Coverage limitations cut insurers’ losses more than crime-related provisions, according to report draft
Online PR News – 07-August-2012 – Miami, Florida – Florida regulators cautioned that the full breadth of the recent reform of no-fault laws won’t be evident until next year—at the earliest—and that current projections of premium savings based on preliminary numbers may be overestimated, highlighting uncertainties surrounding the major overhaul of the state’s coverage system, according to Online Auto Insurance.
Reformers said that personal injury protection (PIP) coverage under the state’s no-fault laws—which allows policyholders compensation for crash-related injuries and financial loss regardless of who caused the collision—contributed to ballooning coverage costs that has made low cost insurance virtually impossible to find in the state.
Pressed by public records requests from media, the Office of Insurance Regulation (OIR) released a draft of the report it commissioned to evaluate the impact of this year’s legislative reform of personal injury protection (PIP) coverage. The draft was accompanied by an OIR statement saying that the draft is “missing necessary data” that would likely change findings in the final report that is due to the Legislature by Sept. 15.
Among the draft’s conclusions are that reform would bring savings to PIP premiums of 12 to 20 percent.
But in the end, premium reductions “may not be as much” as that projected figure, which was based on “premium indications” of the rates that law entitles insurers to, according to the OIR. In their filings, insurers usually ask for rates lower than their indicated rate to stay competitive in the marketplace, officials said.
As HB 119 was debated in the Legislature, lawmakers and Gov. Rick Scott championed reform efforts as a crackdown on crime that would produce savings by reducing abuse of the no-fault system.
In a statement released as Scott signed off on the bill in May, the governor said cutting into insurance-related crime would “benefit the pocketbooks of every Florida family who drives an automobile.”
However, OIR’s draft projected anti-crime provisions in the reform bill will account for, at most, about 1.5 percent of reductions in insurers’ losses. Such provisions included barring medical professionals convicted of PIP-related crimes from receiving PIP compensation for 10 years and suspending their licenses for 5 years.
According to the draft, the majority of the savings would instead be achieved through coverage limits established by the bill, including exclusion of massage therapists and acupuncturists from the list of providers eligible for PIP compensation.
However, those figures are subject to change as legislators await the final report’s release, which OIR spokesman Jack McDermott said might be before the Sept. 15 deadline.
According to McDermott, HB 119’s impact “will not be realized” until Jan. 1, 2013, at the earliest.
“If a person’s auto insurance policy does not renew until November 1, 2013—that would be the first date that they would notice the ‘savings,’” McDermott said in the OIR statement.
For more on this and related issues, head to www.onlineautoinsurance.com/low-cost/ for access to an easy-to-use quote-comparison generator and informative resource pages.
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