Analysis: No-fault repeal could raise rates by 50% or more for some drivers

If Gov. Ron DeSantis signs the no-fault repeal bill lawmakers passed this Session, some drivers could see their premiums jump by nearly 50%.

Florida currently requires all drivers to carry $10,000 in personal injury protection (PIP) coverage, which pays out after an accident regardless of who is at fault.

The bill (SB 54) approved by lawmakers earlier this year would ditch PIP in favor of mandatory bodily injury (MBI) coverage that pays out up to $25,000 for each injured person or up to $50,000 per event.

According to a new analysis from Pinnacle Actuarial Resources, drivers who currently carry insurance that meets the minimum limit should brace themselves for a major premium increase.

In the analysis, Roosevelt C. Mosley Jr. wrote that “the impact on policyholders with minimum required coverage will be significant.”

The analysis says motorists with minimum coverage currently pay $585 a year on average for car insurance. If the no-fault repeal bill is signed, their premiums would shoot up to $868 a year.

The projected increase assumes those drivers would reject medical payments coverage, or MedPay, which was tacked onto the bill in the 11th hour of the Legislative Session. The bill does not require drivers to purchase MedPay, though it does require insurers to offer it.

If the bill is signed, a driver who currently purchases minimum coverage and elects to add MedPay in their new policy would see their rates rise another 30%, to $1,037 a year on average.

The no-fault repeal would impact all drivers, though motorists who currently purchase full coverage would see a comparatively small rate hike.

Those who opt out of MedPay would see a 1.5% bump overall. Adding $5,000 in MedPay would lead to an 8.6% bump on average, and $10,000 in MedPay would lead to a 13.3% increase.

Pinnacle’s analysis, commissioned by the Office of Insurance Regulation, largely tracks with the warnings issued by insurers as the bill moved through the Legislature.

Further, insurers have warned the repeal could send the auto insurance market into a tail spin. They reason that a large rate increase could lead to more drivers ditching insurance altogether.

At approximately 20%, Florida has one of the highest uninsured rates in the country. If it ticks up following the repeal, it would lead to the drivers who do carry insurance covering insurers’ losses through further premium increases.

It could also lead to a spike in uncompensated medical care. Pinnacle’s analysis estimates the repeal would lead health insurance claims to rise by more than $300 million and leave health care providers on the hook for $13 million.

DeSantis so far hasn’t indicated whether he will sign the bill, though Sen. Jeff Brandes said on the Senate floor that the Governor would likely veto the measure. CFO Jimmy Patronis said earlier this year that 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.