Florida’s economy has improved since the 2008 global financial crisis caused a drawn out downturn, but a recovering job market and lower gas prices have had a downside: more traffic crashes and higher auto-insurance rates.
Twenty-three of the state’s top 25 insurers have been granted rate increases since Jan. 1, 2015, ranging from a little less than 1 percent for United Automobile Insurance Co. to nearly 31 percent for Allstate Fire and Casualty Insurance Co. Allstate’s personal-injury protection and liability coverages skyrocketed by nearly 40 percent, the highest of any company. Overall, the average increase has been nearly 14 percent
“People are driving more,” said former state Insurance Commissioner Kevin McCarty, “and accidents have increased commensurate with that number.” Americans drove about 3.5 percent more miles in 2015 than in 2014, according to the National Safety Council. And as more people become employed and commute to work, they’re having more crashes, authorities say. The National Safety Council estimates that crash deaths nationally, at 38,300, were 8 percent higher in 2015 than in 2014 – the largest increase in 50 years. In Florida, fatalities rose by an estimated 18 percent.
Since 1972, Florida has required all drivers to carry $10,000 of personal injury protection, or PIP, to cover minor accident claims, regardless of who was at fault. Known as no-fault insurance, it was an attempt to clear the courts of accident-related lawsuits and get payments to victims faster. Four years ago, Scott and the Legislature revamped the law to dissuade PIP fraud, especially in Tampa and Miami , that was blamed for increasing premiums. But after rates fell in the first two years after the bill’s passage, PIP premiums have risen by nearly 15 percent since Jan. 1 of last year. One major carrier, Allstate Fire & Casualty, has raised PIP rates 40 percent. PIP accounts for about one-fourth of a total premium’s cost, the state has said. Lynne McChristian, the Florida representative of the Insurance Information Institute, an industry group, said the average no-fault claim in the fourth quarter of 2015 was $8,280, nearly matching the figure of $8,520 in 2011 before the new law took effect. “The state is commissioning a $125,000 study as it renews a perennial debate over whether no-fault should be repealed as it has in most other states.”
“It’s time to look at other options,” said Sen. Jeff Brandes, R-St. Petersburg. He filed a bill in the 2016 session that would have replaced PIP with higher bodily injury coverage, but it never gained traction. Brandes said doing away no-fault is complicated in Tallahassee because it involves three very powerful competing interests: insurance companies, lawyers and the medical industry. As Florida’s population gets bigger every year, more people are driving and state data shows they are driving more than ever. They drove a record 551 million miles each day in 2014, the most recent data available. Across the state, car accidents rose last year by nearly 9 percent from the year before, according to the Department of Highway Safety and Motor Vehicles, which promotes safe driving with outreach campaigns such as “Distracted Driving Awareness Month” in April.
Crashes caused by distracted driving also are on the rise, even after passage of a new law in 2013 that made texting while driving illegal. More accidents means more claims, which insurance companies use to justify higher premiums. State Farm, the dominant insurer in Florida with $2.4 billion in premiums last year, said its losses have been climbing for several years.
According to insure.com, Florida’s car insurance rates were fourth highest among all states at an average of $1,742 in 2015. Only Michigan, Montana and Louisiana were higher. In a recent filing with the state, Allstate Fire & Casualty proposed the use of a mileage rating system, similar to what it uses in New York state, to link premiums more closely to how much its customers drive.
What will make everyone happy? No one seems to know. The rub will be finding a solution that insurance companies, hospitals, lawyers and consumers can live with.