Florida officials have announced their intent to let a third party firm prepare a report on the insurance system’s impact o help determine whether or not they should junk the no-fault auto insurance program, The Palm Beach Post reported.
Legislation passed in 2012 was supposed to address issues related to the no-fault insurance program, by eliminating nearly $1 billion in fraud and removing no-fault bills. Records, however, showed that Florida’s major insurers all increased their premiums as a result—by up to 40%--since the start of 2015.
According to records from the Department of Financial Services, the firm tapped to conduct the report has to start by June, and should prepare a draft by Aug. 26. The final report is due Sept. 2.
The report’s objectives are to study “. . . the potential impact to Floridians if the personal injury protection coverage requirements were repealed and replaced with varying levels of bodily injury coverage, or if the current requirements to purchase auto insurance were completely repealed.”
Under the no-fault auto insurance program, drivers are required to purchase $10,000 in Personal Injury Protection (PIP) insurance. The PIP program was originally designed around the 1970s to cover for minor injuries regardless of who is at fault in an accident, while avoiding lawsuits.
The program, however, was seen as redundant and vulnerable to fraud—especially when it forced drivers to pay for medical coverage they already possess through Medicare, employer plans, or other health insurance. PIP, created as a way to avoid lawsuits, ironically had its own mountain of suits.
While Florida is not the only state that has a no-fault system, the state’s motorists pay the fourth highest car insurance bills in the country.
Drivers in Colorado saved as much as 35% on their overall auto insurance bills after dropping their no-fault system in 2003.
Florida legislators are already considering alternatives to the no-fault system. One such alternative is requiring bodily injury liability insurance. Notably, over 90% of Florida drivers have bodily injury liability insurance, reported The Palm Beach Post.
State Rep. Bill Hager, R-Delray Beach, and Sen. Jeff Brandes, R-St. Petersburg, have endorsed legislation to repeal PIP by 2017 and 2019, respectively.
