By Fraser Cobbe
The headlines last week were eye-catching but further analysis calls into question the societal benefits of eliminating Personal Injury Protection (PIP) or "no-fault" auto insurance in Florida.
The Florida Office of Insurance Regulation and Pinnacle Actuarial Resources, Inc. released their long anticipated analysis of the PIP Legislation enacted in 2012. The press release and link to the report can be found here: http://www.floir.com/PressReleases/viewmediarelease.aspx?id=2175
While the review of the 2012 legislation was enlightening, the real headline was the $1 billion savings projected by Pinnacle if we totally eliminate no-fault. Most of the media coverage focused on that billion dollar savings.
While the amount of the overall savings is seductive, in my eyes the real story is that the savings amounts to only $81 per car annually (or $6.75 per month) for the average driver.
Could it be that PIP has been underappreciated and unnecessarily maligned all along?
While we recognize that PIP has many warts, regulatory entrapments, and only covers a fraction of what it used to when enacted years ago, when compared to other insurance benefits on the market, $6.75 a month for $10,000 of medical benefit sounds pretty good.
PIP as originally envisioned has some really good benefits. It was created to make sure drivers have immediate access to resources to secure care they need when involved in an accident. PIP provides benefits for both drivers and passengers regardless of fault. Finally, PIP provides critically important funding to make sure our emergency system, first responders, on-call specialists, and trauma teams are reimbursed for the lifesaving treatment they render accident victims.
Without PIP most drivers involved in an accident will need to utilize their personal health insurance or a governmental program, like Medicaid, to cover the cost of their treatment while fault is determined. This will lead to significant delays and litigation as the parties involved battle over who has to pay for the necessary treatment. Add in the fact that a large percentage of us now have high deductible health insurance plans. I am not so sure that PIP isn't a really good deal for me and my family.
In my situation, carrying a $2,500 health insurance deductible, it would take me 30 years of saving my $81 PIP Relief Fund to cover the cost of my deductible.
If PIP does go away, it is likely to be replaced by other mandated or highly encouraged coverages such as bodily injury or emergency med pay. So the likelihood of drivers actually saving the full $81 is questionable.