Analysis: Florida no-fault repeal will benefit few drivers

Originally published by The Center Square| View Story


By John Haughey


(The Center Square) – The no-fault auto insurance repeal adopted by Florida lawmakers is looking likely to be repealed via Gov. Ron DeSantis’ veto pen.


The governor has until July 1 to veto Senate Bill 54, which does away with Florida’s 1970 no-fault auto insurance law and, instead, requires the state’s 16.5 million drivers to secure mandatory bodily injury (MBI) coverage. If he takes no action, SB 54 becomes law Jan. 1.


Lawmakers adopted heavily-debated SB 54 in a 37-3 Senate vote and 100-6 House tally on April 30, the session’s final day, after wrestling with no-fault repeal for years.


Florida is one of just two states that don’t require MBI coverage. No-fault repeal proponents maintain the state’s insurance requirements haven’t been updated since 1979 and 60% of Florida drivers already carry MBI.


Under Florida law, drivers must maintain personal injury protection (PIP) coverage of $10,000 in medical, disability and funeral expenses, without regard to fault, and are subject to a $2,500 limit for non-emergency medical care. In exchange for PIP, vehicle owners were immune from tort claims.


SB 54 exchanges PIP for MBI, which under SB 54 pays out $25,000 for each injured person or $50,000 per event and $10,000 for property damage. A failed amendment required drivers also to purchase medical payments insurance, or “med-pay.” Insurers, however, must offer it.


In February, Florida Chief Financial Officer Jimmy Patronis said repeal would increase uninsured driving and in March, state Insurance Commissioner David Altmaier said more study was needed to determine if repeal would benefit Florida drivers, who pay the nation’s highest auto insurance premiums.


The adamantly opposed Personal Insurance Federation of Florida and American Property Casualty Insurance Association (APCIA) lobbied aggressively against it and now a study commissioned by the Florida Office of Insurance Regulation (OIR), the agency Altmaier leads, projects few Sunshine State drivers will benefit from SB 54.


In fact, no-fault repeal could boost premiums for millions of drivers by nearly 50%, significantly increase uninsured driving and generate $13 million annually in uncompensated medical care, according to Pinnacle Actuarial Resources (PAR), an actuarial/management consulting firm based in Bloomington, Ill.


The 185-page analysis produced by Roosevelt Mosley, Jr., a PAR principal, and addressed to OIR Budget Director Richard Fox, assumes 7-plus million Florida drivers who now opt for minimum coverage will do so under SB 54.


“The impact on policyholders with minimum-required coverage will be significant,” he writes, calculating these drivers now pay on average $585 annually under PIP would pay $868 annually under MBI.


“For policyholders that opt for minimum MBI limits and no MedPay coverage, the estimated increase in premiums will be at 48.3%. For policyholders with minimum MBI limits and $10,000 MedPay coverage, the increase in premium will be 77.2%,” he writes.


Even those with full MBI/MedPay could see increases, albeit far less than those with less coverage, Mosley maintains.


“We estimate an overall increase in premiums of 13.3% for all coverages combined, or $202 per car annually for the average vehicle,” he writes.


The PAR analysis contradicts a 2016 OIR report that said switching from PIP to MBI would save drivers on average 5.6% but supports studies supplied by insurers.


A 2018 Milliman report projected repeal would raise rates 5.3%, or $67 a year. An APCIA analysis forecast 3-6% rate hikes. Another maintains for about 40% of Florida drivers – 7 million – replacing no-fault PIP with mandatory BI could mean annual rate increases of $600 to $1,000.


“Now is not the time to make major policy changes that affect every Florida driver and impose a tremendous financial burden on Floridians, especially those who can least afford it,” APCIA said, calling on DeSantis to veto SB 54.

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