For drivers carrying minimum-required coverage, the rate spike could be around 50% or higher, a recent report shows.
In addition to raising consumers’ rates, enactment of the law would have a ripple effect across Florida’s economy and could have devastating consequences for health care facilities in the state, according to Glen Ged, founder and CEO of Ged Lawyers.
The law to repeal auto insurance no-fault rules, which is awaiting Florida Gov. Ron DeSantis’ signature, would raise overall premiums for all coverages combined by 13.3%, according to a report by Pinnacle Actuarial Resource, Inc.
If signed, the new law would require bodily injury liability coverage with limits of $25,000 per claimant and $50,000 per occurrence.
Rates for drivers with minimum-required coverage would see more dramatic increases, according to the report. It is estimated Florida has more than seven million drivers currently carrying minimum coverage.
For example, if a policyholder selects minimum bodily injury coverage and no medical payment coverage, their rates would go up an estimated 48.3%. For policyholders opting for minimum bodily injury coverage and $10,000 in medical payment coverage, projected premium increases could reach as high as 77%, according to the report.
“There was a medical payment provision in the bill, but it was taken out. The legislature thought it would increase rates, I believe,” says Glen Ged, founder and CEO of Boca Raton, Fla.-headquartered Ged Lawyers LLP. “This law will impact the poorest and most vulnerable people in Florida.”
He explains those with the means and assets to protect will choose to purchase policies with coverage beyond the state’s minimums, but for those already financially struggling, it could mean doing without auto insurance.
The report, citing 2019 data, found Florida already had the sixth-highest rate of uninsured drivers, with slightly more than 20% of motorists in the state going without insurance. If no-fault is repealed, the increased bodily injury financial responsibility would result in a 25% increase in uninsured motorists.
“Based upon the evidence, the impact on vulnerable people and medical providers would be devastating. The only winners would be trial lawyers,” says Ged.
The law could also have wider implications for the state’s economy.
“Hospitals would have no remedy to be paid to treat people who were in an accident,” he says, adding this would trickle down into facilities handling follow-up treatments and testing. “This would be a disaster for medical providers and their employees. It would significantly decrease revenue coming into Florida’s economy.”
Putting this into sharper relief, Pinnacle projects health care providers in the state would have to absorb slightly more than $13 million in unrecoverable costs annually as a result of the new law.
“I believe Gov. DeSantis is doing an amazing job for the state of Florida and hope he will look at this law and protect the citizens of Florida. Based on the data in the Pinnacle report, I’m not sure how any good could come from it,” Ged says. “The governor was astute in looking at the property rates and trying to reduce them with those legislative efforts. I am hopeful that he will take a good look at this law, but he hasn’t vetoed it yet.”