PIP savings greater than initially estimated, but insurers urge caution
The potential savings under the state’s new no-fault auto insurance laws are even greater than initially estimated, according to the final version of an independent actuarial study release today.
Bloomington, Ill.-based Pinnacle Actuarial Resources says that the amount insurers pay out in personal injury protection claims should decrease between 16.3 and 28.7 percent once the main components of the law go into effect in 2013. And that should cause PIP premiums to decrease 14 and 24.6 percent, the company said.
That is even better news compared to a draft report of the study released earlier this month. But insurers are continuing to caution drivers not to expect too much too soon when it comes to their auto insurance bills, of which PIP accounts for about 20 percent.
Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America (PCI), said some of the assumptions made in the Pinnacle study could be premature. Besides, he said, the law should be allowed to take effect before its impacts are judged.
“Although we commend Pinnacle for its diligent and thorough work, the study cannot anticipate changes to Florida’s legal, social or economic environment which will directly influence the impact of the new PIP law,” Brown said via a news release.
Under the provisions taking effect in 2013, people injured in auto accidents will have only 14 days to seek initial treatment and may be eligible for just $2,500 in coverage unless a doctor determines they were seriously injured.
Insurers are worried that the changes in law will increase the number of cases that end up in court. They also are concerned that medical professionals will make more patients eligible for the full $10,000 benefit than the Pinnacle study estimates.
Lawmakers are expecting insurance companies to start lowering PIP premiums soon. By Oct. 1, companies must either reduce PIP by 10 percent or explain to insurance regulators why they cannot.
Chief Financial Officer Jeff Atwater released a statement saying he was optimistic that the savings projected in the Pinnacle study will come to fruition.
“The independent analysis released today reflects my firm belief that getting at the root of the fraud in our personal injury protection system will give Florida’s consumers the rate relief they deserve,” Atwater said.
“I am eager to see these projected savings, if not more significant savings, passed on to Florida’s insurance consumers. Florida’s drivers deserve to see the full impact of these policy changes through lower auto insurance rates," he said.