Earlier this year the Florida Legislature implemented sweeping cuts to the Personal Injury Protection benefits required under Florida law. Available benefits were reduced from $10,000 to $2,500 in many situations. This reduction in available benefits was expected to reduce the cost of the insurance, and the savings could then be passed on to drivers. The legislature demanded that all insurance carriers providing PIP insurance in Florida either a) reduce their premiums by 10%, or b) explain why they could not do so. Not surprisingly, most carriers have chosen option (b).
According to Sandra Starnes, the director of property and casualty product review at the Florida Office of Insurance Regulation, as of November 16th, the average reduction of PIP premiums is only 2.5%. Some carriers have actually applied to increase their PIP rates. Florida Farm Bureau applied for an 8% PIP rate increase, which was approved by the state. Senator Joe Negron (R), an advocate for the new PIP changes, had this to say: “It’s compete nonsense for insurance companies to not reduce rates. We will not allow insurance companies to reap the benefits of hundreds of millions of dollars in reductions to their costs while they simultaneously deny rate reductions to consumers.”
Generally, PIP premiums amount to only 25% of an average drivers’ car insurance bill. A PIP premium decrease of 2.5% equates to a 1% reduction of the overall bill. These “savings” will be reflected on drivers’ bills when the PIP amendments take effect on January 1, 2013. For more information on the drastic changes to the PIP law see our prior articles or call us at (800) 848-6168 for a free consultation and review of your auto insurance.