House Bill 119 deals with Motor Vehicle Personal Injury Protection (or “PIP”) and was signed into law by Governor Rick Scott on May 4, 2012. The Bill was touted as being designed to reduce the rates charged by insurance companies to consumers for mandatory PIP coverage. The Bill is supposed to accomplish this by fighting PIP fraud. The Bill revised the medical fee schedule, limited the healthcare professionals that may treat injured motorists and passengers eligible to make PIP claims and limited the amount of PIP benefits that can be paid for non-emergency treatment. The bill also changed how personal injury lawyers get paid to litigate PIP cases.
Many of the Bill’s provisions go into effect January 1, 2013. However, as part of the requirements of the Bill, insurance companies were to submit proposed rate changes by October 1, 2012 to Florida’s Office of Insurance Regulation. The Bill requires that insurance companies either: (1) include a 10% reduction in the rate charged consumers for PIP coverage; or (2) explain why there was not a 10% reduction of that rate in their application for rate approval.
The Office of Insurance Regulation then either approves or denies the proposed rate changes (whether the insurance companies seek an increase or propose a decrease).
Many insurance companies waited until the last minute to make their required filings, but an early report issued by the Office of Insurance Regulation on October 1, 2012 shows that of the first 8 companies’ applications, only 3 were approved with rate reductions of at least 10%.
The remaining companies received approval for rate increases of varying percentages, which range from 3.9% to 26.3%.
Interestingly, the insurance companies submitted the rate changes they would have requested by this October 1, 2012 deadline had House Bill 119 not been signed into law. Of the 8 applications approved so far, the “non-House Bill 119” requests ranged from a proposed decrease of 4.7% to a proposed increase of a whopping 60.9%. The company that stated that it would have requested a 60.9% increase had House Bill 119 not passed was approved for an increase of 26.3%.
What message is the public supposed to take from these early approvals? It sounds like the message is: “Well, it could be worse.” Or maybe it is: “The insurance companies will still seek and receive an increase, but it won’t be as bad as it could have been.”
Florida Insurance Commissioner Kevin McCarty said in a statement: “Today marks the culmination of a long chain of events aimed at fighting PIP fraud.” McCarty went on to say: “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.” As more and more insurance companies’ proposal are either approved or rejected, the filings and the action on those filings will be very telling in comparison to what was promised when the bill was enacted. This is why it is very important for consumers, for all of us who have to pay for insurance, to pay very close attention to what happens after laws are passed and enacted.
Certainly, what will be most interesting is what occurs from this point forward with respect to those filings that have yet to be approved.