Florida’s top 25 car insurers raised Personal Injury Protection premiums up to 54 percent since the start of 2017, records requested by The Palm Beach Post show, even as industry lobbyists advised lawmakers to put off PIP repeal another year and cast doubt on a state-ordered report that said drivers could save $81 per car by killing it.
Buckle up again for financially hazardous conditions in Florida, where 16 million drivers already pay car insurance bills among the six highest in the nation. That’s more than $1,250 a year on average. And they’re going up again.
At the heart of this drama is a kind of insurance that Florida requires drivers to buy, PIP. Florida is one of a dwindling handful of states with a no-fault system. PIP is designed to provide $10,000 of coverage for a driver’s own injuries, regardless of who is at fault in an accident.
The system lives on over the protests of exasperated drivers who say they already have Medicare, employer health plans or other coverage for their medical bills. Why should the government force them to buy PIP? It strikes many like paying Cadillac prices for a $10,000 slice of fraud-prone coverage they don’t need in the first place.
“PIP is worthless,” driver Leo Solar of West Palm Beach said. “It’s just like throwing your money away.”
If Florida had some of the nation’s lowest car insurance rates, and PIP was helping bring that about, that might be one thing.
But PIP costs to consumers are shooting up 35 percent faster than overall premiums since January 2017, according to data The Post requested from the Florida Office of Insurance Regulation.
Hoping for rate relief? Not everyone in Tallahassee seems to be in a big rush. A House plan that passed 88-15 to repeal PIP will die in less than a month unless the Senate acts. Similar legislation expired in the Senate a year ago.
The office of Senate president Joe Negron, R-Stuart, did not respond to a request for comment.
With billions of dollars at stake in the nation’s third largest car insurance market, lobbying interests from lawyers to doctors and insurers are fighting to get a hand on the steering wheel or a foot on the the brake.
So Florida’s system sputters on. Its $10,000 benefit has not kept up with medical inflation, changing little since the 1970s. An overhaul supported by Gov. Rick Scott and billed as protecting consumers in 2012 even reduced some benefits, such as capping non-emergency care at $2,500.
But the rate hikes keep coming.
The six-month PIP premium Solar paid last November was $249.30. That was up from $230.74 in the spring of 2016. It has climbed more than 40 percent from the $175.46 he paid in November of 2015.
Even drivers who never get in accidents have to pay for PIP’s rising costs in their region. PIP often accounts for up to a quarter or more of a driver’s total bill.
Since the start of 2017, overall premiums have gone up 9.9 percent among the top 25 insurers, but the parts of the insurance bill that are rising fastest are PIP (13.4 percent) and uninsured motorist coverage (14 percent). Drivers may choose to buy uninsured motorist coverage not necessarily because other drivers have no insurance at all, but because Florida lets them carry only state-required minimum coverage including PIP. That means their insurance provides little help to others who may suffer harm they cause.
A bill the House passed, HB 19, would repeal PIP and require $25,000 of bodily-injury liability coverage per person or $50,000 per accident. That’s comparable to what most states require. It won’t mean a drastic change for most Florida drivers, because more than 90 percent already carry some level of BI coverage, according to state regulators.
But it could provide a rare breath of fresh air in Florida: Rate reductions. A state-commissioned actuarial study in 2016 found even after an expected bump in BI premiums, the average Florida driver could save $81 per car under PIP repeal like the House version. The savings were projected to run about 5.6 percent of the overall bill and add up to about $1 billion a year.
Under a Senate version, meanwhile, consumers bills are projected to stay about the same or go up. SB 150 repeals PIP but requires $5,000 of medical payments coverage, which one lobbyist dubbed PIP 2.0. Doctors and hospital groups say want this because they are required to treat people in an emergency, and this helps ensure at least some payment — though the bill would require all drivers to buy it, not just those lacking health coverage.
The Senate bill is sitting in committee, with no action listed on a state website since Jan. 17, as the session’s end approaches in early March.
Should there prove to be any late-session stirrings, some industry interests have tried to splash cold water on the idea consumers should expect lower premiums under either repeal bill.
A report prepared for the Property Casualty Insurers Association of America said the House bill would raise premiums by at least 5.3 percent, or $67 per driver.
The report’s authors admitted they relied on data from a group of PCI members that had not been audited or verfied: “To the extent the participating members do not represent an unbiased sample of the entire market of personal auto insurers in Florida, our results may be biased as well.”
The report also decided to ingore any potential savings from eliminating PIP fraud: “we have not adjusted our central projections for any reduction in fraud claims in the proposed new system.”
The report’s credibility was immediately called into question by Paul Jess, executive director of the Florida Justice Association, representing lawyers who support PIP repeal.
“The ‘findings’ in this report are way out of line with the real-world savings that were generated after Colorado, Georgia, and Connecticut switched from no-fault auto insurance to a responsibility-based approach,” Jess said. “The insurance corporations that paid for this report apparently are afraid of Florida embracing a new approach that promotes the principles of individual responsibility and accountability. That’s why this insurance corporation-sponsored report wildly misses the mark.”
