In a quarterly financial report in August, Progressive Insurance shared that it could possibly surpass the three-year profit threshold despite recent rate reductions. (Credit: Birdland/Adobe Stock)
The law at play in this situation is FL Stat § 627.066, which was adopted in 2024. It requires private passenger auto insurance companies to file data on premiums, losses and expenses with the state by July 1 each year. An insurer is considered to have excessive profit if there has “been an underwriting gain for the three most recent calendar-accident years combined which is greater than the anticipated underwriting profit plus 5% of earned premiums for those calendar-accident years.”
Each insurer’s profit and loss data from the three most recent years is compared to its anticipated underwriting profit. The statute explains, “If the insurer group has realized an excessive profit, the office shall order a return of the excessive amounts after affording the insurer group an opportunity for hearing and otherwise complying with the requirements of chapter 120. Such excessive amounts shall be refunded in all instances unless the insurer group affirmatively demonstrates to the office that the refund of the excessive amounts will render a member of the insurer group financially impaired or will render it insolvent under the provisions of the Florida Insurance Code.”
Excess profits may be returned to insureds as cash refunds or as a credit toward a future insurance purchase.
In a quarterly financial report in August, Progressive Insurance shared that it could possibly surpass the three-year profit threshold despite recent rate reductions.
“Since Florida insurance reform was enacted in early 2023, we have seen lower loss costs on certain types of personal auto accident claims and favorable reserve development, and we have experienced strong profitability in our Florida personal auto business,” a report from Progressive filed with the U.S. Securities and Exchange Commission said. “In response to these trends, we have lowered Florida personal auto rates twice in the last year. Despite these actions, it is possible that our profit for personal auto in Florida for the 2023 to 2025 period will exceed the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any three-calendar-year period and that we will need to pay any profit above the limit to all Florida personal auto policyholders active at December 31, 2025.”
Progressive’s August report also noted that it is still too early to know for sure if the company will exceed the limit in 2025 because of potential hurricane damage in the coming months.
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