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The 2021 Florida Legislative Update: What’s happening with PIP?

Florida legislature again considers revisions to auto insurance laws

Personal Injury Protection, or PIP, is a type of insurance required for all drivers in Florida, covering up to $10,000 medical coverage after an accident. There have been many past attempts to repeal the legislation responsible, but so far all have failed. This year SB 54, sponsored by Senator Danny Burgess, will be heard before the senate committee.

If passed, the bill would eliminate PIP coverage in favor of bodily injury liability coverage. This would pay out up to $25,000 for a crash-related injury or death, or up to $50,000 for injury or death in a crash involving two or more people. (Drivers would retain up to $10,000 in liability for property damage.) At the same time, insurers would also be required to provide medical payments coverage starting at $5,000, with deductibles up to $500.

Eliminating PIP: Will is reduce or increase car insurance premiums in Florida?

Proponents of the bill claim it would reduce Florida insurance costs, which are among the highest in the nation.  It’s also been argued that repealing the bill will reduce fraud costs. The Office of Insurance Regulation says that while PIP represents about 2% of Florida’s collected insurance premium, it accounts for almost half of fraud referrals.

On the other hand, critics of the bill claim that costs would actually go up, citing Colorado as an example. In 2003, the state repealed its no-fault law and instead instituted bodily injury coverage. Premiums went down in the short term, but quickly bounced back. In fact, a 2018 report found that Colorado premiums actually rose more than 50% since 2011.

Others have expressed concern that repealing PIP would just ship some of the cost burden to either other parts of an auto insurance policy, or healthcare premiums, which are already stretched thin in some cases. Meanwhile, about 13% of Florida drivers are uninsured. In fact, in 2015, Florida reported the highest uninsured rate in the country at 26.7%—more than twice the national average. Four in five uninsured motorists told the Insurance Research Council (IRC) they lacked coverage because of high premium costs.

Conflicting research shows both an increase and a decrease if PIP is eliminated

Previous research has been contradictory. A 2016 report by the Florida Office of Insurance Regulation projected that drivers would get 5.6% in savings in their insurance premiums if the state moved to a bodily-injury coverage requirement. A 2018 study by the actuarial consulting firm Milliman showed an average increase in premiums of $67, or a 5.3% increase.

The proposed law change would also allow for “bad faith” lawsuits against insurance companies if there is evidence they didn’t properly look after their clients’ interests. This is another controversial proposal that has previously halted discussions on ending the no-fault system.

As of the date of this posting, SB54 is on committee agenda for 2/15/2021. It easily passed the first hurdle, the Florida Senate’s Banking and Insurance Committee by a vote of 10-2.

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