Some Auto Insurers Will Keep No-Fault

May 11, 2007

By Russell Ray, Tampa Tribune, Fla.

May 12--Some of the state's auto insurers are preparing to lower consumers' premiums now that Florida's no-fault insurance law is set to expire Oct. 1, while others say they may continue providing the controversial coverage.

Some Florida drivers, especially those who don't have health insurance, may want to maintain the coverage, which provides $10,000 worth of personal injury protection. The PIP provision covers their medical bills if they are injured in an accident no matter who is at fault.

It's an option insurance companies can keep offering even though the coverage will no longer be required after Oct. 1, said Gary Landry, vice president of the Florida Insurance Council.

"We hear a lot about how many people there are in Florida who do not have health insurance," Landry said. "For those who do not have health insurance, the only 'health insurance' they have is their automobile insurance policy."

The Florida Legislature ended the regular session last week without extending the law requiring that motorists carry no-fault coverage. But Gov. Charlie Crist has said he may add the item to next month's special session, giving lawmakers another chance to fix the law, which has been a catalyst for fraud.

If the law is allowed to expire, motorists will be able to drop the coverage in exchange for a lower rate.

"Many people probably will," Landry said. "Others may hold on to it."

Meanwhile, State Farm Insurance Cos., the state's largest insurer with 25 percent of the market, has said it will eliminate the coverage if the no-fault law is not extended during the special session, a move that would save a typical two-car family about $360 a year.

Two other large auto insurers -- Allstate Floridian Insurance Co. and Progressive Insurance -- said they too will eliminate the coverage. How much less customers would pay in premiums was unknown, but both companies said the savings would be significant.

"On average, consumers across Florida, according to studies I've seen, would look at about a $250 to $350 savings annually," Allstate spokesman Adam Shores said. "We would hope to be in line with that."

In other states that did away with the no-fault system, Progressive was able to lower premiums "significantly over time," Progressive spokeswoman Kathy Bell said. In Colorado, for example, the company's auto rates dropped 30 percent after that state eliminated its no-fault law, Bell said.

Other auto insurers, including Nationwide Insurance Co., are waiting to see whether no-fault will be taken up again during next month's special session before deciding to keep or eliminate the coverage.

"Without significant reforms, the system should be allowed to sunset," Nationwide spokesman Eric Hardgrove said. "If it does actually sunset, we'll assess from there."

Under the no-fault system, motorists who are injured in an accident are compensated regardless of fault and cannot sue under most circumstances. But the $10,000 worth of coverage became a target for shady practitioners who took advantage of the system.

"There's so much fraud and abuse in that system," Shores said. "We're beyond the point of looking at any reform."

The state's hospitals and medical clinics could lose as much as $350 million if the coverage expires, which is why the Legislature attempted to change the law to eliminate the fraud. The Senate approved a bill extending the law for four years and included provisions to fight fraud. But the bill died in the House.

"We don't believe true reform is going to happen, which is why the sunset of no-fault is in the best interest of consumers," Bell said.

Reporter Russell Ray can be reached at (813) 259-7870 or [email protected].

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Copyright (c) 2007, Tampa Tribune, Fla.

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