President, Personal Insurance Federation of Florida
PH: (850) 597-7425
FOR IMMEDIATE RELEASE
TALLAHASSEE, Fla. (March 27, 2017) – The House Insurance and Banking Subcommittee today took an initial step toward repealing Florida’s fraud-riddled No-Fault/PIP auto insurance system with the passage of CS/HB 1063. Under the bill, the existing No-Fault/PIP system would be replaced by a new fault-based system that includes mandatory Bodily Injury coverage of $25,000 per individual and $50,000 per accident, and mandatory Property Damage coverage of $10,000 per accident.
As the potential repeal of No-Fault/PIP moves forward, the Personal Insurance Federation of Florida urges legislators to weigh very carefully how moving to a new alternative fault-based system would impact consumers, in terms of both coverage and cost. Any repeal of PIP must avoid unnecessary cost increases and address third-party bad faith litigation, which adds considerable costs to the current system that all Florida drivers are burdened with paying.
A 2016 study by the Pinnacle actuarial firm found that repealing PIP would yield savings of only about one percent if drivers also voluntarily selected $5,000 in Medical Payments coverage. Mandating additional coverages like Medical Payments coverage would erode potential savings for drivers.
The repeal timeline must also be scrutinized to avoid unnecessary costs of implementation, such as the requirement that insurers provide notice of the new law to their customers in a separate communication that is out-of-sync with normal policy renewals. The burden of required form and rate filings should also be considered, as the short timeline would force insurers to file hundreds of form and rate filings with the Office of Insurance Regulation, which may not have the capacity to handle the deluge in a short period of time.
Additionally, any repeal of PIP must include reform to Florida’s third party auto bad faith law. An August 2014 study by the Insurance Research Council found third-party bad faith lawsuits added $813 million in excess Bodily Injury claims costs in 2013. These litigation costs are paid by all Florida drivers and must be addressed by legislators if they truly want to bring auto insurance costs down and create more choices and competition in the marketplace for Floridians.
As the debate on repealing PIP unfolds, the Personal Insurance Federation of Florida is committed to working closely with legislators to ensure that Florida’s motorists receive the best coverage at the best prices possible, while avoiding unnecessary mandated coverages and litigation costs that drive up the price of auto insurance for everyone.