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Commissioner Discusses Possible Elimination of No-Fault System

Commissioner Discusses Possible Elimination of No-Fault System

Insurance Commissioner Kevin McCarty mentioned the possibility of scrapping Florida’s no-fault auto insurance system during a speech at the Florida Chamber of Commerce’s recent insurance summit.  Eliminating the no-fault system would require a legislative change and has been discussed by some lawmakers in recent years as they have struggled to implement lasting reforms that curtail abuses in the system.

If the no-fault system is eliminated, drivers would be required to maintain a specified level of bodily injury insurance.  However, McCarty points out that most drivers already have bodily injury protection that presumably would meet the requirements of any law change.  McCarty has concerns about the litigation that would ensue in a system based on bodily injury coverage, but believes the drawbacks of the current PIP system might be greater.  “I’m not so sure that I’m ready to move to a more litigious auto system, but I think one thing to consider, particularly if we get an adverse decision on PIP, let’s fix it or flush it,” McCarty said. “We have done everything to fix PIP you could have possibly have done. We’ve had seven sessions on PIP. … A $10,000 benefit, really. Is it worth this amount?”

Early indications suggest that statutory reforms enacted in 2012 have been successful in reducing the cost of PIP coverage.  However, it might be too early still to evaluate the long-term impacts of the legislation.  In addition, court challenges cast some doubt as to whether the reforms ultimately will be upheld.  For example, in 2013 a Leon County circuit judge ruled that the reforms illegally prevented injured people from using PIP coverage to pay for treatment by acupuncturists and massage therapists and limited the services from chiropractors.  Although this ruling later was overturned, many observers remain concerned about whether the PIP reforms will stand up to continuing court challenges.