Insurers shot back that trial lawyers are a big part of the problem of rising costs. They want reforms to rein in legal fees, including an overhaul of Florida’s “bad faith” law, before returning to a tort system where a wider range of cases could wind up in court.
“We look forward to working with lawmakers on measures that ensure cost savings and protection for Florida’s policyholders,” said Logan McFaddin, PCI regional manager.
Concerns about legal fees were seconded by the Personal Insurance Federation of Florida, whose founding members include State Farm, Allstate and Progressive and represent close to half of Florida’s car insurance market.
President Michael Carlson said another issue is what to do about drivers who buy only minimum coverage, and could face higher costs and choose not to buy it at all in the new system.
“While the House bill is superior to the Senate bill because it is more economical in scope and effect, we would prefer that no bill pass that doesn’t meaningfully include these concepts,” Carlson said. “PIP has been on the books since 1971. Another year and perhaps a more reasoned evaluation of suggestions for improving our auto reparations system is probably a good idea.”
By choosing to ignore any rate effects from ending PIP fraud, the industry’s rate forecast sidesteps a long and colorful history.
Despite a string of reform attempts including a 2012 law, fraud never quite seems to go away. The A&E network chronicled the takedown of a fraud ring in Palm Beach and Martin counties in 2015.
A year later, two Lake Worth brothers were sentenced to nine year prison terms for what prosecutors said was a $3 million staged-accident scheme involving a sham clinic that offered unneeded or nonexistent treatment.
They’re not the only ones accused of ripping off the system, though. Complaints do not always allege outright fraud, but sometimes bill-padding or overcharging to collect a maximum benefit.
HCA hospitals in Palm Beach County and other locations charged up to 65 times what Medicare does for PIP injury scans, often using up the entire $10,000 benefit in a single day, a lawsuit alleged. Injured drivers said they were left with no money for any other treatment. Hospital attorneys said blame insurers who agreed to pay those prices.
Is PIP any different from other health insurance in a way that makes it vulnerable to fraud? Yes. It is designed for fast payments, in as few as 30 days. That can be a good thing, as driver Brandon Notowitz of Delray Beach said it was for him when he was injured in an accident at a stoplight.
He told the Post in January he figured he might have been facing loans, a ding to his credit score or missed work time while he waited for the other driver’s insurance company to act on the claim, but the timely PIP benefit helped.
“Without the PIP, I would have been stuck,” he said.
But the trade-off in PIP’s design was that it was supposed to be almost automatic, leaving less time to check out questionable charges — though the system wound up generating tens of thousands of court cases and frequent legislative intervention.
And cost controls are different. Medicare and most employer health plans have a long history of working out what they will pay for certain treatments and procedures. There’s not likely to be payment for 65 times what Medicare pays when Medicare is paying, though medical providers often argue that’s too little.
In the end, drivers pay for everything PIP does through their premiums. And most drivers are paying a lot more for PIP.
Take the eye-opening 54.3 percent increase at USAA General Indemnity Co. since the start of 2017, according to state data. Two other USAA companies hiked PIP rates close to 50 percent.
USAA spokesman Rich Johnson in San Antonio did not dispute the figures but declined comment.
Not all are that dramatic. One carrier cut rates slightly. But 15 of the top 25 insurers filed double-digit PIP increases in Florida since the start of 2017.
In West Palm Beach, Solar said he had enough trouble sorting out a 2014 accident where he was treated for injuries but understood the other driver only carried minimum coverage including PIP.
All he knows is higher PIP bills keep coming his way.
“Why have a law when it does nothing?” he said.
PIP rate changes
Increases in Personal Injury Protection premiums at Florida’s top 25 insurers since start of 2017
USAA General Indemnity Co. 54.3%
USAA Casualty Insurance Co. 50.7%
United Services Auto Assn. 47.4%
Southern-Owners Ins. Co. 33.9%
Infinity Indemnnity Ins. Co. 31.4%
Infinity Auto Ins. Co. 27.5%
Florida Farm Bureau Gen. Ins. Co. 21.2%
Metropolitan Casualty Ins. Co. 20.9%
Geico General Ins. Co. 17.7%
Travelers Home & Marine Ins. Co. 16.1%
Allstate Fire & Casualty Ins. Co. 16%
Windhaven Ins. Co. 16%
Safeco Ins. Co. of IL 15.6%
Allstate Ins. Co. 13%
Geico Indemnity Ins. Co. 8.8%
State Farm Mutual Auto Ins. Co. 6.9%
Direct General Ins. Co. 5%
Esurance P&C Ins. Co. 5%
Security National Ins. Co. 3.3%
Progressive American Ins. Co. 1.5%
Progressive Select Ins. Co. 0.3%
21st Century Centennial Ins. Co. 0%
Allstate P&C Ins. Co. 0%
United Automobile Ins. Co. -1.9%
Weighted PIP average 13.4%
Overall premiums 9.9%
Source: Florida Office of Insurance Regulation
Note: Weighted average takes into account market share, so big companies count more.