AUTO/PIP… Post does a number on the numbers!

The Palm Beach Post  did a bit of a number on OIR numbers regarding PIP reform. To be clear, its conclusion that PIP needs to be repealed is sound but,  an editorial by Randy Schultz and the biased article upon which it was unfortunately based, both come across  like attacks on entities  the Post doesn’t like, rather than treatises on repealing No-Fault, which is its position.

OIR numbers show the PIP portion of the average auto premium decreased by 13.2 percent–not too shabby, but short of the targeted 25%.   Post readers, however, were deflected to overall premiums which include increases for coverages not even addressed by the reforms. It’s easy to miss it from the Post’s rendition but, this information was also provided in the OIR’s widely circulated numbers revealing an overall savings of only 3 to 4 percent on the “total” premium once non-PIP increases were factored in.

Schultz correctly states that the reforms were supposed to cut PIP premiums by 25%.

Unfortunately he also said:

The clear intent was to cut the cost of auto insurance by the same 25 percent. At least.

I don’t know how clear that intent was.  It certainly wasn’t contemplated that rising costs for other coverages, physical damage for example, wouldn’t continue to contribute to rising premiums.  And, don’t forget the original slate of PIP reforms was severely watered down, maybe to a 13.2% level.  But, never mind that.

Schultz relies too much on an article by Post staff writer Charles Elmore.

Titled, Dude, where’s my car insurance savings?”  it used the OIR report to imply that increases in non-PIP auto coverages were attempts by insurers to avoid reducing total premiums  resulting from the PIP reforms.

Not true.  And, it confirms suspicions of an organization-wide disdain at the Post for all things insurance.  Increases in non-PIP coverages could not be implemented without OIR’s prior approval which, even when facts demonstrably support such an increase, would only be reluctantly granted.

In what was either an attempt to create the appearance that OIR wasn’t telling the whole story or to make his employer think he had to dig further than a public press release, Elmore refers to the OIR figures as “records reviewed by The Palm Beach Post” and uses the tag line:

Twelve of top 20 Florida insurers raise overall rates despite law that slashed benefits

He doesn’t mention that some of the twelve had  insignificant market share or specialty programs that would skew the total results. Instead he highlights GEICO whose overall rate change came to exactly 0% despite a PIP reduction of -25%.  Why didn’t he single out Progressive Select  which reduced its’ overall rates by 15% due to a whopping reduction in PIP of almost 35%?

And, of course, he sought unbiased testimony from a trial lawyer. Miami attorney Marlene Reiss said:

“This has been one of the great scams perpetrated by the insurance industry and its lapdogs in Tallahassee.”

Elmore practically declares Governor Scott to be in the pockets of insurers because of one campaign contribution, but…completely overlooks the fact that trial lawyers favor Scott’s PIP reforms and oppose the Post’s position in favor of repeal.

Finally, instead of pointing out that many insurer’s want to repeal PIP, too, including the American Insurance Association (AIA) whose members write more PIP in Florida than any other single group, Schultz closes with another jab at the industry:

“Make a change for the sake of drivers, not insurers”

A few simple truths.

The Post is right to urge repeal but wrong to single out insurers as the culprits in opposition.   Hospitals, Trial Lawyers, business groups, health care providers of every ilk, also want to keep feeding off the status quo. Many in the media agree.

The OIR figures were correct and any implication by the Post to the contrary is wrong. But…they are subject to interpretation.

Here’s mine:

Since the original 1971 law mandated an across the board 15% rate reduction which eroded within two years setting into play four decades worth of reforms whose savings also eroded, there’s no reason to believe that reforms generating only a 3.4% across the board savings will last beyond the next election.


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