Statement by The James Madison Institute
Regarding the Final Actuarial Report on PIP Reform
Submitted by Pinnacle Actuarial Resources, Inc.
Based on Pinnacle Actuaries finalized analysis of the 2012 PIP reform legislation submitted to Florida’s Office of Insurance Regulation, it appears that consumer prices on that portion of vehicle insurance will decrease when these reforms are implemented. However, the amount and timing of consumer benefits remains indefinite due to several possible mitigating factors.First, most of the provisions do not take effect until January 1, 2013 after which policies will be gradually impacted as they are renewed or are newly written. Therefore, for many consumers, savings may not be realized until July 1, 2013 or after.Second, according to Pinnacle’s report, the largest savings are likely to stem from the two provisions that limit non-emergency conditions and exclude massage therapists and acupuncturists. These provisions will most likely face legal challenges, which could delay implementation of–and/or cause a reinterpretation of–the reforms. Litigation would also force insurers to incur legal costs that could ultimately diminish and/or delay savings for consumers. Furthermore, there is evidence that these two provisions are already being analyzed by the affected parties in an attempt to identify loopholes for continuing to game the system.Taking these factors into consideration, The James Madison Institute recommends that policy makers remain cautious regarding promises of immediate savings for consumers and premature demands for rate reductions. Time will tell if the PIP reforms of 2012 will work as the Governor and Legislature intended, with losses due to fraud decreasing, real savings occurring, and consumers reaping the benefit.