By Clifton C. Curry, Jr.
Florida’s no-fault auto insurance system is broken and rewards irresponsible drivers at the expense of everyone who follows the rules. It’s time to smash this system and put a new one in place that’s based on individual responsibility and accountability delivered at competitive prices.
Florida was the second state to embrace the no-fault system in 1972, just after Massachusetts. No fault is an academic-created utopian concept of insurance coverage that says that no matter who was at fault, people hurt in accidents must rely on their own insurance company for compensation.
The PIP system requires all drivers to carry $10,000 in personal injury protection (PIP) insurance coverage. PIP’s $10,000 maximum benefit has not changed since 1979. When adjusted for medical inflation, the benefit effectively has $1,350 in buying power compared to 1979.
While PIP’s value has eroded over time, insurance corporations continue to repeatedly hike PIP’s rates. Recently, the Palm Beach Post reviewed insurance corporation reports filed with the State of Florida and found since 2017, PIP rates have increased by up to 54 percent.
This means drivers are paying more for insurance that depreciates in value. Even worse, some of Florida’s senior residents – many who are living on fixed income – must comply with a government mandate that they carry this coverage even though they already have similar insurance through Medicare and Tricare.
Why do the insurance corporations want drivers in the state to continue paying to maintain a 1970s-era system that:
• Generates constant rate increases from the insurance corporations
• Doesn’t provide enough coverage to keep up with rising cost of medical care including a $2,500 cap on non-emergency care
• Forces seniors to buy insurance they don’t need
• Punishes responsible drivers for the actions of irresponsible people behind the wheel.
That is the system insurance corporations and others who are making money off the failing PIP system want lawmakers to protect.
Florida can do much better.
The state must repeal the status-quo PIP system and replace it with a bold responsibility-based approach. It’s time for Florida to join 48 other states that require drivers carry bodily injury coverage.
Under the broken PIP system, Florida has had among the highest auto insurance rates in the country. According to a state-by-state comparison done by Insure.com, at an average annual rate of $1,840, Florida had the fifth highest insurance premiums in the U.S. in 2017, exceeding the national average by $522 or 40 percent higher.
A study done for the Florida Office of Insurance Regulation found the average Florida driver could save $81 per car if the state would repeal PIP and replace it with a requirement that drivers carry bodily injury liability at $20,000/$40,000 levels. We’ve also seen evidence from Colorado that shows when that state repealed its no-fault system in 2003 and replaced it with a responsibility-based coverage requirement. What happened? According to a 2010 report from RAND, the “average auto-insurance premiums dropped 35 percent from July 2003 to December 2007.”
Knowing the insurance industry is supporting a losing product, an association of insurance corporations recently tried to pull a fast one over on Florida. They did a survey of their members, dressed it up like it was a legitimate study, and sent it to the media with a goal of trying to get a headline to scare lawmakers into keeping PIP in place.
We already know what Floridians are receiving under the current broken status quo auto insurance system: Rates are skyrocketing – up by double digits for many insurers since the beginning of 2017; the benefit is shrinking; and the system is still prone to fraud.
The time has come for Florida to scrap PIP and choose better auto insurance coverage for Florida’s drivers. Requiring drivers carry bodily injury liability insurance at appropriate levels to cover the costs resulting from modern-day accidents is a much better way to take Florida into the future. Please ask our lawmakers to repeal PIP and support responsibility-based auto insurance.