Progressive may need to refund Florida auto policyholders after excessive profits

Progressive might be in a position where it needs to refund Florida automobile policyholders as an outcome of its excessive profits over the last three years, surpassing what is legally permissible under Florida state regulations. According to a recent filing by Progressive with the U.S. Securities and Exchange Commission, new Florida insurance laws introduced in early 2023 have caused the company to benefit from lower costs from specific types of personal auto accident claims and favorable reserve developments. Despite reducing personal auto rates twice within the last year, the company’s Florida personal auto profits between 2023 to 2025 could potentially exceed the allowed profits as stipulated by law.

The SEC filing discloses that Progressive cannot definitively establish whether it will surpass the authorized profit ceiling due to various factors that could influence the outcome. These factors include the possibility of hurricanes affecting Florida up to late November 2025 and the potential impact of reserve development on losses from 2023 to 2025 in the first quarter of 2026. Florida Statutes 627.066 and 627.915 have made it mandatory for auto insurers to report high profits and provide precise formulas that companies must utilize to ascertain their underwriting profits.

Insurance Commissioner Mike Yaworsky recently communicated a decline in auto insurance rates for the state in a press release issued in late July. Yaworsky highlighted a decrease in rates of about 6.5% by the top five auto insurance groups, contrasting with an average 4.3% rate rise in 2024 and a substantial 31.7% bump in 2023. The announcement further mentioned a reduction in Florida’s personal auto liability loss ratio to 53.3%, showing the positive outcomes of the state’s insurance reforms. Gov. Ron DeSantis voiced his support and mentioned the rate reductions attributed to tort reform, specifically praising a bill from 2023 that banned the assignment of benefits for glass repair in the state.

DeSantis continued to reinforce the positive impact of tort reform after Progressive made an 8.1% reduction in its rates in February. He also underscored how previous bills had contributed significantly to the decrease in auto glass repair lawsuits. A bill signed by DeSantis in 2022, SB 2D, abolished one-way attorney fees in connection with the assignment of benefits and helped considerably reduce the number of auto glass repair lawsuits. The resultant decline from 24,720 lawsuits in Q2 of 2023 to 2,613 in the same period in 2024 illustrated the efficacy of this measure.

Meanwhile, the Louisiana Department of Insurance Commissioner, Timothy J. Temple, announced that several auto insurance companies are also decreasing premiums in the state. Temple noted that downward cost trends in the market are inspiring businesses to compete by offering lower prices as losses drop in tandem. Although the effects of legal reforms implemented this year will require time to become apparent, the reduction in accidents witnessed in 2024 and early 2025 was a promising sign for the future.