Florida drivers may get a break
Analysis: Automobile insurance premiums leveling off, declining
With auto insurers quick to blame rising motor vehicle crashes for the need to increase insurance premiums in recent years, wouldn’t you think drivers would get a break after crash rates declined between 2017 and
Here’s some good news: Many Florida drivers will get a break on insurance rates this year.
An analysis of recent rate proposals by top auto insurers indicate premiums are leveling off and in some cases declining for millions of Florida customers.
For example, State Farm Mutual Insurance Co., with 2.3 million private vehicle policies in Florida, will lower its rates an average of 5.1 percent this March, according to its latest filing.
Progressive American Insurance Co., with 1.3 million private vehicle policies, is planning to lower its rates an average of 0.1 percent.
Major companies that recently implemented or are planning no rate increase include Progressive Select (935,136 policies), Geico General (765,501 policies), Safeco
(223,621 policies) and Hartford
Those follow a year in which total motor vehicle crashes in
Florida declined 0.6 percent, from 402,492 in 2017 to
399,934 in 2018, according to the Florida Department of Highway Safety and Motor Vehicles. Crashes with injuries declined 0.5 percent while traffic fatalities declined 2.2 percent.
The tricounty region fared even better, with total crashes declining 2.7 percent, from 134,697 to 131,054. Crashes with injuries fell 2.2 percent, through fatalities declined only 0.9 percent.
It can’t be said with certainty that the flattening rates are a direct result of fewer crashes in 2018.
Insurance rates are based on complex formulas that take a multitude of factors into account. Loss projections play a large role, and they are generally based on cost trends over recent years. Price competition can push prices down as well, and the Florida market is extremely competitive, says Michael Carlson, president and CEO of the Personal Insurance Federation of Florida.
“It will be interesting to see how others follow. If State Farm is taking rates down 5.1 percent, I guarantee others will follow,” he said.
Nationwide, spending on motor vehicle insurance increased 3.4 percent in January compared to the previous January, according to the U.S. Department of Labor’s latest Consumer Price Index report. That follows increases of 7.4 percent and 8.4 percent the previous two years. Not all insurers plan to flatten or lower their rates. USAA, with 611,600 policies across three product lines, plans to raise its rates between 2.1 percent and 5.8 percent this March. And Allstate Fire and Casualty plans a 4.5 percent hike for
786,000 policyholders. Lynne McChristian, Florida representative for the industry trade group Insurance Information Institute, said a single year of declining crashes isn’t enough data to conclude it’s causing insurance rates to decline.
Too many other factors remain in play, she said. “Cars are safer, but driving isn’t getting any better. Distracted driving remains a big problem.”
Still, a year of declining crashes “is a good sign, and portends well for the future,” she said.