Why reducing insurance fraud may not lower rates

Insurers claim that even if legislation is passed to combat personal injury protection they can’t guarantee lower insurance rates, even if is passed to PIP, insurance fraud.

Regardless of which driver is at fault, PIP pays medical bills for policyholders injured in auto accidents, and state law requires drivers to have at least ten thousand dollars in coverage. The requirement was intended to avoid lawsuits and their costs for minor injuries and to protect Floridians who don’t have health insurance. So, the clear question is: why can’t the savings be passed to consumers, if fraud is causing rate increases and laws are passed to fight it. In this article we are going to show you what the experts answer is and some other questions.

If legislation is performed to reduce PIP scheme, would your automobile insurance rates decrease?

The answer is no, not right away. Insurers would be required to go ¬†through a lengthy process to ask to hold or raise rates or to decrease rates, a summary of the House insurance committee’s bill to fight PIP fraud.


A few state leaders said that if legislation is enacted (similar to provisions in previous years that required home insurers to pass savings to consumers), they would want insurers to be required to lower rates. For several reasons, it would be hard to do with automobile insurance – say insurance industry representatives. These reasons are:

  1. It would take as a minimum a few years to know whether the legislation helped enough to lower premiums because rates are based on losses in previous years.
  2. It could be possible to find a way around legislation by providers, by allowing savings in one area to be equalize by higher costs in another. For example, the Legislature didn’t limit how many procedures could be billed, but Legislature successfully set fees in 2007 for what health care providers could charge for PIP claims in 2007.
  3. Lawsuits could drive up costs and laws would have to survive legal challenges.

The other question is: Will insurance cost decrease if law enforcement cracks down on staged accidents that result in fraudulent PIP claims?


Well, the answer is no, because fake accidents are not the only way PIP is being taken advantage of. Most of the people have ten thousand dollars in PIP exposure, (massages or repeated chiropractic visits – health care provider bill for services) – patients may not need.

The other question is that how much of the raise comes from PIP against other exposure and how much have automobile insurance premiums in Florida increased in recent years?

JohnBales Attorneys informed us that State officials have offered PIP coverage for some insurers. All together, the full premiums insurers for PIP exposure in Florida is not changed a lot, from the past 8 years.

About 44% of the total amounts of sales – the biggest auto insurers – raised premiums twelve percent to sixteen percent from 2009 till 2011 – as said by the Office of Insurance Regulation.

According to OIR data, over the past eight years – all PIP premiums in Florida haven’t changed much.