The Florida House voted overwhelmingly on Friday to mothball the state’s no-fault car insurance system in place since the 1970s, sending a clear message for the second straight year amid rising expectations the Senate will pass its own version of repeal this session.
“We will be able to do this at a cost reduction to the average driver in Florida,” said sponsor state Rep. Erin Grall, R-Vero Beach, before the 88-15 vote. “Let’s stop putting a Band-aid on something and make meaningful change.”
But it’s not just a question of whether the state’s Personal Injury Protection system should be repealed. A crucial issue is how.
Among House dissenters, state Rep. Julio Gonzalez, R-Venice and an orthopedic surgeon, said the House plan fails to make sure medical providers are compensated for treating injuries after accidents. He wants “some reliability in reimbursement,” and he referred to a competing plan working its way through committees in the Senate.
Under the House bill, HB 19, drivers could save up to $81 a car or collectively close to $1 billion, according to a 2016 actuarial study commissioned by the state. That would be a net savings after expected premium increases for bodily-injury liability coverage, which would be required at $25,000 a person and $50,000 an accident under the House plan.
For most drivers, it won’t impose a startling new requirement because more than 90 percent in Florida already carry some level of BI coverage, according to regulators. The savings come because they will no longer have to pay for PIP, whose premiums have climbed by double-digit levels in recent years even for drivers who never get in an accident.
In contrast, drivers’ savings would dry up and overall premiums are projected to rise after full implementation of SB 150, according to a Senate staff analysis. The bill by Sen. Tom Lee, R-Brandon, passed the Senate banking and insurance committee on Wednesday 10-1.
The Senate bill repeals PIP and requires bodily-injury liability coverage at amounts that are phased in over several years, but also requires drivers to buy $5,000 of “medical payments” coverage for a driver’s own injuries — no matter how much health insurance drivers already have from Medicare, employer plans or other sources.
It amounts to “PIP version 2.0” and preserves a “costly and inefficient” system, said Mark Delegal, a lobbyist representing State Farm, at Wednesday’s hearing.
Medical providers including hospitals say they are required to treat drivers in emergencies and need medpay to ensure drivers have at least some coverage for injuries.
Lee called his bill “a work in process” and an attempt to balance competing interests.
Both bills would end’s Florida status as one of two states that do not require drivers to buy bodily-injury liability insurance, which covers injuries to others. Instead, the state has for nearly half a century required motorists to buy $10,000 of Personal Injury Protection to cover a driver’s or passenger’s own injuries regardless of who is at fault.
“For the life of me, I don’t see the purpose of PIP,” triathlete Paul Davidson of Boynton Beach said last year. He said he was on his bike when he was hit by a driver who was not required to carry any liability insurance to help cover the cost of disfiguring injuries to his face and head. “Basically the other individual bore no responsibility at all for what happened.”
Florida drivers pay among the nation’s top six highest average car insurance premiums, more than $1,200 a year, for some of the lowest required coverage amounts. Repeal supporters have called PIP “a failed social experiment,” and it has roiled drivers who already pay for health insurance they consider to have better cost controls, in what they see as an expensive and fraud-prone form of “double taxation.”
Another issue: Will PIP repeal increase lawsuits? Questioned on the House floor a day earlier about that, Grall said she knew of no definitive analysis on the immediate impact.
But the bill certainly would end a flood of PIP lawsuits already engulfing the state, she said. That’s one ironic outcome of a system started in the 1970s with the expressed aim of reducing trips to the courthouse.
“I believe there would be a decrease in litigation,” Grall said.
A state working group in 2011 estimated 95 percent of the 36,509 lawsuits filed against insurers in Florida’s county courts in 2010 involved PIP. Many came from health-care providers suing insurers to get paid. In the first eight months of 2011, the report said, another 46,842 suits were filed.
Lawsuits did not spiral out of control in Colorado after it dropped its no-fault system and a tort system returned there, according to research by the Florida Senate’s banking and insurance committee staff in 2008. The number of lawsuits filed in Colorado district courts involving injuries in vehicles increased 5 percent in the three years after no-fault was dropped, researchers found.
Meanwhile, drivers reaped a huge benefit. They saved 35 percent on their overall car insurance bills or $322 a vehicle, according to a 2008 report to Colorado’s governor.
“I was pleasantly surprised it works,” Robert Ferm told The Palm Beach Post in 2012. Ferm said he was initially skeptical about repeal as legislative counsel for the American Insurance Association, a trade group representing insurers in Colorado’s debate. “It was not really the catastrophe that was anticipated.”
Florida’s no-fault benefits are less generous than Colorado’s once were, so savings are projected to be less dramatic.
But a key question going forward is whether Florida drivers will win any rate relief at all.