Litigation and fraud are among several factors behind Florida having the third highest auto insurance rates in the nation.
While the national average is around $1,400, Florida motorists pay closer to $2,100 a year, according to a recent study by the auto insurance comparison website, The Zebra. The study showed that since 2011, Florida’s rates have increased by 50 percent.
“It still is a broken system with higher rates than consumers should have to face here in Florida,” said Jeff Grady, president and CEO of the Florida Association of Insurance Agents.
Jeff Grady, President/CEO of Florida Association of Insurance Agents | FAIA website
The number of people trying to game the system is a major cause.
“We have a very, very high degree of fraud, uninsured motorists,” Grady said. “They have made many changes to the law to try to police that better but it still goes on.”
In addition to the uninsured, there is significant Personal Injury Protection fraud.
While the state legislature has attempted reform, changing the law seems at a standstill, Grady said, adding that it’s due in part to conflict among interest groups that profit from the industry and their perpetual lobbying of the legislature. These include trial lawyers, medical professionals and the insurance companies themselves.
“The system that we have is interesting,” Grady said. “While broken, it’s in a stalemate to fix it. I think in the last four sessions, there have been bills – I think some of which have gotten a lot closer than others – to do away with the no-fault system.”
The alternative would be to go full tort so everyone would take care of their own. He noted that most other states around the country have eliminated their no-fault laws.
“Here in Florida the fight within the legislature really creates a stalemate, and although the system is broken, there’s not a real strong will to overturn it,” Grady said.
The result is rates that continue to be higher than they should be.
Given the state legislature’s recent progress on another insurance issue – the assignment of benefits – Grady said it could perhaps lead to further reform and a better system.