let’s see what our experience is.”

But that’s not how the law was described when it was being pushed through the Legislature by Atwater and Gov. Rick Scott.

“We passed (a) property insurance PIP reform bill that is going to lower the cost of auto insurance for all Floridians. We are going to get rid of this fraud,” Scott said in March when the bill passed through the Senate on a narrow 21-19 vote on the final day of the legislative session.

Atwater acknowledged it probably won’t be until next year when new license requirements for clinics take effect that consumers will see real savings. However, he  took insurers to task for not embracing cost reductions that he thinks will result from the new law.

“This entire PIP effort was to reduce the cost burden on Floridians, and the insurance industry came to these committee meetings, they lobbied these legislators, saying ‘You’ve got to make these changes so that we can help our customers.’ Well, no sooner than suggested reductions come out and everybody starts running for cover. I’m kind of stunned at what I’m reading,” Atwater said.

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