Florida’s Auto Insurance Affordability Impacted by Legal System Abuse

Florida is one of the least affordable states in the nation for auto insurance in part because of claim fraud and legal system abuse, according to a research brief published today by the Insurance Research Council (IRC), a division of The Institutes.

In an update to a study released last year, the IRC found that the average annual expenditure for auto insurance was $1,342 in Florida in 2020, more than 30 percent higher than the countrywide figure. In terms of affordability, auto insurance expenditures were 2.39 percent of the median household income for the state. Only one state, Louisiana, was less affordable.

The new IRC analysis shows that Florida consumers are facing many of the cost drivers of auto insurance impacting the country as a whole. Factors leading to increased rates in Florida include:

• Increasing auto injury claim severity
• Elevated medical utilization
• High rate of uninsured motorists
• Legal system abuse and fraud

“Unique features in Florida’s insurance system and a long‐standing culture of claim and legal system abuse have allowed some medical and legal professionals to generate substantial income for themselves at a significant cost to Florida drivers,” said Dale Porfilio, FCAS, MAAA, IRC president. Porfilio also serves as the chief insurance officer of the Insurance Information Institute (Triple-I).

Policymakers in the Sunshine State enacted substantial property insurance reform in late 2022 focusing on the affordability and availability crisis in homeowners’ insurance. During the current Florida Legislative Session, leaders have pledged to address similar issues in other lines of insurance to ease the financial burden that paying for auto insurance represents for Florida drivers.

Bills being addressed by the state’s Senate and House focus on significant tort reform to stop lawsuit abuse, including the elimination of one-way attorney fees for litigated auto claims, and the abolishment of assignment of benefits for auto insurance claims, a generator of fraud schemes and litigation. One-way attorney fees allow a driver who successfully sues their insurer to recoup attorney fees from the insurer.

About Insurance Research Council

The Insurance Research Council (IRC), affiliated with The Institutes, is an independent, nonprofit research organization supported by leading property and casualty insurance companies and associations. IRC provides timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers. IRC does not lobby or advocate legislative positions.

About The Institutes | Risk and Insurance Knowledge Group

The Institutes, a leading provider of risk management and insurance knowledge solutions, offer innovative education, research, networking, and career resources, including professional designations such as the CPCU® program, leadership programs, continuing education courses, events and conferences, associations, custom solutions, publications, and assessment tools.

CPCU is a registered trademark of The Institutes. All rights reserved.

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“Unique features in Florida’s insurance system and a long‐standing culture of claim and legal system abuse have allowed some medical and legal professionals to generate substantial income for themselves at a significant cost to Florida drivers."