Will it Become Law?
The bill repealing the current PIP statute awaits the governor’s signature or veto by May 16, 2021. The legislature could override his veto in the special session that starts on May 17, 2021, but an override would likely not be considered until the next regular session which begins in January 2022. While the bill passed overwhelmingly in both chambers with bi-partisan support, it is not known if the Governor will sign it. Florida CFO Jimmy Patronis (Republican member of Governor’s cabinet and individual that oversees the Florida Office of Insurance Regulation) has spoken out publicly against the bill.
If it Becomes Law, When Will the Effects be Felt?
If signed, the bill would become law on January 1, 2022 (the “Effective Date”). This would mean that all auto insurance policies incepted after that date would need to comply. After the Effective Date, all existing policies are deemed to include the $25k bodily injury minimum, but the $10k in PIP is also in effect. Any insured that wants to cancel their policy that was incepted prior to the Effective Date to obtain a new policy, is allowed, but the insurer may update the premium to reflect the new risk.
Most of the policies impacted are six-month policies, which means most policies operating under the old law would completely fall off at the end of 2022Q2. There is a five-year, one month statute of limitations on PIP (which starts to run after bills become overdue), so if the bill became law, PIP suits could be filed as late as 2027Q4, but based on past trends, there would likely be an influx in the filing of PIP actions in the year following with suits tapering off as the statute of limitations runs.
Executive Summary of the Bill
If the bill becomes law, drivers will be mandated to carry $25k in medical liability (Bodily Injury) coverage per person with $50,000 per incident. Additionally, they are required to carry $5k in death benefits as well as maintaining the $10k minimum for property damage liability coverage. MedPay must also be included unless it is refused by the insured in writing. MedPay is like PIP, but under the bill, would be far less regulated. With regards to both medical liability and MedPay coverages, there would be no fee schedule governing payments, no mandate for examinations under oath, and no demand letter requirement which would allow suits to be filed without putting the carrier on notice. These issues combined with the increase in mandatory limits will nearly double insurance rates for about 80 percent of the non-standard market – which are often those with low credit ratings or limited credit history. Under this law, Bodily Injury lawsuit volume will likely more than triple – which means there will be a significantly higher focus on fault determination, injury severity and bad faith claims handling.
Adapting Claims Handling to CS/CS/BS 54
For more information contact Kelley Kronenberg Partner, Steve Simeonidis.