Florida is one of the least affordable states for personal auto insurance, according to a new Insurance Research Council (IRC) study. Claims trends are driving premium rates up across the country, and Florida has been particularly hard hit.
In 2020, the average auto insurance spend in Florida was $1,342, more than 30 percent higher than the national average, the IRC report said, citing data from the National Association of Insurance Commissioners (NAIC). In terms of affordability, IRC says spending on auto insurance was 2.39 percent of the state’s median household income. Only Louisiana was less affordable.
“Efforts to improve the affordability of auto insurance must start with the underlying cost drivers,” says the IRC report. In almost every one of these categories, Florida costs are well above the national average:
Accident rate: The number of property damage claims per 100 insured vehicles in Florida is 10 percent higher than the national average.
Repair costs: For years, the average cost of property damage in Florida has been below the national average. However, there is evidence that repair costs are rising faster in Florida than anywhere else.
Relative frequency of claims for damages: Floridians show a greater propensity to file claims after an accident, with a relative claims incidence that is 40 percent higher than the national average. Florida is the only no-leverage state with an above-average personal injury-to-property damage ratio.
Severity of the damage claim: The median amount paid per claim for auto accident insurance claims for all accident coverage combined is much higher in Florida.
Medical Utilization: Auto applicants in Florida are more likely than other states to receive diagnostic procedures such as magnetic resonance imaging (MRI).
Legal involvement: Florida applicants are more likely to hire attorneys. The involvement of an attorney has been linked to higher claims costs and delays in settlement time.
Fraud and build-up: The percentage of all auto injury claims with the appearance of claim fraud and/or build-up is a testament to the culture of fraud in Florida.
Uninsured drivers: Florida has one of the highest rates of uninsured motorists, both a symptom and a cause of affordability problems.
Process climate: According to a survey of business leaders, Florida’s legal environment ranks at the lower end of state liability systems for fairness and appropriateness.
“Unique features in Florida’s insurance system and a longstanding culture of claims and legal system abuse have enabled some medical and legal professionals to generate significant revenue for themselves, at a significant cost to Florida drivers,” said Dale Porfilio, IRC President and Triple I insurance manager. Triple-I and IRC are both affiliated with The Institutes.
Policymakers in the Sunshine State enacted sweeping property insurance reform in late 2022 to address the affordability and availability crisis in home insurance and committed to addressing similar issues in other lines of insurance to ease the financial burden of paying for auto insurance on drivers in the United States represents Florida.
Bills being considered by the state’s Senate and House of Representatives focus on comprehensive tort law reform to stop the abuse of claims, including eliminating one-way attorney’s fees for disputed motor claims and eliminating the assignment of benefits for auto insurance claims – a source of fraud and litigation. Unilateral attorneys’ fees allow drivers who successfully sue their insurer to recover attorneys’ fees – but not the other way around.
Learn more:
Florida insurance crisis reforms are gaining momentum with the latest proposal
Florida auto legislation following 2022 reforms suggests the state is serious about fixing the insurance crisis
Florida and Abuses of the Legal System Highlighted at JIF 2022
Fraud, litigation brings Florida insurance market to the brink of collapse
Why personal auto insurance rates are likely to keep rising
Florida’s AOB Crisis: A Microcosm of Social Inflation
Triple I Issues Briefings:
Florida’s Homeowners Insurance Crisis
Dealing with the Property/Casualty Insurance Crisis in Florida
Private car insurance rates
Risk-based insurance pricing
