As required by law, a new study was provided to the Florida’s Office of Insurance Regulation on the feasibility of lower automobile insurance prices. The study by Pinnacle Actuaries found that lower prices should eventually materialize as a result of anti-fraud measures. However, the report’s findings are a bit optimistic, given the recent disturbing signs that some medical providers are trying to exploit potential loopholes in the new law. Another complication is that the savings will be delayed, since the legislation was just passed a few months ago and that many of the bill’s key provisions don’t kick in until 2013. Most importantly, however, is that fraud costs first need to be significantly reduced before any benefits reach consumers. The key is the execution of the new law in stamping out auto insurance fraud.
We hope the provisions in the bill will rein in bogus medical clinics, eliminate incentives for trial lawyers to sue, and provide insurers and law enforcement officials with new fraud-fighting tools. Make no mistake about it – if PIP reform is a success, medical and litigation costs should come down and consumers should receive the full benefit of lower rates.
The Pinnacle Report confirms that lower rates are possible, but lower rates will only materialize when auto insurance fraud costs are first reduced. Any attempt to prematurely pressure rates could destabilize the auto insurance market that policymakers are trying to fix and ultimately harm the consumers they are trying to help.
We need to fix the fraud problem, and doing that will ultimately reduce insurance costs for Florida consumers.