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Insurers say PIP changes likely to mitigate premium increases, for now

Published Oct. 2, 2012

TALLAHASSEE — Auto insurance companies say the state's new no-fault auto insurance law will save drivers money by staving off insurance premium increases.

But drivers shouldn't expect their insurance bills to dip immediately either.

As part of insurance reforms passed last spring, car insurers had a Monday deadline to either reduce personal injury protection premiums 10 percent or explain why they could not.

Many companies took the second option, filing paperwork with the state asking to again increase PIP rates, the state said.

The state-mandated changes, insurers say, will reduce personal injury protection costs, just not enough to completely offset other factors that justify higher premiums. That means the law created by HB 119 is working, Insurance Commissioner Kevin McCarty said in a statement Monday.

"Although it initially appears the savings will result in a mitigation of rate increases rather than actual rate reductions for most companies — it does represent a major shift in the trajectory of PIP insurance rates in Florida," he said.

The size of the premium rate increase — or in a few cases, the decrease — varies by insurer. PIP premiums make up about 20 percent of a driver's overall car insurance bill.

For example, insurer Florida Farm Bureau said it would have been eligible for a 45 percent PIP rate increase, but after factoring in the effects of the new law, it applied to increase PIP by just 8 percent. The state approved that request.

That wasn't the purpose of the law, said Sen. Joe Negron, the Stuart Republican who helped lead PIP reform efforts.

"It's complete nonsense for insurance companies to not reduce rates," Negron said. "We will not allow insurance companies to reap the benefits of hundreds of millions of dollars in reductions to their costs while they simultaneously deny rate reductions to consumers."

As part of the changes, people injured in car accidents will have only 14 days to seek initial treatment (previously there had been no limit) and may be eligible for just $2,500 in coverage, instead of $10,000. Massage therapists and acupuncturists will no longer be allowed to treat patients under PIP.

Legislators worked with insurers to address the issues that were driving up the cost of PIP, Negron said, and the savings were intended to trickle down to drivers.

So far, the state has approved new auto insurance rates for eight companies. Of the seven that were selling policies in Florida before HB 119, three reduced PIP premiums by at least 10 percent. The other four will be allowed to raise PIP rates between 3.9 and 26.3 percent.

Dozens of other requests are pending, and the review process can take up to 60 days. Most insurers have submitted complete auto insurance filings that deal with all types of coverage, including bodily injury and property damage.

Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, said he couldn't speak for individual companies but felt it was too soon to accurately gauge the effects of PIP reform.

"The PIP legislation definitely delivered the potential to address those runway costs," Brown said, "but you have to have adequate time for those to take effect."

Brown said insurers also remain concerned that some provisions will be challenged in court. For example, a coalition of massage therapists, acupuncturists and chiropractors filed a lawsuit against the state last month challenging the constitutionality of the new law and its limits on the types of medical professionals who can diagnose injuries and treat them.

Tia Mitchell can be reached at tmitchell@tampabay.com or (850) 224-7263.

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