Med pay requirement heightens concern for no-fault repeal

The Senate voted late Wednesday to repeal the state’s no-fault auto insurance system, but opponents, including one Senator, are raising concerns about a floor amendment that could increase insurance rates for Florida drivers.

SB 54, sponsored by Republican Sen. Danny Burgess, would replace the current requirement to carry personal injury protection coverage with a new one requiring mandatory bodily injury coverage.

There were already questions about effects the switch would have on Florida’s auto insurance rates, which are already among the highest in the country, but an amendment to require drivers also carry $5,000 in medical payment, or med pay, coverage spurred more concerns.

Previously, the bill would have made med pay coverage an optional add-on. Staff analysis from the bill’s committee stops don’t broach the impacts of mandatory med pay and the effects of a PIP-to-MBI switch are already hazy.

St. Petersburg Republican Sen. Jeff Brandes, the lone nay vote on the bill, compared the bill to the public debate leading up to the passage of the recent coronavirus stimulus package.

“Nancy Pelosi famously said we have to pass the bill in order to find out what’s in it,” Brandes said. “In this case, we have to pass the bill to find out how much it costs. That’s no way for the Florida Senate to do business.”

“You can’t go home and look your constituents in the eye and say this is going to lower your rates for your poorest constituents. It may raise their rates 15, 20, 70%. We don’t know. And that isn’t right.”

Insurers and lawyers alike have since joined Brandes in opposing the change, which they say will lead to more Floridians ditching insurance altogether, ultimately leading to higher premiums for those that do maintain coverage — Florida already has the highest uninsured rate in the country at 20%.

“A bodily injury requirement with no personal injury protection like SB 54 proposes would hike up the cost of insurance and only lead to more drivers hitting Florida’s roads uninsured,” said Michael Feiner, a Florida-based personal injury lawyer and founding partner of Steinger, Greene & Feiner. “If there was no personal injury protection, a claimant would not need to meet a threshold of a ‘permanent injury’ to recover non-economic damages (pain and suffering) as is required now.”

American Property and Casualty Insurance Association Assistant Vice President of state government relations Logan McFaddin also railed against the bill.

“The Florida Senate’s passage of Senate Bill 54 is bad news for Florida drivers, but especially those who live paycheck-to-paycheck and carry the minimum levels of auto insurance coverage. In Florida, approximately 40% of drivers carry minimum limits that are below what would be required under SB 54. Under the current proposal, these drivers could see their auto insurance costs rise by $165 to as much as $876 a year.”

Repeal advocates have countered APCIA premium increase claims by pointing to a January 2021 actuarial study conducted by Stephen A. Alexander that claims drivers would save an average of $350 a year under an MBI system.

McFaddin also said the bill was devoid of any meaningful “bad faith” lawsuit reforms. She said the omission would likely lead to more litigation and higher premiums.

Despite overwhelming support in the Senate, the bill faces an uncertain future.

The House version (HB 719) would not require drivers to carry med pay coverage. It has one committee stop left before the chamber floor.

Gov. Ron DeSantis so far hasn’t indicated whether he will sign the bill, though Brandes said on the Senate floor that the Governor wasn’t opposed to the measure. CFO Jimmy Patronis, however, has said he opposes the change and believes it will raise rates.

“I grew up in a service industry, I had employees that work from month to month, and if you increase their insurance rates by $15 or $18 a month, that’s real money to somebody’s pocket,” he said.