More insurers warn no-fault repeal will be costly

Insurance policy contract concept with toy model cars having a crash. Auto insurance, car insurance, PIP, no-fault.
Some drivers could pay up to $1,000 more per year.

Another insurer is warning that repealing the state’s no-fault insurance system could produce massive rate increases for low-income drivers.

The Senate last week passed a bill (SB 54) that would replace the current no-fault system with a mandatory bodily injury (MBI) system.

It was amended on the chamber floor to require drivers also purchase medical payments insurance, or “med-pay,” raising concerns from some lawmakers since the impact of the requirement had not been analyzed when the bill was moving through committee.

The House, meanwhile, is poised to vote on its no-fault repeal bill after passing it through its final committee stop on Monday. The House bill does not require drivers to purchase med-pay coverage.

Both bills require drivers to carry MBI with limits of $25,000 for an accident with one injury or death, and $50,000 for multiple injuries or deaths.

Don Moser, president of Amwins Specialty Auto of Florida, said the no-fault repeal will result in substantial cost increases for drivers in the “non-standard” market who do not currently purchase bodily injury coverage.

He added, “This will be most pronounced in the segment of our population with limited income, including a disproportionate impact on minorities. The increased costs come from roughly 80% of the people in the ‘non-standard’ market who currently do not purchase bodily injury coverage due to cost and/or need. Making these people buy 25/50 bodily injury limits will add $600 to $1,000 per year to the costs for these people.”

The possible increases Moser warns of eclipse those predicted by the American Property and Casualty Insurance Association. That organization forecasts increases of $165 to as much as $876 a year for drivers who purchase minimum coverage in the current system. That segment includes about 40% of Florida drivers, many of whom are lower-income.

Doug Bell, a lobbyist for Progressive Insurance Co., told News Service of Florida Monday that the repeal could cause “significant” rate increases for people who have only PIP coverage or who have bodily-injury coverage amounts lower than the proposed new minimums.

Moser also took aim at med-pay — whether required or optional.

“The switch from mandatory personal injury protection with a limit of $10,000 to optional medical payments coverage with $5,000 will not result in savings as the Legislature has, over the years, enacted legislation to help stem the rising costs and combat fraud in personal injury protection,” he said.

“The key things lost by switching to medical payments include: no Medicare fee schedule to prevent ridiculously high billing for treatments, no more examinations under oath as a condition precedent to coverage to aid in fraud investigation and no more pre-suit demand letters.”

Moser said drivers won’t know how much higher their rates will be until carriers get “actual experience” in the new system, but he agreed with other groups that the “result will be more people opting out of coverage.”

“This will leave a big portion of our citizens with no medical protection for an accident in which they are at-fault. The bottom line is that insureds will not save money but will have less coverage when they are at-fault in an accident,” he said.

Other insurance groups, including APCIA, have also warned of an increase in uninsured drivers. At approximately 20%, Florida has one of the highest uninsured rates in the country.

Drew Wilson

Drew Wilson covers legislative campaigns and fundraising for Florida Politics. He is a former editor at The Independent Florida Alligator and business correspondent at The Hollywood Reporter. Wilson, a University of Florida alumnus, covered the state economy and Legislature for LobbyTools and The Florida Current prior to joining Florida Politics.

One comment

  • martin

    April 20, 2021 at 2:49 pm

    When the insurance industry issues warnings such as this, you know that it is the ambulance chasing lawyers who are pushing for this change.
    Eliminating PIP for a mandatory med-pay system essentially guarantee’s these lawyers will earn at least another 3-5k per case they represent.
    In addition to considering the back-log of court cases we currently see, due to the court system essentially being on hold for the past year due to covid, imagine the nightmare the courts will experience with an exponential number of auto cases going to litigation.
    Now consider the make-up of our legislative body in Tallahassee; lawyers. Who in particular is pushing for these changes, do the research and see who has sponsored these bills.
    Every time the legislature has made changes to our insurance laws, it becomes a cluster jumble.

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