As Florida residents gear up for the hurricane season, they must also brace for the financial storm brought by skyrocketing auto insurance premiums.
The state's vulnerability to extreme weather events, coupled with broader trends in the industry, have led to substantial underwriting losses that are pushing insurers to impose rate hikes that outpace increases seen in other parts of the country.
Some insurers have raised rates by as much as 30%, according to the Tampa Bay Times, while others have decided to pull out of the Florida market altogether.
One of the most notable departures is Farmers Insurance, which announced that it would be exiting its own own-branded business in the state last month.
Meanwhile, State Farm implemented a rate increase of just over 30% on nearly 3 million vehicles, and Progressive followed suit with a 30% hike for some 3.3 million vehicles.
Liberty Mutual, with its smaller customer base of around 157,000 cars, raised rates by slightly more than 44%. Geico, which insures 2.5 million vehicles in Florida, increased rates by almost 24%.
Industry experts have attributed the escalating premiums to a combination of factors, including high inflation and labor costs.
Insurers have also been faced with the challenge of paying out more in claims, with accident frequency and severity having both increased post-pandemic.
In Florida, the problem is particularly pronounced due to the threat of hurricanes, as well as high rates of auto theft and rampant claims fraud.
Logan McFaddin, vice president of state government relations for the American Property Casualty Insurance Association, told the Tampa Bay Times that legislative reforms targeting insurance fraud should help Florida’s market return to stability, but added that it will take time for “the current wave of legal system abuse to wash through the system.”
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