The handout that Governor Scott gave to the Insurance Industry may not result in "actual" savings. In my blog March 12, 2012, I wrote about the new law and the fact that it was nothing more than a reduction in benefits.
A report completed by Bloomington, Ill.-based Pinnacle Actuarial Resources -- says the changes agreed to by legislators should reduce the amount insurance companies pay out in PIP claims, and that, in turn, could reduce PIP premiums.
The decreases, if any, will not come until 2013, and not in October 2012, as lawmakers had originally suggested. Most importantly, the reduction may not reduce your overall car insurance bill but instead simply offset other increases.
The new PIP law which goes into effect in 2013, has a 14 day window within which an injured party may seek initial treatment. In addition, if the injury is not a "medical emergency" the injured party may only be eligible for just $2,500 in coverage. Of course, we will all pay premiums based on $10,000.00 in coverage.
So, under the new law, if you go to the hospital for evaluation and treatment, and the test come back negative, you are now facing payment of a huge medical bill. What a great concept. Wouldn't it just be easier to regulate the fraudsters that advertise for PIP benefits and mislead the public into believing that are entitled to $10,000.00 if they are involved in a car accident?
Overall, the report says, the changes could reduce the amount insurance companies pay out in PIP claims between 14 and 23 percent.
The bottom line for drivers, however, may not change that much.
In a press release accompanying the report, insurance regulation spokesman Jack McDermott cautioned reporters not to assume that a reduction in PIP claims will translate into lower auto insurance premiums.
"This projected savings may actually mitigate premium increase(s), not reduce premiums," McDermott wrote.
As part of the law, insurers must either reduce PIP premiums by 10 percent or explain why they cannot by Oct. 1.
Sen. Joe Negron, the Stuart Republican who led the charge to reform the state's no-fault auto insurance laws, says the law was written to reduce car insurance rates, not just stop increases.
"We worked closely with all the stakeholders to look at the cost-drivers, and I expect PIP rates to be significantly reduced at a minimum of 10 percent immediately and 25 percent once it's fully implemented," Negron said Friday. "I'm going to be watching that like a hawk over the next year or two, and we're going to hold the insurance companies' feet to the fire to make sure there are reductions."
My question for Senator Negron is; In the event rates do not go down, whose feet should we hold to the fire?
