The House is expected to vote next week on a bill to repeal Florida’s no-fault auto insurance system.
The bill (SB 54), carried by Zephyrhills Republican Sen. Danny Burgess, 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.
The measure already passed the Senate last week 38-1. However, amendments added by the House sponsor, Rep. Erin Grall, means the measure would have to go back to the Senate after the House vote.
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.
PIP coverage pays out regardless of which party is responsible for an accident 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.
One of Grall’s amendments changed the Senate’s proposed requirement for mandatory medical payments coverage. The Senate would require motorists to carry $5,000 in med-pay coverage, while Grall wants to allow motorists to have an “opt out” choice on $5,000 to $10,000 in med-pay coverage.
The second amendment clarified parts of the “bad faith” portion of the bill.
No-fault repeal is a perennial effort in the Legislature.
And passing the bill was not effortless. Burgess joked about the several times the bill had been postponed on the floor this month before lawmakers finally considered it.
During debate in the Senate, Burgess acknowledged the bill has become a “Frankenstein bill” with inputs from several stakeholders to create what he called a balanced bill.
Republican Sen. Jeff Brandes, who cast the lone Senate vote in opposition, quoted a prominent Democrat in his debate ahead of his vote against the proposal.
“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.”
Florida has 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.
Insurers and others 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.
“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.”
Opponents say insured Floridians would pick up the slack, if not through their auto insurance, then through their health insurance premiums or higher taxes. Brandes warned the bill could raise rates on some of the poorest Floridians by more than half.
However, Grall told members people’s insurance rates would go down based on the information available to lawmakers.
She pointed to a 2016 report by the Florida Office of Insurance Regulation that projected drivers on average would see a 5.6% savings with a shift to a bodily-injury coverage requirement.
“Based on the information we have about rates and what will happen to rates after this bill is enacted and it becomes law, we believe rates will go down based on the information available from the 2016 (Office of Insurance Regulation) study and with the current increase in PIP costs,” Grall said. “We have not made any specific provision (regarding uninsured motorists) except that it is understood that rates should go down with this change, therefore making it easier for those who are currently uninsured to be able to afford coverage.”
But a 2018 study by the actuarial consulting firm Milliman showed a potential average increase in premiums of $67, or a 5.3% increase. On Monday, Doug Bell, a lobbyist for Progressive Insurance Co., estimated the changes could cause “significant” rate increases for people who have only PIP coverage or who have bodily-injury coverage amounts lower than proposed new minimums.
The American Property Casualty Insurance Association sent out a news release Friday that said nearly 12,000 letters have been sent to lawmakers this month opposing auto-insurance changes.
“Floridians already pay the highest premiums in the country for full auto insurance coverage, so they are understandably concerned about any public policy changes that would push costs even higher,” said Logan McFaddin, the association’s assistant vice president of state government relations.
The association contends the bill could increase the cost of an average auto insurance policy by 23% or $344. The association also argues costs would increase 3% to 6% because of a “lack of meaningful bad faith reforms” in the legislation.
Bad faith has been a sticking point in the past as the House and Senate have considered measures to repeal the no-fault system. Bad-faith lawsuits, which can be costly, involve allegations that insurers have not properly looked out for the interests of their customers.
And the repeal effort has the support of Senate President Wilton Simpson, who noted in a statement that every state except Florida and New Hampshire have mandatory bodily injury coverage.
“For everyone’s protection, drivers must be insured at sufficient levels,” Simpson said. “PIP coverage levels are clearly insufficient. It’s the right time for Florida to move to mandatory coverage for bodily injury liability.”
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.”
The News Service of Florida contributed to this post. Republished with permission.