We appreciate the opportunity to provide you with information on the recent rate revisions we have implemented. Due to a recent increase in the frequency of claims, the average cost of injuries, and fraud in the State of Florida, our claims costs have greatly increased. This in turn has necessitated an increase in the rates we must charge for automobile insurance.
News media within our State have prominently covered Florida's worsening automobile claim environment, and many studies have been conducted to track the common trends that are affecting insurance prices.
Click on the links that follow for more information and resources.
Published Research Findings and Trend Analysis
The following articles and websites provide a sampling of the research that has been conducted and the current trends within Florida automobile insurance.
This report was issued by the Associated Industries of Florida (AIF) in October 2011, and it provides detailed information regarding the increased amount of fraud and Personal Injury Protection (PIP) abuse in the State of Florida.
- Florida drivers currently pay the highest auto liability insurance premiums in the nation.
- Florida has seen a dramatic increase in third-party bodily injury claims (those where a party or parties other than our insured is filing a claim) in recent years.
- No-fault claim costs in Florida have also skyrocketed over the past 5 years (increasing twice as fast as other no-fault states).
The Florida Office of the Chief Financial Officer publishes a newsletter (PDF) that touches on a number of subjects related to insurance fraud in our State.
- One section of the January newsletter, titled "PIP Fraud – In the News" provides information on current events surrounding insurance fraud and increasing claim costs.
- Stephen Smith, the Captain of the Division of Insurance Fraud in Miami, provides an editorial which addresses current fraud trends and what is being done to stop them.
This article from the Insurance Journal discusses how "auto insurance claim costs countrywide have increased, reversing previous trends of declining or relatively stable costs."
- Recent data from the Insurance Research Council (IRC) indicate that claim frequency is no longer decreasing.
- PIP claim costs per insured vehicle countrywide increased more than 18% from 2008 to 2010.
Frequently Asked Questions (FAQs)
I have a great driving record. Why am I still receiving a rate increase?
Even though you have a great driving record, the frequency and severity of accidents has increased in Florida. Because insurance is based on the principle of shared risk, everyone's rates are affected by increased claims costs. However, customers with good driving records will typically see less of an impact on their rates.
Why do I have to pay more because of other peoples' fraudulent activity?
Fraudulent activity results in higher claims costs, which in turn increase the amount of money needed to ensure that all policyholders will be adequately covered in the event of an accident. Because insurance is based on shared risk, the frequency and severity of accidents for all GEICO policyholders in Florida can have an impact on the rates that everyone has to pay.
I live in a safe neighborhood. Why is my rate being affected?
Although the area you live in may not have a high theft or vandalism rate, the primary causes of adjusted rates in Florida are the increased cost of medical expenses, accident frequency and fraud. Rest assured, however, that areas with a lower frequency of accidents and fraud will typically have lower premiums as well.
Why do higher medical costs affect the rate I pay for automobile insurance?
Because the biggest portion of automobile claim costs is related to injuries and medical treatments, the rising cost of medical services in the State has a direct impact on the rates that all policyholders must pay. The costs of medical treatment are higher now than in times past, so insurance rates must also increase to ensure that we can settle losses and satisfy our customers.