By JEFF HARRINGTON St. Petersburg Times
Published: Sunday, July 31, 2011 Auto insurance rates in Florida have been rising steadily since
State Farm, Geico, Progressive and Allstate -- the big four auto insurers in Florida -- have been aggressively battling for your business on the airwaves, with each promising lower rates than the other guy.
You'd think auto insurance is getting cheaper.
You'd be wrong.
Auto rates in what is already one of the most expensive states in the country have been on the rise through a steady stream of twice-a-year increases by many insurers since late 2009. All of the big four insurers have been hiking rates.
Take giant State Farm, which insures one out of every five vehicles driven in Florida.
Since November 2009, State Farm has raised its average auto rates four times, between 4.3 and 9 percent each time. That means if you were paying $200 for auto insurance a year and a half ago, the same coverage would cost about $252 today, roughly 26 percent more. Why? "I can tell you in one word," State Farm spokesman Chris Neal says. "It's PIP. PIP losses continue to accelerate with no end in sight. It's almost the sole reason behind those increases."
PIP, or personal injury protection, covers drivers and passengers hurt in auto accidents. Under the state's no-fault insurance laws, anyone injured is covered for up to $10,000 in medical bills.
The problem: PIP claims have skyrocketed in Florida, along with allegations of PIP fraud. Insurers and the state investigators cite increased reports of staged accidents in which people with minor or no injuries go to medical clinics for treatment and those clinics, in turn, collect up to $10,000 per person in insurance payouts.
A push to clamp down on PIP fraud failed in the Legislature the last session, in part because of concerns that it was overreaching. Personal injury attorneys and some legislators objected that it gave insurers up to three months to pay legitimate claims and said a limit on attorney fees could discourage people from going after insurance companies that deny legitimate claims.
Regardless of what percentage of PIP claims are legitimate, it's clear that claims are on the rise.
A report this year showed that PIP filings rose 28 percent from 2006 to 2010 in Florida. The number of PIP-related lawsuits in which the insurer was the defendant increased by 387 percent in the same four-year period.
In January, economist and Insurance Information Institute president Bob Hartwig said the cost to insurers of covering no-fault fraud is rising by 70 percent annually, and "these costs will eventually be passed along to Florida drivers."
"Eventually" has arrived. In addition to the string of State Farm filings:
Geico General imposed a pair of rate increases this year, an average 4.5 percent increase effective Jan. 27 and a 5 percent boost effective June 30. Its sister company, Geico Indemnity, imposed rate increases of 4.8 percent and 4.3 percent, respectively, for the same time periods. In a letter to some customers, Geico blamed a continual sharp increase in the number of people claiming injury for every 100 accidents, "although the rate of accidents has remained fairly stable."
Progressive has raised auto rates about 10 percent since early 2010.
The two biggest Allstate units in Florida -- Allstate Property & Casualty and Allstate Insurance Co. -- are raising their auto rates 20 percent and 6 percent, respectively, effective this Monday. That's on top of hikes of 13 percent and 3 percent, respectively, last year.
Neal of State Farm said the percentage change reflects the overall increase in the average premium. Collision and comprehensive coverage has actually gotten cheaper, so policies including them may not rise as much. On the other hand, a customer with a bare-bones policy -- the state-mandated PIP coverage and property damage liability -- could see their premiums go up 20 or 30 percent at renewal time instead of 5 percent, Neal said.
"People that have a lower socioeconomic standing are probably the ones carrying minimum coverage," he said. "So these rate increases hit those that can least afford it."
Copyright © 2011 HeraldTribune.com
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