After months of debate and revisions, lawmakers in Florida have passed a piece of legislation that provides sweeping changes to the auto insurance market in the state.
The bill passed the Florida House and Senate on April 30, the final day of the state's 2021 legislative session, and is now waiting for the signature of Governor Ron DeSantis.
The passage of Senate Bill 54 brings an end to Florida's no-fault system if signed into law. Currently, Florida does not require drivers to carry bodily injury coverage; however, this legislation would mandate motorists to have bodily injury coverage of at least $25,000 per person/$50,000 per accident and eliminate the mandatory $10,000 in PIP coverage currently in place.
This bill has faced stiff opposition from the insurance industry. In an April 22 letter to Gov. DeSantis, Progressive's CEO S. Tricia Griffith and Pat Callahan, personal lines president, caution that SB 54 would "substantially increase rates for our customers and your residents who can least afford an increase and force hundreds of thousands of Floridians who are already struggling to pay current premiums to drive without insurance."
The American Property Casualty Insurance Association (APCIA) is encouraging Gov. DeSantis to veto the bill to "protect Florida drivers from higher auto insurance costs and help keep our roads safer."
"By failing to deliver savings for drivers and potentially increasing auto insurance costs, this legislation could also lead to more uninsured drivers, making Florida's roads less safe," said Logan McFaddin, APCIA assistant vice president of state government relations, in a statement. "Our state already has the unfortunate distinction of having one of the highest rates of uninsured motorists in the country at 20%."
Actuarial analysis obtained by APCIA suggests that SB 54 could increase the cost of the average auto insurance policy by as much as 23% or $344.Drivers who carry the lowest levels of coverage could see increases as high as $805 a year.
McFaddin also said the law does little to reform Florida's bad faith laws, adding that "SB 54 will only serve to fuel the current cycle of lawsuit abuse, clog our court system with more lawsuits, and worsen Florida's legal environment."
Steve Simeonidis, a partner out of Kelley Kronenberg's Miami Florida office commented on the bill saying "[w]hile the legislature's desire to reform an auto insurance industry ripe with fraud is admirable – CS/CS/SB 54 is not the answer. The bill in question will drastically increase auto-insurance rates across the board, especially for working-class Floridians. This increase will cause many to forgo auto insurance, driving up the number of uninsured people on the road. Additionally, the legislation fails to include meaningful bad faith reforms thus continuing to permit undeserving parties to walk away with millions on five-figure claims with Florida consumers footing the bill."
Heather A. Turner
Heather A. Turner is the managing editor of ALM's NU Property & Casualty Group. She can be reached at [email protected].