Originally published by Miami Herald | Read Full Article
By Michael Carlson and Scott Matiyow
Florida is one of the most expensive states for auto insurance. Rates are increasing because of the complexity and cost of new vehicles, the rising cost of used vehicles and an increase in auto crashes. Yet Florida lawmakers are considering a policy that will only add to the cost of insurance that millions of drivers pay.
The Legislature once again is considering the repeal of Florida’s Motor Vehicle No-Fault Law and its Personal Injury Protection (PIP) insurance requirement. Bills filed in the Senate and House would replace PIP with mandatory bodily injury coverage; the Senate bill goes one step further and creates a flawed third-party insurance bad-faith standard.
If the legislation to repeal PIP becomes law, Florida motorists’ rates will rise, particularly for those who buy the minimum insurance required and those who buy bodily-injury coverage at amounts below what the proposed law requires. For low-coverage drivers, the estimated cost increase is 48%, according to a study commissioned by the Florida Office of Insurance Regulation. These drivers can least afford an increase, and it is estimated that hundreds of thousands of additional Floridians will drive illegally — without insurance — because of this increase. Today, an estimated one in five vehicles in Florida does not carry insurance, almost the highest rate in the country, and this will get worse if HB 1525 and SB 150 become law.
PIP is $10,000 medical coverage that pays for your injuries if you are in a car crash, regardless of whether you are at fault. Bodily-injury insurance covers the victims of a car crash, not the at-fault driver. To recover bodily-injury benefits, an injured person may have to file a lawsuit.
The proposed law will require motorists to buy $25,000 in bodily-injury coverage and $5,000 in funeral benefits. Insurers must also offer medical-payments coverage to each insured. This coverage is similar to PIP in that it pays for medical expenses without regard to fault. For street-legal drivers who reject medical-payments coverage, these bills would require them to pay for $15,000 in additional coverage (a $5,000 funeral benefit is included in PIP).
Forcing Floridians to spend more for additional auto insurance is the wrong thing to do. This approach ignores the private market, where you can buy bodily-injury and medical-payments coverage in any amount you want.
There has been no outcry from consumers about the auto-insurance market. So far, not one consumer has spoken in favor of this legislation in any committee. There is no turbulence in Florida’s auto-insurance market, unlike the property market, which is in crisis. While there are problems with PIP — notably fraud and overbilling — these problems can be readily addressed through legislation.
It’s important to note that there is no data to support proponents’ arguments that this will reduce rates. In fact, data points to significant rate increases for millions of drivers who buy low limits. Even the Office of Insurance Regulation has stated that rates will increase if we move to the proposed mandatory bodily-injury system.
Who benefits if PIP is repealed? Auto-accident attorneys — the single constituency that has been calling for repeal of PIP and replacing it with more-expensive bodily-injury coverage. These lawyers want more lawsuits to churn out their attorney fees. And under the proposed system, that will happen.
The members of the Personal Insurance Federation of Florida believe any repeal of PIP must consider ways to alleviate potential rate increases. Meaningful reforms to Florida’s deeply unfair bad-faith system or addressing the problem of inflated medical damages should be included to help reduce the cost of claims and related lawsuits.
Gov. Ron DeSantis was right to veto last year’s PIP repeal legislation. This year’s bills are no better. Creating a bigger problem by raising auto-insurance rates by almost 50% cannot be the solution to PIP problems. The Legislature should put a stop to HB 1525 and SB 150.
Michael Carlson is the CEO of the Personal Insurance Federation of Florida. Scott Matiyow is the vice president of the Federation’s Legislative & Regulatory Affairs.