OIR Releases Final PIP Report
The Florida Office of Insurance Regulation (OIR) has released the final version of the actuarial report of Pinnacle Actuarial Resources relating to the anticipated savings under 2012’s Personal Injury Protection (PIP) reform law. The report estimates the indicates savings associated with HB 119 passed in this year’s legislative session. Most of the provisions of the new law are slated to take effect January 1, 2013.
The report provides that the indicated premium savings range from 14% to 24.6%, arising from loss reductions estimated to range from 16.3% to 28.7%. As with an earlier draft of the report, the Office of Insurance Regulation cautioned readers against misinterpreting the report. First, the savings are based on premium indications and not actual premiums. An insurer’s actual savings will depend, in part, on whether it has been filing for and gaining approval of its indicated rates or something less. In some instances, it is possible that the savings will serve to moderate increases that an insurer otherwise would need and not to reduce those premiums. Additionally, the OIR points out that the PIP portion of the overall auto insurance premium is about 20%. Any premium reductions therefore will be a small portion of the overall rate.
The report was due to the Governor and Legislature on September 15, 2012. The OIR was able to release it early, however, to allow companies to take advantage of its when making their PIP rate filings as required by the new law.
The report met with prompt comment from Chief Executive Officer Jeff Atwater. “Through reforms passed last legislative session, we were able to target the fraud in Florida’s auto insurance system that has caused rates to skyrocket for Florida drivers. The independent analysis . . . 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,” said CFO Atwater. “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.”
Insurance Consumer Advocate Robin Westcott added that she is pleased her office was able to contribute to the work performed by Pinnacle. “Pinnacle’s use of data supplied by my office and discussions about the methodology employed by Pinnacle resulted in a substantial change in estimated savings for consumers – from a range of 12 to 20 percent in the draft report to a range of 14 to 24.6 percent in the final report,” said Ms. Wescott. She went on to comment that she expects the true savings to be greater than the estimates, and that prior reforms in the workers’ compensation and medical malpractice lines of business resulted in greater loss reductions than suggested by initial studies.