An effort to ditch Florida’s no-fault auto insurance system is again on the move in the Legislature as reforms championed in 2012 by Gov. Rick Scott and state Chief Financial Officer Jeff Atwater haven’t held.
The legislation is projected to save motorists an average of about $80 a year per policy.
However, the proposal (HB 1063) could be another exercise in wheel spinning, similar to past legislative sessions. Some members of the House Insurance & Banking Subcommittee, which voted 12-2 for the bill, expressed a need for the measure to address issues, such as changes in the state’s bad-faith law, to reduce the potential for increases in lawsuits and lengthy delays in medical payments.
“If it gets to the floor without some provision for paying the medical providers and some reform on bad faith to keep the rates down, I won’t be able to support it,” said Rep. George Moraitis, a Fort Lauderdale Republican who voted for the measure on Monday.
Bill sponsor Erin Grall, R-Vero Beach, said after the meeting that bad-faith language may eventually encourage more people to seek counsel rather than navigating the legal system on their own.
Also, she said that simply taking time to review and hold discussions on adding bad-faith language “could stop the conversation this year.” Bad-faith lawsuits typically involve allegations of misconduct by insurers in handle claims and can be costly.
Under Florida’s no-fault system, motorists are required to carry $10,000 in personal-injury protection, or PIP, coverage. That coverage is designed to pay medical bills after accidents.
Grall’s proposal would eliminate the $10,000 no-fault coverage in 2018 while mandating motorists get at least $25,000 in coverage for bodily injury or death and $50,000 for bodily injury or death of two or more people.
Rutledge Bradford, an attorney from Orlando, said the proposal would take away benefits that provide some short-term relief from medical expenses and lost wages.
“When you go straight to a system that only pays benefits for someone who was not at fault, you’re cutting out a large segment of people,” Bradford told the House panel. “PIP pays medical bills within 30 days, pays wages every two weeks. These health care providers, hospitals need a way to be paid.”
The 2012 reform law, which set benchmarks for insurers to lower rates, was considered a last-ditch effort to maintain the system after rates increased due to an increase in fraudulent claims. The law also required people involved in crashes to seek treatment within 14 days and allowed up to $10,000 in benefits for emergency medical conditions, while putting a $2,500 cap on non-emergency conditions.
Ditching no-fault for bodily injury, which provides coverage if motorists cause accidents that hurt someone else, would put more questions of medical coverage into the courts, as injured parties would seek to recoup expenses from at-fault drivers, according to the state Office of Insurance Regulation.
Nationwide Insurance, State Farm Mutual Automobile Insurance Co. and the Personal Insurance Federation of Florida are among those that argued the no-fault repeal needs to address the state’s bad-faith law.
More than 90 percent of motorists have PIP and some form of bodily-injury coverage, which is why most motorists would be projected to see a savings from eliminating no-fault. However, the change could negatively impact health care premiums, according to a House staff report.
Repeal efforts also emerged during the past three legislative sessions but did not pass. Unlike those past efforts, when lawmakers argued that the 2012 reforms needed to take hold, this year’s proposal comes with a state study showed the reform effort failed to reach expectations.
A $125,000 state-commissioned study in September by Illinois-based Pinnacle Actuarial Resources determined the 2012 reform resulted in an estimated statewide average savings in PIP premiums of 15.1 percent.
A press release in January from the Office of Insurance Regulation showed that in the first two years after Scott signed the reform law, personal-injury protection rates from the state’s top 25 insurers dropped an average of 14.4 percent — 10 percentage points lower than desired.
Since 2015, rates have gone up 25.7 percent. Meanwhile, all liability coverage has gone up 23.4 percent the past two years.
The increases are due to rises in medical care, costs of vehicle body work, people driving more and even an increase in distracted drivers.
“This isn’t a perfect bill, I’m going to vote for it,” said Rep. Michael Grant, R-Port Charlotte. “But I can’t continue to vote for or sustain a PIP environment that is completely broken.”