Insurer Could Top Profit Limit

By The News Service of Florida

While saying it has reduced Florida auto-insurance rates twice, Progressive insurance reported Monday that it could top a state limit on profits. In a quarterly financial report, Progressive said its business has been bolstered in Florida by legislation that helped reduce lawsuits against insurers.

“Since Florida insurance reform was enacted in early 2023, we have seen lower loss costs on certain types of personal auto accident claims and favorable reserve development, and we have experienced strong profitability in our Florida personal auto business,” the report filed with the U.S. Securities and Exchange Commission said. “In response to these trends, we have lowered Florida personal auto rates twice in the last year. Despite these actions, it is possible that our profit for personal auto in Florida for the 2023 to 2025 period will exceed the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any three-calendar-year period and that we will need to pay any profit above the limit to all Florida personal auto policyholders active at December 31, 2025.”

Florida has an “excessive profit” law that uses a formula to limit profits that auto insurers can make over three-year periods. Progressive said in the report Monday that it is too early to tell whether it will exceed the limit this year, in part because of potential damage from hurricanes.

Florida Insurance Commissioner Michael Yaworsky last week touted an average 6.5 percent rate decrease by Progressive and the four other largest auto insurers in the state, Geico, State Farm, Allstate and USAA.