Florida Office of Insurance Regulation: Study on Potential Savings of No-Fault Bill Not Final

Aug 6, 2012

The following article was published in PropertyCasualty360º on August 6, 2012:

Florida OIR:  Study on Potential Savings of No Fault Bill Not Final

By Chad Hemenway



With numerous caveats, the Florida Office of Insurance Regulation released the findings of an independent study of a no-fault reform bill passed this year.

The draft report from Pinnacle Actuarial Resources concludes the overall result of the bill (HB 119) is an indicated savings in personal injury protection premiums of 12 percent to 20 percent.

The term “indicated savings” is where state regulators want readers to pause, and the OIR adds that it has “not yet reviewed, or approved” of the preliminary findings by Pinnacle.

Indicated rates and actual rates can vary widely. It’s the difference between what an insurer believes it is entitled to and what it actually files to get approved, says the OIR.

Most companies do not request their indicated rate. “Instead they request something less to keep their rates competitive,” says a statement from OIR.

Additionally, the supposed savings are only for the PIP portion of the auto premium and any savings may actually amount to a reduction in premium increases rather than a cut of auto insurance premiums, says the OIR.

HB 119 is meant to mend the state’s no-fault, PIP system—a system the insurance industry for years has said is plagued by abuse and fraud, costing Floridians more than $1 billion annually.

The new law requires claimants to seek treatment within 14 days of an accident from a hospital or physician. The bill bans treatments from acupuncture and massage facilities.

The bill also limits attorneys’ fees, establishes stiff penalties for doctors who commit fraud, and requires that claimants submit to an examination under oath from insurers.

The examination of HB 119 by Pinnacle was a provision in the legislation.

The Property Casualty Insurers Association of America (PCI), an industry trade group, also cautioned against jumping to any immediate conclusions.

“While the 2012 PIP legislation delivered the potential to begin fixing the runaway costs with the system, it is imperative that policymakers, regulators and Florida drivers understand that it must have adequate time to take effect,” says a statement from Donovan Brown, PCI’s state government relations counsel.

Brown adds that PCI has concerns with Pinnacle’s conclusions and it encourages “all stakeholders to use the information as a starting point” in evaluating the bill.

HB 119 also requires insures to make rate filings by October 1. If the insurer’s rate filing does not include a 10 percent rate reduction, it must provide a detailed explanation to the OIR.

The OIR says it expects many insurers to file these detailed explanations since their “prospective ‘savings’ differs from the 10 percent, or differs from the findings in the finalized Pinnacle report.”

View the original article here:  http://www.propertycasualty360.com/2012/08/06/florida-oir-study-on-potential-savings-of-no-fault