Florida No-Fault Insurance Study Ups Expected Savings

Outside consultants on Tuesday increased their estimate of potential savings from Florida’s new no-fault auto insurance law, but state regulators continued to express skepticism.

The law is designed to curtail rampant fraud in personal injury protection, or PIP, due to bogus claims and staged accidents.

Pinnacle Actuarial Resources now estimates that consumer savings from the law will range from 14 percent to 24.6 percent. That’s up from a range of 12 percent to 20 percent in a preliminary study released earlier this month.

The Office of Insurance Regulation, which contracted for the study, again noted that projected savings are for premiums that insurers are entitled to receive, not actual premiums. Companies often ask for lower premiums than they are entitled to for competitive reasons, and that would lead to smaller savings.

The regulators also pointed out PIP represents only about 20 percent of an overall insurance bill and that the savings may simply reduce future increases rather than bring down premiums. If there are savings, they will not be realized until Jan. 1 at the earliest.

The state’s insurance consumer advocate, Robin Westcott, painted a more optimistic picture. She said she expects the savings will be greater than those estimated by Pinnacle.

The law calls for a minimum 10 percent premium savings but that companies can avoid that requirement by explaining why they can’t cut that much.

The no-fault system pays up to $10,000 for injuries regardless of who is at fault in a crash. The new law puts a 14-day limit on seeking treatment and caps benefits at $2,500 unless a doctor or other specified medical professional certifies there’s an emergency medical condition.

The new law’s premium reductions do not go into effect until after Jan. 1.