PIP reform rate filings due, yet reforms so far miniscule
An important reminder about the reforms to Florida’s no-fault auto insurance law: The most significant changes do not go into effect until January 2013. So if you’re looking for big rate relief now, it can’t happen because very little has changed in the three months since the law first became effective.
There are some people finding fault already with Florida’s no-fault, also known as Personal Injury Protection (PIP). That’s rather like panning a movie before it has been produced. You are hearing many people say the effectiveness of the reforms remains to be seen, and they are saying that because there is nothing to see – yet.
Phase One of the PIP bill, HB 119, launched July 1 with changes that have little to no impact on auto insurance rates. One provision requires law enforcement to use a long-form crash report when anyone at an accident scene is injured or complains of pain, when a vehicle in inoperable or when a commercial vehicle is involved. This is to prevent someone from saying later that they were injured when they were not or claiming they were inside the car when the accident occurred when they were nowhere around.
The other provision effective in July was to require health care clinics to be licensed to receive PIP reimbursement. Licensing is part of the larger picture of who can provide medical care, but it won’t drive rates down all by itself.
An independent report on the fiscal impact of HB 119 showed that using the long-form crash report would have a maximum impact on rates of -1.5% on the 20% of the auto insurance premium that comprises PIP costs. Clinic licensing would have zero impact. Despite this, insurers were required by the PIP reform bill to file rates by October 1 showing at least a 10% rate reduction or document why a reduction is not possible. Keep two things in mind:
- Insurance rates reflect insurance costs, and there has been nothing implemented by the new law (yet) to reduce costs.
- The October 1 deadline to file auto insurance rate decreases will not have an immediate impact on rates because the Office of Insurance Regulation (OIR) has up to 60 days to review rate filings. Even if rate approval was instantaneous, new rates apply when a policy renews, not the moment they are filed. All the rate filings are public record, accessible via a file search on the OIR website.
Of the 16 major categories for PIP reform, only two have the potential to drive down PIP costs – and those two changes don’t happen until January. These “Phase Two” changes involve limitations on medical benefits for non-emergency treatment and excluding massage therapy and acupuncture as treatment options. You can read the paper on PIP changes for more details.