While it is great news to hear that more Floridians are driving, there is not just one—but two consequences to this upside: state reports reveal that there are now more vehicular crashes as a result, and auto insurance premiums have increased accordingly.
“People are driving more,” remarked former state insurance commissioner Kevin McCarty. “. . . and accidents have increased commensurate with that number.”
Data from the Department of Highway Safety and Motor Vehicles for the year 2015 showed that car accidents across Florida increased on average by 9% from 2014.
A report by Miami Herald
found that auto insurance premiums have surged by 14% since Jan. 1, 2015.
Under McCarty, the Office of Insurance Regulation approved dozens of rate increase requests in the past year and a half. The average increase for the 25 companies that write the most car coverage in the state of Florida is 13.8%
Florida’s no-fault personal injury protection (PIP) insurance program, designed to help cover for minor accident claims regardless of who was at fault, was also cited as a factor in the state’s auto insurance premium hike. The PIP program, first created in 1972, required drivers to carry $10,000 worth of coverage.
In time, rampant PIP fraud occurred in regions like Tampa and Miami, which increased premiums in the state. In response, Gov. Rick Scott and the Legislature passed a bill four years ago to discourage PIP fraud and lower premium rates. Two years after the bill, however, PIP premiums have risen by almost 15% since Jan. 1, 2015. One carrier—Allstate Fire & Casualty—even increased its PIP rates by 40%.
State officials have mentioned that PIP accounts for roughly a quarter of a total premium’s cost.
Insurance Information Institute representative Lynne McChristian believes that the drop in unemployment rates in Florida also led to the surge in insurance rates.
“It’s an unintended consequence of low unemployment,” she said. “You have more people with jobs to go to.”