Florida adopted a personal-injury protection [PIP] auto insurance law in 1979 and remains one of 10 states with a “no fault” mandate that requires motorists to carry $10,000 in medical coverage.
Since PIP coverage makes individuals responsible for their own injuries in an accident regardless of fault, the mandate was imposed to ensure timely payments for injured drivers and to avoid saddling the court system with lawsuits.
But 40 years later, the Florida Motor Vehicle No-Fault Law doesn’t appear to be fulfilling its intent, especially in terms of containing litigation. According to the state’s Office of Insurance Regulation [OIR], “the amount of PIP claims, and PIP payments, has skyrocketed.”
While PIP premiums represent roughly 2 percent of the insurance premiums Floridians pay, PIP lawsuits “account for nearly 50 percent of fraud referrals,” the OIR reports.
The Senate Banking & Insurance Committee on April 1 approved Senate Bill 1052, which would repeal Florida’s PIP law, eliminate limits on damages for pain and suffering, and require insurers to offer motorists “minimum security requirements” for bodily injury liability and property damage.
SB 1052, crafted by the Senate Infrastructure & Security Committee and co-introduced by Sens. Tom Lee, R-Thonotosassa, and Darryl Rouson, D-St. Petersburg, was advanced by the panel in a 5-3 vote.
The bill faces a hearing before the Senate Appropriations Committee before it can be presented on the floor.
PIP repeal falls in the same category as tort reform and assignment of benefit [AOB] reform---every year, for the last decade and beyond, proposals to do away with no-fault are filed and die in committees or on chamber floors.
Under SB 1052, motorists would have to carry $25,000 in bodily injury coverage, $50,000 for any two or more persons, and $10,000 in property damage coverage as “minimum security requirements.”
Additionally, insurers must offer customers optional policies providing $5,000 for medical expenses and at least $5,000 for death benefits, with optional deductibles.
If adopted, the new law would apply to any car insurance policies written after Jan. 1, 2020.
The state and bill proponents say doing away with no-fault would save motorists money in reduced insurance premiums, but not everyone agrees.
In a 2016 report, the OIR said “5.6 percent savings would be realized in the statewide average premium charge” by replacing no-fault with “minimum security requirements” of $25,000/$50,000.
In 2018, however, the actuarial firm Milliman Inc. determined during an assessment of a similar bill for the Property & Casualty Insurers Association of America that repealing PIP and mandating coverage of at least $25,000/$50,000 would increase the statewide average premium charge by $67, or 5.3 percent.
For drivers who currently purchase only PIP and property damage at the minimum mandatory limits, Milliman estimates premiums would increase by an average of $230, or 50.1 percent.
“This is a more efficient system,” Lee said. “It is not perfect, but there’s a reason we’re one of only a couple of states in the nation that don’t require a mandatory bodily injury system.”
But Sen. Jeff Brandes, R-St. Petersburg, said SB 1052 wouldn’t protect insurance companies against dubious claims filed in “bad faith” by trial lawyers.
“This conversion [from PIP to minimum security requirements] needs to happen. Everybody agrees it needs to happen,” Brandes said. ”But in the absence of addressing third-party ‘bad faith’ before we pass PIP repeal, we will go years and years before that issue ultimately gets addressed. I think it is one of the major issues the Legislature needs to address.”
Sens. Doug Broxson, R-Gulf Breeze, and Keith Perry, R-Gainesville, joined Brandes in voting against the measure.
Brandes has filed his own PIP repeal bill, SB 896, the “Responsible Roadways Act,” which calls for eliminating the no-fault system by Jan. 1, 2021, but includes a provision “providing that, under certain third-party claims, a motor vehicle liability insurer is not liable beyond available policy limits if it meets certain conditions.”
SB 896 was filed Feb. 8 and referred to Infrastructure & Security, Banking & Insurance and Appropriations committees but has not been heard.
Lee said “bad-faith reform” would help insurance providers but, in this instance, such laws could backfire by leaving policyholders vulnerable to third-party lawsuits.
SB 1052 “totally rewrites the fundamental premise of the insurance policy, which is that the insurance company has a level of sophistication and the wherewithal to defend the insured,” he said.
Lee said Brandes made good points, however, and a “bad faith” provision such as the one in SB 896 “could be written in a way that is fair to consumers and doesn’t leave them hanging.”