Fla. Senators Delay Vote on New Bill Aiming to Repeal PIP

A Florida Senate committee held off voting on a bill this week to get rid of the state’s requirement that drivers buy personal injury protection (PIP) coverage.

The proposal, discussed for a second time at last week’s committee meeting and newly christened as SPB 7152, would replace the PIP system with a requirement for drivers to carry at least $50,000 worth of bodily injury (BI) liability coverage per accident and at least $25,000 worth of property damage (PD) liability coverage.

This week, the Senate Banking and Insurance Committee revisited the proposal from Sen. David Simmons (R-Altamonte Springs), who is also the committee’s chairman.

Bonnie Gordon, senior counsel for GEICO, offered testimony at the committee hearing, saying that the insurer currently does not support the proposal but would be willing to “re-evaluate this position.”

Insurers took a similar stance at the committee’s meeting last week, offering support for PIP reforms that would but stopping short of support for Simmons’s proposal.

Gordon said that GEICO could not currently offer backing to Simmons’s proposal but still wanted “real and sustainable change” that “generates long-term benefits” for Florida motorists

“Too often in the past, proposed no-fault reform legislation has promised to address fraud and abuse but was watered down through the legislative process and nullified by the courts,” she told committee members.

According to Simmons, insurance trade organizations have been receptive to his ideas.

“I’m not going to say they’re in favor of it; I’m saying they are warming to it as well,” he said.

At the Tuesday committee meeting, Simmons’s call for debate from committee members was met with silence before he spotlighted Sen. Joe Negron (R-Stuart) for feedback. Negron had been a leading stakeholder as lawmakers negotiated PIP reforms last year.

“Sen. Negron? Anyone? You’re like a stakeholder in this,” Simmons said at the meeting, drawing laughter from attendees.

“I’m busy working on the budget,” Negron responded, amid more laughter.

“That’s interesting that this is where we are,” he said, before saying voting on SPB 7152 would be tabled until next week’s meeting.

If passed, the requirement to have PIP coverage included in an auto policy would be lifted for policies issued or renewed on or after Jan. 1, 2014, with insurers required to “provide notice of the provisions” of new requirements by this September.

Bill Analysis Estimates Changes to Driver Premiums, Fees

Simmons said that, with the vast majority of drivers in the state already having the bodily injury liability limits that his bill would require, nixing the PIP requirement would likely result in “a significant decrease, or at least a material decrease,” in overall premiums.

In response, Sandra Starnes, FOIR’s director of Property and Casualty Product Review, said she believed Simmons’s prediction was “a fair statement.”

About 90 percent of Florida drivers already have bodily injury coverage, according to the FOIR, which said in a legislative analysis that those with BI coverage at the 25/50 limit proposed in SPB 7152 “should pay a lower premium” because PIP coverage would be taken out of policies.

According to the analysis, a policyholder with BI coverage of 25/50 and “full coverage” that includes BI, PD, uninsured motorist, medical payments, comprehensive and collision coverage would see premiums drop between 3.2 percent and 11.2 percent.

Policyholders who do not have BI but have PIP and PD insurance coverage “may pay lower premiums” if they live in densely populated locations that have seen high rates of PIP-related crime like the central areas of Tampa and Miami, the FOIR said. Drivers with this type of policy in other areas, though, “generally will incur increases” if the bill becomes law.

Also, according to the FOIR, current PIP losses would be spread out over other types of coverage, with a 2007 study on the possible effects of PIP repeal showing that nearly 80 percent of losses would go to other auto-related coverages, 16.4 percent of losses would be transferred to the healthcare system and 4.1 percent would “not be covered by any type of insurance.”

Senator Pushes Vote Back to Allow More Feedback

Simmons and other lawmakers say PIP coverage, in which an insurer compensates its own policyholder for crash-related medical costs regardless of who caused the collision, is the culprit for the state’s skyrocketing auto insurance costs. Florida is home to many crime rings perpetrating staged accidents and submitting phony claims under PIP coverage, according to the National Insurance Crime Bureau.

PIP-related losses from extensive fraud squeezed the Florida coverage industry as premiums ballooned for policyholders across the state and drivers in fraud-ridden areas were hit especially hard with higher prices.

Lawmakers tried to address the problem last year by tightening rules around PIP compensation with HB 119, which knocked down the reward limit for nonemergency conditions from $10,000 to $2,500 and eliminated massage and acupuncture therapists from eligibility.

Those physician groups responded in a lawsuit alleging that HB 119 unconstitutionally removed them from eligibility for PIP compensation. A circuit court judge sided with plaintiffs in that lawsuit and issued a stay to the reforms, but an immediate appeal from Florida Office of Insurance Regulation (FOIR) put a hold on that stay.

Simmons said that awaiting a result from that court case is one reason the committee should push back voting on his bill.

“I can tell you that that would seem to be a tail that would wag this dog,” he said about court proceedings for HB 119.

Simmons also said that he will be reviewing input from Gov. Rick Scott and other HB 119 stakeholders. Scott told The Palm Beach Post this week that he favored further reforms over full-on repeal of the PIP system.

At the committee meeting, Simmons said that he wants to know “exactly where [Gov. Scott] is on this” and discuss it with Rep. Bryan Nelson (R-Apopka), chair of the House’s committee overseeing insurance matters, before calling for a vote.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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