Guest column: Reforms could raise car insurance rates

Originally published by The Florida Times Union | View Story


By Logan McFaddin


The auto insurance reform debate in Tallahassee is veering off course this legislative session. Efforts to repeal Florida’s no-fault auto insurance system could result in spikes to consumer costs, especially for those who can least afford it. It’s time to make a U-turn.


Lawmakers in Tallahassee are voting on legislation to eliminate Florida’s existing no-fault auto insurance system and replace it with a mandatory bodily injury coverage system, which means drivers would be required to purchase mandatory limits of bodily injury and property damage liability coverage. That’s a lot of insurance talk. The bottom line is that low-income drivers who purchase minimum limits in Florida are likely to be hit the hardest financially by the current legislative proposals, but all drivers could see costs go up especially if lawsuit abuse is not tackled.


In Florida, approximately 40 percent of drivers carry minimum limits that are below what would be required under the House and Senate proposals. Under the current proposals, these drivers could see their auto insurance costs rise by $165 to as much as $876 a year, according to data assembled by APCIA. This could result in even more uninsured motorists on Florida’s roads, which is a serious concern as Florida has one of the highest rates of uninsured motorists in the nation at approximately 20 percent.


Additionally, the House proposal is likely to increase costs by an average of 5 percent for all drivers in Florida, according to a preliminary analysis conducted by Milliman, due to its failure to address much needed legal reforms to Florida’s bad faith laws.

Florida drivers already pay the highest premiums in the country for full auto insurance coverage. With the pandemic putting financial strains on consumers and businesses, now is not the time for lawmakers to implement major policy changes that will likely increase costs.


Since 1971, Florida has had a no-fault auto insurance system, which requires all drivers to obtain personal injury insurance. The intention has been to provide injured drivers up to $10,000 in immediate medical coverage in lieu of determining which driver was at fault and potentially going to court. It was designed to increase the speed of payment to injured parties and avoid unnecessary lawsuits.


Unfortunately, 40 years later, it has not been the panacea we had planned. Florida auto insurance costs have fluctuated wildly, and although comprehensive reforms have been enacted over the years to reduce fraud and increase affordability, improvements have been short-lived.


The goal of any repeal or reform of Florida’s no-fault auto insurance system should be to reduce costs for consumers, which needs to start with addressing lawsuit abuse.


Policymakers have been trying to fix Florida’s already dysfunctional legal environment. Our state’s legal system is rife with rampant lawsuit abuse, excessive attorney fees, and skyrocketing settlements, which has resulted in one of the worst legal environments in the country. Repealing Florida’s no-fault auto insurance system, without real legal reforms and tools to fight fraud, will fail to deliver meaningful savings for Florida drivers and exacerbate our state’s lawsuit problems.


Additionally, our state’s court system is experiencing a backlog of more than one million cases due to the pandemic, according to recent reports. This is not the time to send more auto insurance claims to court by repealing the no-fault auto insurance system.


Lawmakers have debated this issue for many years, and any attempt to fix or repeal the current no-fault auto insurance system should contain reforms, specifically to Florida’s bad faith laws, that will help lower auto insurance costs for Floridians, combat rampant lawsuit abuse, eliminate or minimize opportunities for fraud, and ensure policyholders’ rights are protected.

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