Despite warnings from insurers and health care providers, the Senate is scheduled to take up a bill to repeal Florida no-fault auto insurance system as soon as today.
The bill (SB 54) would end the requirement that Floridians purchase $10,000 in personal injury protection (PIP) coverage and would instead require mandatory bodily injury (MBI) coverage that would pay out up to $25,000 for a crash-related injury or death.
PIP coverage pays out regardless of which party is responsible for an accident — hence “no fault” — and it does so quickly. MBI coverage, however, doesn’t pay out until a fault determination is made, which can leave health care providers or patients on the hook for thousands of dollars in medical bills while they wait for a claim to resolve.
No-fault repeal is a perennial effort in the Legislature. Republican Sen. Danny Burgess is shouldering the 2021 effort, picking up the mantle from the lawmaker he succeeded in SD 20, former Sen. Tom Lee.
Those backing PIP repeal say the system is rife with fraud and that the $10,000 coverage limit, set in the 1970s, is woefully inadequate five decades later.
The state Office of Insurance Regulation says that while PIP represents about 2% of Florida’s collected insurance premium, it accounts for nearly 50% of fraud referrals. Backers this Session have pointed to that stat to hype up the state’s auto insurance market as being in crisis.
Opponents say the crisis is a manufactured one. A PIP repeal, they say, would produce a real one.
According to data assembled by the American Property Casualty Insurance Association, an insurance industry trade group, the no-fault repeal could jack up insurance rates – especially for low-income drivers.
The analysis predicts rates would rise by $165 to $876 a year for predominantly low-income drivers who carry minimum limit insurance. About 40% of Florida drivers carry minimum limits that are below what would be required under the Senate bill.
A January 2021 actuarial study conducted by Stephen A. Alexander counters the APCIA analysis, asserting that a switch to a mandatory bodily injury auto insurance system would result in an average savings of $350 a year for Florida drivers.
Florida does have some of the highest auto insurance rates in the country, and they are rising faster than every other state except Colorado, which pins the blame on repealing its own no-fault law.
Most analyses say Florida’s crisis, if there is one, is the volume of uninsured drivers on the road. The Sunshine State has the highest rate of uninsured drivers in the country at more than 20%, according to the Insurance Research Council.
Insurers warn that the PIP repeal and the ensuing rate increase would only drive more Floridians to ditch their insurance, which would further raise rates for insured Floridians.
An uptick in uninsured drivers also impacts health care costs — the more uncompensated care at Florida hospitals, the more providers must charge to make ends meet. About 25% of emergency room care statewide is uncompensated, and much of it is related to auto accidents.
Opponents say insured Floridians would pick up the slack, if not through their auto insurance, then through their health insurance premiums or higher taxes.
Still, the repeal effort appears to have the support of Senate President Wilton Simpson, who has decried PIP coverage “outdated” and said “it’s the right time for Florida to move to mandatory coverage for bodily injury liability.”
Burgess has offered amendments to the bill, but Florida Politics is still sorting through them.
Whether it has the support to make it into law is another question as other elected officials aren’t sold, including CFO Jimmy Patronis who said early on in the Legislative Session that all indications are it would raise rates for “those that can least afford it.”