Drivers in Florida are facing a crisis. If Florida's elected officials allow the system of mandatory auto insurance that has served the public well for more than 30 years to expire Oct. 1, driving in the state will become more dangerous ... and much more costly.
The debate over the future of Florida's no-fault auto insurance system is usually portrayed as a fight between, on the one side, doctors and hospitals, who want to keep mandatory insurance, and insurance companies, who want to get rid of it. Not so. I'm the CEO of one insurance company who believes strongly in the mandatory insurance system. Let me give you some of the reasons.
Direct General Corp., through its subsidiaries, is a leading provider of what is known as "nonstandard" private passenger auto insurance. We're in the business of covering the drivers whom other insurers - the ones who want to do away with Florida's no-fault law - don't want to cover. We employ nearly 600 people across Florida, in 110 retail locations and a major claims center in the Tampa Bay area. Florida is important to us, and we'd like to think we're a valuable corporate citizen.
Direct General sells basic auto insurance to working families who often struggle to make ends meet. As a business, Direct General benefits from the fact that almost every state, including Florida, requires all drivers to be insured. But it's the people of Florida who benefit most from Florida's mandatory auto insurance system.
Florida's version of mandatory insurance may not be perfect. But, no matter what other insurance companies may say, mandatory insurance is good for the Florida economy and, more importantly, good for Floridians.
The auto insurance system works best when every driver is insured. Insurance costs are kept under control for good and bad drivers alike because every driver is required to be financially responsible. Mandatory insurance also gives people a financial incentive to drive more safely, because they know that tickets and points also mean additional insurance costs.
What will happen if mandatory auto insurance goes away? Many drivers will choose to go uninsured. Because of the large number of uninsured drivers, everyone else will pay much more for uninsured motorist coverage. But that's only the beginning.
Mandatory property damage liability insurance will go away, too, which means that your collision premiums will go up. There will be more lawsuits over injuries from car crashes, so bodily injury liability premiums will go up. Health insurance will replace the coverage now provided by mandatory PIP, which means that the health insurance crisis will get worse as health insurance becomes more expensive and more people choose to go without coverage. Health care costs and the taxes that support public hospitals will go up as more injured people, lacking either PIP or health insurance, get emergency treatment without any ability to pay for it.
On top of all that, if companies like Direct General are forced to scale back their operations in Florida, more drivers who want to be responsible will be forced into the state's Auto Joint Underwriting Association, which is supported by assessments on all drivers. And when nonstandard auto insurance is less available, that will mean less competition within the auto insurance market, and fewer choices at higher cost for everyone.
To put this as simply as possible: Driving in Florida will become much more expensive if the Legislature allows the no-fault law to go away.
Most insurance companies say that the system is so riddled with fraud that it can't be fixed. They're right about fraud being a problem, even though there's been substantial progress in the last few years. Other states have managed to keep no-fault while fighting fraud and abuse through reasonable controls on medical and legal costs. But it's foolish to think that getting rid of the no-fault law will reduce fraud.
Every driver in Florida is better off because the law requires every driver to be insured. It would be tragic if Florida's elected officials - most of whom support some version of the mandatory auto insurance system - were to allow us to get to October without acting to preserve or improve the mandatory insurance system. There's not much time left.
Dan Tarantin is president and chief executive officer of Direct General Corp., an insurance holding company based in Nashville.
By the numbers
250,000 auto crashes annually statewide
140,000 drivers or passengers are injured
Department of Highway Safety and Motor Vehicles
40 percent of those injured in car crashes have no other form of health insurance than PIP
60 percent are covered by private health insurance, Medicare or Medicaid
Florida Hospital Association
3,000 auto accident victims were treated at Bayfront Medical Center last year
3/4 of Bayflite's patients are victims of car crashes
$15-million in uncompensated care delivered last year
Bayfront Medical Center