Drivers could save billions if Fla. dumps no-fault system, study shows

Florida’s more than 15 million drivers could save an average of $81 a car — if the state drops its costly and troubled no-fault Personal Injury Protection system after four decades, a study released Wednesday shows.

That amounts to about $1 billion a year in savings for Florida households, potentially a huge dose of relief for beleaguered drivers in a state where motorists pay the nation’s fourth highest insurance bills.

Florida drivers could reap the savings even with a projected increase in other parts of the car insurance bill, such as bodily-injury liability premiums, according to a $125,000 study state officials commissioned from Pinnacle Actuarial Resources Inc. of Bloomington, Ill.

The savings apply if state lawmakers vote to kill PIP without imposing new requirements that offset the impact.

That’s a big if.

A big chance to cut car insurance bills comes as legislators prepare for a new session early next year, but the outcome is far from clear given heavy lobbying by interest groups from hospitals to lawyers to insurers.

Many drivers say they are upset Florida law forces them to buy $10,000 of medical coverage in their car insurance, to cover injuries regardless of who is at fault in an accident. They have to pay for it no matter how much health insurance they already have from Medicare, employer plans or other sources.

Even if individual drivers never get in an accident, they are at the mercy of relentless PIP rate increases, particularly in South Florida.

Motorist Loren Egley of Delray Beach has called it “double taxation.”

Drivers like Michael Dorsett of Lake Worth want action. He told The Palm Beach Post in March he felt “robbed” by PIP premium increases. Insurance costs that were once $200 a month for two vehicles jumped to $280 a month for one truck with 165,000 miles, he said.

Created in the 1970s, the PIP system has been dogged by decades of complaints about fraud and rising premiums despite multiple attempts to fix it.

Insurers including Allstate have raised PIP premiums up to 40 percent since the start of 2015, despite reforms backed by Gov. Rick Scott that were supposed to save families money.

“We are reviewing the study,” Scott spokeswoman Jeri Bustamante said Wednesday.

The net annual savings from dropping PIP would be about $67 or 4.5 percent of the overall car insurance bill in Palm Beach County, according to the Pinnacle report.

Other savings: $130 in Broward or 8.7 of the total bill and a whopping $272 or 16.2 percent in Miami-Dade County, according to the Pinnacle report.

Martin County premiums would stay about the same, and St. Lucie County drivers would save about $62, the study found.

In Palm Beach County, the average car insurance bill would drop to about $1,433 from $1,500 without PIP — even accounting for projected increases in bodily-injury liability and uninsured motorist premiums, the Pinnacle study calculated.

Statewide, drivers would save almost 10 percent of the liability portion of their bill and 6.7 percent on the overall bill if PIP was no longer required, the study found.

Savings would be smaller or almost disappear under various other options the analysis explored. For example, a motorist paying for $5,000 in “medical payments” coverage instead of traditional PIP would save less than 1 percent, or about $9.

Hospitals have argued against dropping PIP, or at least requiring medical payments coverage instead, contending it is needed to make sure all drivers have at least some medical coverage. Attempts to seek comment Wednesday from the Florida Hospital Association were not successful.

It could matter a lot to consumers how lawmakers rewrite the car insurance law, if they do. For example, there’s a big difference between requiring insurers to offer medical payments coverage in place of PIP, and requiring consumers to buy it.

For example, the Property Casualty Insurers Association of America would support mandatory offer of Medical Payments coverage by insurers but not mandatory purchase by drivers, said regional manager Logan McFaddin.

The Personal Insurance Federation of Florida, representing big car insurers such as Allstate, Progressive and State Farm, “welcomes the release of the Pinnacle study, and we are carefully reviewing its data and conclusions,” president Michael Carlson said. “We look forward to be actively involved in any discussions of repeal or reform of the No-Fault Law.”

Legislators including Rep. Bill Hager, R-Delray Beach, and Sen. Jeff Brandes, R-St. Petersburg, this past spring filed bills to kill PIP by 2019. Neither could be reached for immediate comment Wednesday.

Those bills did not get particularly far, but the Pinnacle study could provide new fuel for debate in what lawmakers have said could be a multi-year effort.

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