No-fault repeal clears first Senate committee

The Senate Banking and Insurance Committee advanced a bill that would replace Florida’s no-fault auto insurance system with a bodily injury system.

SB 54, sponsored by Republican Sen. Danny Burgess, would eliminate PIP coverage in favor of bodily injury liability coverage, which would pay out up to $25,000 for a crash-related injury or death or up to $50,000 for injury or death in a crash involving two or more people.

“Since this is my first bill, I wanted to make sure to ease into the process a little bit and not present anything too controversial or all that substantive,” Burgess, who joined the Senate in November, joked at the outset of the Tuesday meeting.

The current system requires drivers to carry $10,000 in personal injury protection, or PIP, to pay for medical coverage after an accident. The coverage pays out regardless of which party is responsible for an accident, hence “no-fault.”

PIP is aimed at getting injured parties medical care quickly and without bogging down courts. However, critics say the system is rife with fraud and the $10,000 coverage limit, set in the 1970s, is insufficient. Critics of BI insurance note that it doesn’t pay out automatically, potentially leaving providers or the injured on the hook.

A system swap has a lot of variables, and most studies on the effects it would have on premiums are murky. Pro-swap studies lean on the assumption that curbing PIP fraud will lead to an overall reduction. The other side claims a change would simply shift costs from auto insurance premiums to health insurance ones.

Regardless of system, the state’s high number of uninsured drivers are a contributing factor in insurance rates.

Still, lawmakers consider ditching the no-fault system on a seemingly annual basis.

The latest “repeal and replace” effort, however, appears to have the support of Senate President Wilton Simpson and comes at a time when insurers and health care interests, which are generally in opposition, are bogged down with other policy efforts such as remedies for the shaky property insurance market and COVID-19 liability protections. Trial lawyers generally support the change.

A point of contention Tuesday were changes to the state’s “bad faith” laws, which are aimed at helping consumers if an insurer denies a claim without a valid reason, unnecessarily delays a settlement, or offers less than the policy coverage amount.

Bad faith reform is something of an olive branch to insurance companies, which claim changes are needed in order to balance out the negatives of a repeal.

Originally, SB 54 contained a minimal framework, but an amendment by Sen. Kathleen Passidomo, a Naples Republican, made some changes to those provisions, particularly to the third-party bad faith claims, or claims filed by an injured party against a driver’s insurance carrier.

Passidomo said the amendment is aimed at facilitating “communication, whether it be the claimant in asking for a settlement, and then being able to determine whether or not to accept this settlement offered by the insurance company, or the insurance company, knowing what the claimant is requesting and being able to investigate the validity of the claim.”

With the amendment adopted, the committee voted 10-2 in favor of the bill, with Democratic Sens. Annette Taddeo and Perry Thurston being the lone no-votes.

SB 54 now moves on to the Senate Judiciary Committee.

Senators on the panel stressed the need for more data on how the bill would impact premiums before it’s heard in its next committee.

St. Petersburg Republican Sen. Jeff Brandes, who chairs Judiciary, said the uninsured are what’s driving up insurance rates. If the repeal caused a further premium increase, an increase in uninsured motorists could follow.

“Ultimately, it’s the fact that you’re having to pay hundreds and hundreds of dollars in premiums for uninsured motorists, because you have a one in four shot of having somebody hit you that carries zero insurance. And that is untenable and unsustainable. And that’s really what’s driving rates.”