Lynne McChristian of the Insurance Information Institute recently told the Miami Herald that auto insurance rates are rising because of the drop in the unemployment rate as the main reason. “It’s an unintended consequence of low unemployment,” she said. “You have more people with jobs to go to.” That’s a new one for Miami car accident lawyers and their personal injury clients.
Four years ago, the Florida Legislature allegedly reformed the PIP (Personal Injury Protection) laws. As part of the reform deal, our insurance rates were supposed to drop. Car insurance rates dropped after the 2012 changes by 0.2% in 2013-2014. But in 2015-2015 those rates increased by 13.8% according to the Florida Department of Insurance Regulation.
Since January 2015, the insurance companies have raised automobile insurance rates an average of 15%. In fact Allstate has increased its PIP rates by 40 %.
Ms. Christian claims that average PIP claim in the last quarter of 2015 was $8280 which is close to the average in 2011 of $8,520 before the PIP reforms were instituted. Of course the insurance companies claim fraud is driving the rates higher in spite of the fact that these same insurance companies pushed through the reforms they wanted.
Insurance Company Statistics are Like Bikinis
Aaron Levenstein once said “Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.” Insurance companies are experts in using statistics to move their agenda
forward which usually involves rate increases. State Farm is the top Florida insurer with $2.4 billion (with a “B”) in premiums last year. But State Farm claims its losses have been rising for years. State Farm spokesman Michal Brower said “We’ve seen an increase in claims costs. We must appropriately match our rates to the amount of risk we’re insuring.” Like we said – bikinis.
But let’s look at the actual facts. The Florida Department of Highway Safety and Motor Vehicles maintains statistics for car crashes. In 2014 and the preliminary findings for 2015 show:
| County | 2014 | 2015 | Change |
| Miami-Dade | 60,175 | 63,398 | 5.4% |
| Broward | 34,839 | 38,397 | 10.2% |
| Statewide | 344,344 | 373,898 | 8.6% |
Florida’s Rising Car Insurance Rates
The Florida Department of Insurance Regulation maintains records for insurance rates. Here are the overall car insurance rate hikes in Florida since January 1, 2015:
- Statewide Average: 13.8%
- Allstate: 13.5%
- Progressive: 14.8%
- State Farm: 14.1%
- GEICO: 18.1%
- USAA: 21.7%
In 2015, Florida’s car insurance rates averaged $1,742. According to insure.com, that made Florida the fourth-highest among in the United States with only Montana, Michigan, and Louisiana were higher. On average, one fourth of each premium is allocated to PIP coverage.
Over the years, debate has raged in Tallahassee over what to do with PIP coverage. The truth is most states have done away with PIP. But in our analysis, PIP is not going anywhere in Florida for the foreseeable future because of the competing interests involved – the medical profession, the legal industry and the insurance companies.
The Competing Interests that Keep PIP Alive in Florida
Why does the medical profession want to keep PIP? The original intent of the PIP statute was to provide car accident injury victims access to medical care without regard to fault. That is where the name “No-Fault” came from – payment of medical bills and lost wages that were caused as a result of a car accident would be paid without delay. The medical industry likes to be paid and paid promptly. Health insurance companies pay on schedules that reduce the rate of reimbursement. Workers’ compensation also has a schedule. PIP has some schedule like limitations, but nothing comparable to the afore-mentioned schedules. So the medical industry’s interest is monetary.
Why do the insurance companies want to keep PIP? Despite all the outrage and claims of fraud, PIP is very profitable. No one ever hears about the premiums the insurance companies collect from drivers who never make a PIP claim. If PIP wasn’t profitable, the insurance companies would lobby vigorously against it and in the legislative climate of Tallahassee, it would most likely be gone. But insurance companies want to keep collecting those premiums and to keep complaining. Clearly, the insurance company’s interest is profit.
Why does the legal profession want to keep PIP? Generally speaking, if an insurer fails to pay PIP benefits on time and a lawsuit is filed, the insurance company will have to pay attorneys’ fees if the lawsuit is successful. In Florida, there are many law firms devoting a significant part of their practice to PIP lawsuits. But personal injury attorneys are generally in favor of PIP too. If there is PIP coverage available, then the new personal injury client will have up to $10,000 in PIP benefits available to get medical care and treatment and/or pay for lost wages. That medical treatment often lays the foundation for the personal injury negotiations. It also helps the personal injury victim get the medical care and treatment they need following a car accident. Obviously, the legal professions interest in maintaining PIP coverage is financial.
What Are the Options to PIP in Florida?
The main option is to eliminate PIP and make Bodily Injury (BI) coverage mandatory with a legally set minimum limit. But as stated above, this option has significant opponents. By switching to mandatory BI the attorneys’ fees in PIP would be eliminated (bad for legal industry), but prompt payment of medical bills would no longer exist (bad for medical profession). If a doctor chose to treat car accident victims, he or she would need to work under a Letter of Protection and wait until the case was resolved in order to get paid.
So what do the insurance companies lose with the elimination and replacement of PIP? Insurance companies charge premiums for each coverage. Eliminating PIP eliminates a portion of the premium. Even if that coverage is replaced with mandatory BI, the insurance company will never be able to justify the same high premiums they now charge for PIPI. While buying BI will be mandatory, payment of those claims will be dependent on fault as determined by the parties, a judge or a jury. Payment of BI limits will not be mandatory and will not include the risk of statutory attorneys’ fees like PIP has now.
What Can You Do About Your Insurance Rates?
What can you do? Stay informed. Email your representatives and let them know you are watching. Tell them what you pay and why you think it is unfair. Demand that the government look out for you against the competing interests of the insurance companies, doctors and lawyers.
You can also shop around for different insurance companies and compare rates. Just because you parents were insured with one company for most of their lives does not mean you have to be insured with that same company. Let the free market work for you. Get different quotes and compare the cost. Call the insurance companies to see if they can offer you any ways to reduce your premiums. Maybe they will. Maybe they won’t. But you will never know unless you ask. No matter what anyone says – you are still the customer.
If you have any questions about your insurance, feel free to call our Miami Car Accident Lawyers at Wolfson & Leon. We will be happy to discuss your insurance issues free of charge. Just call us at (305) 285-1115.