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More Changes Coming to Florida's PIP Law?

Much of this year’s Florida Legislative Session dealt with the issue of reforming the state’s personal injury protection or “PIP” auto insurance law.  Lawmakers wound up passing a reform measure, but Tom Flanigan reports there are already questions about whether it will work as advertised…

Back during the 2012 lawmaking session, all sorts of people were calling for changes to Florida’s forty-one year old requirement that all motorists carry a minimum of ten-thousand dollars in personal injury protection coverage.  One of these people was Florida Chief Financial Officer Jeff Atwater.  Here, he appeared on a web broadcast produced by the Florida Chamber of Commerce in which he discussed the matter with Chamber Vice President David Hart.

“So when he talks about this fraud number being a billion dollars, well that’s because…how could premiums go up a billion dollars across all Floridians picking up that tab when actually there are fewer accidents?”

The answer, Atwater said, was that fraudsters, including unscrupulous lawyers, doctors and treatment clinics, were staging car wrecks and providing bogus care to make-believe victims.  Lawmakers finally hammered out a hybrid PIP reform.  It would force those injured in traffic accidents to seek medical attention within fourteen days from a hospital or licensed physician.  Follow-up care would have be ordered by qualified medical professionals before victims could seek the maximum ten-thousand dollar benefit.  And no treatment done by acupuncturists or massage therapists would be covered.  Lisa Miller is a private insurance consultant who worked for the Florida Office of Insurance Regulation when Jeb Bush was governor.  She came across a flyer advertising the services of a South Florida company before the ink on the new law was dry.

“An organization that was advertising that they would basically rent their physician licenses to massage therapists and/or chiropractors to help them get their claims filed, which I found quite convenient as it was floating around the minute the legislation was signed.”

For that reason alone, Miller has some concerns about a new study released by Pinnacle Actuaries and commissioned by the Florida Office of Insurance Regulation.  The study projected real premium savings for Florida’s auto insurance policyholders as a result of PIP reform.  Donavan Brown with the Property Casualty Insurers Association of America says it’s not a bad study.  He just thinks it leaves some things out.

“We also know the study can’t calculate the scope of how trial attorneys might try to attack the cost savings in the law.”

And even if all of those savings are ultimately realized, it won’t really amount to much.  The Florida Office of Insurance Regulation points out that PIP represents only about twenty percent of the average car owner’s total insurance premium. So, despite the Pinnacle Study’s rosy projections, Steve Pociask with the American Consumer Institute Center for Citizen Research thinks auto insurance savings, if any, may be quite a ways off.

“All of those things, unfortunately, are going to interfere with and delay the implementation of fraud-fighting tools and when that happens, those costs won’t be reduced so consumers won’t see the benefits.”

Walter Dartland with the Consumer Federation of the Southeast doubts there will be any savings, ever.  He lobbied heavily against fraud and for PIP reform during the legislative session.  He remembers the promises from the insurance industry that reforms would bring huge reductions in premiums almost overnight.

“What happens is, they don’t and they say, ‘Well, you know inflation brought it up to where it was before and there’s still stuff going on,’ and it’s very frustrating and you can understand why surveys that we have done with the Coalition Against Insurance Fraud suggest that the insurance industry is one of the least respected and believed-in businesses in the country.”

Meanwhile, the consensus seems to be growing that still more changes to Florida’s auto insurance laws may be needed, perhaps as early as the 2013 lawmaking session.