Florida motorists are hoping that auto insurance rates in 2024 follow the old adage that what goes up must surely come down.
Of course, the term “down” is subjective when it comes to insurance costs, with the most optimistic definition meaning a lower rate of increase this year compared to the past two years.
And has it ever increased. According to personal finance website Bankrate.com, the average cost for full coverage in Florida increased from $2,762 in 2022 to $3,941 in January. That’s a 42.7% hike over two years.
The nation overall experienced a 43.5% increase during the same period — but from a much lower $1,771 to $2,542.
Mark Friedlander, spokesman for the insurance industry-funded Insurance Information Institute, projects another year of double-digit increases across the United States, “but hopefully not as steep as what we experienced in 2023,” he said in an email.
Last year, auto insurance costs rose 20% nationwide — the largest rate of increase since 1976, according to the Bureau of Labor Statistics. December marked the 16th consecutive month with a year-over-year increase of at least 10%, Friedlander said.
If we squint hard, we can spot some hopeful signs emerging in Florida, home of the highest-priced average auto insurance premium in the U.S.
Windshield lawsuits declining
A law enacted in May barring insurance customers from assigning benefits of their policies to contractors has already reduced the number of lawsuits by windshield installers, which has been cited as one of the factors driving rate hikes in the state.
Contractors and plaintiffs’ attorneys have used assignments of benefits (AOBs) to generate increasing numbers of lawsuits against insurers of all types in Florida. Prohibiting AOBs and laws that award legal fees to attorneys who convince insurers to settle litigated claim disputes will eventually reduce insurers’ costs and at least stabilize premiums for consumers, insurers say.
The number of lawsuits by companies with the term “glass” in their names declined from 8,331 in the fourth quarter of 2022 to 5,296 during the same period of 2023.
The law took effect last May for any auto insurance policy issued or renewed on or after July 1, 2023, meaning it will take until July 1 of this year for windshield assignments to be completely prohibited, and at least another year or two for windshield AOB lawsuits to go away.
Crashes and fatalities are down
The number of motor vehicle crashes, injuries and fatalities were lower in 2023 compared to previous years in Florida.
Total crashes declined from 397,620 in 2022 to 393,123 in 2023. Meanwhile, the number of injuries were down from 252,169 to 251,100 and fatalities dropped from 3,553 to 3,368.
Nationwide, the number of crashes and fatalities have been falling over the past two years after spiking dramatically during 2020 and 2021.
Lower numbers of crashes, injuries and fatalities should reduce pressure for increasing insurance rates, according to Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, an insurance industry trade group.
Vehicle prices expected to fall
Inventories of new vehicles are expected to return to normal levels in 2024, bringing down prices and auto loan rates. Cox Automotive projected in a January report that 2024 will be the best year for car buyers since the pandemic as the microchip shortage recedes into the past and auto manufacturing rebounds to pre-pandemic levels.
If prices for cars and parts fall or at least stabilize, that would reduce the cost of repairs and insurance price increases.
Insurance rate hike requests possibly slowing
An analysis of auto insurance rate filings in Florida since last August shows fewer requests. And rate-hike requests so far for 2024 appear to be lower than in previous years.
It’s still early in 2024, so it’s possible that rate hikes will gain momentum as the year progresses. But so far, large insurers are seeking lower increases, according to filings with the Florida Office of Insurance Regulation.
For example, Farmers Property and Casualty Insurance is seeking a rate hike averaging 9.6% statewide for owners of 120,000 insured vehicles effective on Feb. 18. Last June, the company was approved for a 25% hike.
Allstate Insurance Co. is seeking a 4.35% increase for owners of 164,808 vehicles, while Allstate Property and Casualty — a separate Allstate brand — has requested approval for a 3.9% price hike to cover 80,532 vehicles. Both requests would take effect March 9 for renewing policies.
Equity Insurance Company, a Tulsa, Oklahoma-based company is seeking a 6.3% rate hike effective March 1 for 240,000 vehicles it insures in Florida. That follows an 8.4% hike last March and a 6.8% increase last June.
Progressive Insurance has not yet filed a 2024 rate increase request for 1.7 million Florida vehicles insured under its Progressive American brand following increases totaling 37.2 percentage points in 2022 and 2023.
Nor has the company filed a 2024 request for another 1.7 million vehicles insured by its Progressive Select brand following four hikes totaling 31.4 percentage points in 2022 and 2023.
Still, AAA is seeking a 15.2% hike for 84,696 vehicles insured by its Auto Club South Select brand. It would follow a 15.1% hike that took effect on July 1.
And State Farm Mutual Automobile Insurance Co. is requesting a 9.7% increase, effective March 25, for just over 3 million vehicles it insures in Florida, following three hikes in 2023 totaling 30.2%.
Asked about the pending increase, a State Farm spokesperson blamed growth of auto insurance claims, inflation, supply chain disruptions and higher costs for labor and materials, saying, “We continue to adjust to these trends to make sure we are matching price to risk.”
And yet…
Friedlander, meanwhile, offered numerous reasons why insurance rates will continue to rise during 2024:
- Vehicle replacement costs are up 45 percentage points since 2022. Those costs have been driven by parts shortages and labor costs.
- The auto insurance industry continues to lose money. A $28 billion underwriting loss in 2023 marked an improvement, thanks to higher rates, compared to a $33 billion loss in 2022.
- Florida ranked third in vehicle thefts during the first half of 2023 and third in fatalities for the full year.
- Hurricane Idalia and South Florida floods destroyed thousands of vehicles.
- Costs of medical treatment and vehicle repairs have risen.
- Florida was first in the nation for auto insurance lawsuits, with 30,000 personal injury protection (PIP) suits filed per month last year. Matching bills in the Florida Legislature would eliminate Florida’s law requiring drivers to carry PIP insurance, which is seen by some as redundant for drivers who carry bodily injury coverage. Eliminating the PIP requirement could save drivers about $300 per year. But this year’s bills have not yet been heard by any legislative committees. Similar bills in recent years have failed to gain traction, and Gov. Ron DeSantis vetoed a bill that passed the House and Senate in 2021, citing potential “unintended consequences.”
- For the year, glass companies filed more than 50,000 lawsuits.
Michael Carlson of the Personal Insurance Federation of Florida says “very preliminary,” the decline in auto glass lawsuits and a potential decline in personal injury protection lawsuits bode well for the possibility that auto insurance rates could stabilize within the next year or two.
And “if inflationary and other pressures begin to wane, auto insurers will be in a better position to compete on rate, giving Floridians more choice about what to pay for auto insurance,” he said.
He added, “It would also really help if Florida motorists were less distracted on the road. One of the key drivers of rates are crashes and the cost of vehicle replacements and repairs.”
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email atrhurtibise@sunsentinel.com.
