Study: Drivers Could Save By Eliminating “No Fault”

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TALLAHASSEE (CBSMiami) – Eliminating the state’s no-fault auto insurance system could save average Florida motorists 9.6 percent on their liability-coverage packages, or about $81 a year per car, according to a new study.

It also found that premiums on personal-injury protection insurance coverage, also known as no-fault, dropped 15.1 percent statewide following a 2012 legislative effort to reduce fraud in the system.

However, the premium reduction is nearly 10 percent less than targeted for consumers. And the Pinnacle actuaries found that since 2014 there has been “a small erosion in the cost savings from this legislation.”

The state Office of Insurance Regulation commissioned Illinois-based Pinnacle Actuarial Resources Inc. to perform the study in advance of the 2017 legislative session. A spokeswoman for the office said it is “carefully reviewing the results.”

The findings come as critics contend the 2012 reform attempt has failed to meet expectations and that bodily-injury coverage, which most motorists in Florida already have, should be a replacement for no-fault coverage.

The study, which used state records and data from six of the top auto insurers in Florida, projected that eliminating no-fault would save $272 a year per vehicle for motorists in Miami-Dade County.

The savings would be $39 in Escambia County, $28 in Brevard County, $105 in Orange County, $130 in Broward County, $97 in Hillsborough County and $47 in Duval County.

Ashley Carr, a spokeswoman for state Chief Financial Officer Jeff Atwater, said the CFO’s office will need to thoroughly review the 416-page report “before any thoughts about possible recommendations can take place.”

Atwater, who along with Gov. Rick Scott backed the 2012 reform effort, last year said repeal of no-fault may be needed if consumers aren’t getting the intended relief.

Bills calling for the repeal of no-fault in the 2016 session (SB 1112 and HB 997) didn’t advance out of their first committees.

The insurance industry may not be ready to give up on no-fault, which was designed to streamline payments to injured people and reduce the need for lawsuits after accidents.

Logan McFaddin, regional manager for the Property Casualty Insurers Association of America, said the study indicates the 2012 reforms have reduced fraud while providing cost savings to Florida motorists. He added that the association, which represents numerous insurers, is open to talk about additional reforms.

“While PCI (the association) and our members are still reviewing the results of the study, so far we are pleased with the results,” McFaddin said in a statement. “Evidence shows PIP reforms enacted in 2012 continue to reduce fraud and abuse, protecting the hard earned premium dollars of the citizens of Florida. PCI and our members, however, are always willing to consider additional reforms to continue to reduce fraud and protect our policyholders.”

Under the decades-old no-fault system, motorists are required to carry personal-injury protection coverage that includes $10,000 in medical benefits.

The 2012 legislation (HB 119), aimed at reducing fraud, included capping non-emergency care at $2,500 and requiring people seeking PIP medical benefits to receive initial care within 14 days of accidents.

In advancing the law, state officials claimed the number of no-fault claims had increased 28 percent from 2006 to 2010, with the dollars paid by insurers in that time growing 66 percent, from about $1.5 billion to $2.5 billion.

The News Service of Florida’s Jim Turner contributed to this report.

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