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PIP reform advocates expect lower Florida auto insurance rates

"Florida Auto Insurance News"

Miami 3/31/2012 03:49 AM GMT (WooEB)

The personal injury protection (PIP) piece of a Florida auto insurance premium is expected to decrease before the end of this year, even though the state’s new PIP reform law doesn’t mandate that insurers do so.


Advocates of the reform measure point to several stipulations of the anti-fraud bill that will pressure insurers to give rate relief to auto insurance customers.


The law requires insurers by Oct. 1 to submit rate filings that reflect reductions of at least 10 percent in PIP rates, or actuarially show the Office of Insurance Regulation why it cannot give such relief. In January, another filing by insurers is required, this one showing an additional 25 percent reduction unless, once again, they can show loss history that precludes lower rates.


Legislators in House and Senate who backed the reform—and backing in the House exceeded that of the Senate—are assuming that as the Florida car insurance law’s reforms take effect, excessive litigated settlements will occur less frequently. That expectation is why advocates were willing to guide insurers toward lower premiums instead of forcing them to reduce.


Reform features of the law include requiring accident victims to seek treatment within two weeks of the accident. The $10,000 benefit is reserved for “acute” medical conditions, with $2,500 being the top payout in other cases. Attorney fees are not capped—which the legal fraternity resisted—but admonitions to charge only “reasonable” fees, combined with strengthened fraud investigation tools, are expected to mitigate against rampant overcharging and other abuses of the system.


According to the National Insurance Crime Bureau, a nonprofit group funded by insurers, Florida topped state listings for staged accident claims in the years 2007-09. In that period, some 3,000 “suspicious” claims were reported by insurers. 


Officials in Florida’s Division of Insurance Fraud have said cases of possible PIP insurance fraud increased by 53 percent over 12 months ending June 2010. Suspicious cases during that period totaled more than 5,500. Some observers saw a tie between the rise in fraudulent claims and the rise in Florida’s unemployment rate.


Florida’s Insurance Consumer Advocate, Robin Westcott, said she believes the requirements and language of the bill will produce the desire effect—less filing of fraudulent claims and lower premiums for Florida auto insurance customers.


“This is a significant bill and it should result in significant rate reform,” she is quoted saying in an Insurance Journal report. For nearly two decades, Westcott has worked in one department or another of the state Department of Insurance, becoming Consumer Advocate in 2011.



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