July 31, 2025 • 9 mins
The average full-coverage auto policy will decline by $226 dollars per vehicle with the average minimum liability policy costing about $99 less.
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Episode Transcript
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Speaker 1 (00:04):
Your questions, Brian's answers. It's time for today's Q and
A of the day. This is the Brian mud Show
Today's Q and A as we take a look at
auto insurance and orders auto insurance reforms. Are they working?
This is brought to you by Well Listen, as is
check Mark Collections. Each day I feature a listener question
(00:26):
that is sent by one of these methods. You may
email me Brian Mud at iHeartMedia dot com, hind me
up on social at Brian Mud Radio. You may also
use the iHeartRadio talk back feature. We'd love it if
you would enter the iHeartRadio app. Make us your number
one preset, the Brian Mudshow podcast your number two preset,
and we are always there for you for free on demand.
(00:47):
And while you're in there, look for the little microphone button.
See it, Tap it You may lay down a message
right there, maybe for a future Q and A. Today's
note is this Brian. Two quick questions on the auto
insurance story. What does Florida having the lowest insurance loss
ratio mean? As in what is it?
Speaker 2 (01:07):
Also?
Speaker 1 (01:08):
How did Florida suddenly go from worse to first? It
doesn't appear to be due to better driving based on
what I've seen.
Speaker 2 (01:16):
But Zinga's that's a good one, because I would agree
with that.
Speaker 1 (01:21):
Yeah, No, they and they are great questions, great questions,
and I'm pretty sure that you're not the only one
that's unsure of what insurance loss ratio is mean. Taking
a look at some of the reporting, I think it's
pretty clear that most of the reporters don't really know
what it means either, and they just like, well, this
is what is reported, and I'm reporting what was reported.
(01:43):
I see Joel smiling. Yeah.
Speaker 2 (01:45):
Well, my version of the story, I kept it very simple.
It's according to the insurance commissioner, five companies are lowering
their prices and that that's pretty much it. I don't
get involved in the into the insurance loss ratio, try
not to.
Speaker 1 (02:02):
Yeah.
Speaker 2 (02:02):
Yeah.
Speaker 1 (02:04):
So today's question does come following the news that after
years of significant increases and auto insurance rates in our state,
that rates are set to drop by an average of
about seven percent in Florida going forward. This was the
determination made by Florida's insurance Commissioner, Mike Yorkski after the
(02:24):
state's top five auto insurance with Joel was just referencing
progressive Geico State, Farm All State, and USAA submitted their
rate request to the state for consideration. To give you
an idea, those five companies under right seventy eight percent
of the auto insurance policies within the state. So the
(02:45):
key to the coming decline and auto insurance rates is
what you're asking about, Florida having had a huge decline
in its insurance loss ratio. So about that. The insurance
loss ratio is how much insurance companies paid out in
total auto insurance claims and related expenses. Okay, that is
(03:10):
just to service the claims that come their way. Here's
the look at the change over the past three years.
And don't get hung up on the percent, because I'm
going to break this down further. It's just to illustrate
the progress that's been made here because it really has
been traumatic. In twenty twenty two, the loss ratio was
(03:32):
eighty point five percent. Two years ago, it was seventy
four and a half percent. Last year fifty three point three.
Pretty incredible decline there. So what that greater than twenty
seven percent decline means is that two years ago, approximately
(03:53):
eighty one cents out of every dollar collected in insurance
premiums was being paid out in insurance claim related costs. Okay,
so every dollar coming through the door, eighty one cents
of that dollar going back out just to take care
of claims and the related cost of those claims. Now,
on the surface, you might think, God, that doesn't sound
(04:15):
so bad. I mean, that still leaves nineteen cents per dollar.
You know, after that, that would be a healthy margin
for a business. However, no, that is not the margin.
That is again just servicing the claims. By the time
you factor in the cost of actually running the business,
that is not sustainable, not profitable, and that's why rates
just continued to rapidly rise higher in recent years. To
(04:40):
give you an idea, what is a decent ratio and
acceptable ratio, Well, the industry average loss ratio is about
sixty five percent, So you can see how far off
we were when we were above eighty for example, and
then you know, a couple of years ago, still around
seventy five. So at sixty five percent that allows for
(05:01):
profitable operations for the insurers in a stable overall auto
insurance market. Then mid sixties level is also why we're
set to see a related decline and insurance rates this
year now that we're below sixty. Now, for years, Flordians
have been paying the price for exceptionally high payout costs
(05:23):
by insurers to attempt to bring us back in line.
So this cycle we'll see cost cut to bring us
back in line with the industry averages going the other way.
So an answer to your second question, your anecdotal observation
on point on point, Much like the biggest driver of
Florida's property insurance crisis in years gone by, the biggest
(05:45):
driver of Florida's auto insurance crisis wasn't the level of
claims activity, but rather litigation associated with it. If you're wondering,
how is it that we suddenly had this huge decline. Yeah,
you're right, it's not because we had that many fewer
acts sentence all of a sudden. No, it's not coincidental
that Florida's property insurance and auto insurance crisis peaked at
(06:09):
the same time and are improving at the same time.
Here's how the litigation reforms enacted by the state legislature
impacted Florida's auto insurance market. You had four big pieces
of reform, the elimination of one way attorney fees, so Previously,
insurers had to pay policy holders legal fees if the
(06:29):
policy holder won a lawsuit, so that insteadivized frivolous claims.
The Civil Remedies Law in twenty twenty three repeal this,
requiring both parties to cover their own legal costs. Got
rid of a law of those nonsensical lawsuits. Next up
the prohibition of assignment of benefits. You will remember, going
(06:49):
back a couple of years ago, all of the discussion
about AOB when it came to property insurance. Well, just
as property insurance, AOB abuse was a big deal. It
was too when it came to auto insurance. The number
one area where we had problems with the assignment of
benefits in the auto insurance industry auto glass repair. So
(07:16):
what happened previously is that often you would have a
windshield repair company come out and maybe make unnecessary repairs,
like something they could easily do without replacing a windshield.
Now we're just going to go ahead and replace a
whole windshield now, and you will had to often an
inflating of cost or outright fraud. You know, there are
(07:38):
times documented where people said, yeah, we replaced windshields and
they never did so. Reforms banned aob meaning that the
claims are handled directly by the policy holders. That's cut
down on a lot of abuse, tighter claims filing deadlines.
So the deadline to file insurance claims was reduced from
three to two years, and then the pre lawsuit notification
(08:02):
related policy holders are now to notify insurers at least
ten days before filing a lawsuit, and so most of
the time issues can be worked out during that ten
day period without the much more expensive process of a
drawn down legal battle. So what all of this means
in terms of savings over the next year is that
(08:23):
the average full coverage auto policy will decline by two
hundred and twenty six dollars per vehicle, but the average
minimum liability policy costing about ninety nine dollars less. So
it's good news that hopefully you will continue. It's also
a particularly good time to rate shop for auto insurance policies.
If you haven't done so in a long time, you
(08:44):
might be shocked at how much you could say by
doing a little shopping around.
Speaker 2 (08:48):
And I do have to tell you, before I heard
this story, I did notice my policy renews every six
months and my monthly premiums have gone down. I'm with
one of those five compies have gone down by fifteen
seventeen bucks a month.
Speaker 1 (09:04):
I will tell you that I was with one of
those five companies. We switched about a year ago to
another one of those five companies. We saved over three
thousand dollars between our twoes.
Speaker 2 (09:16):
LE might want to shop around, yes,
Your questions, Brian's answers. It's time for today's Q and
A of the day. This is the Brian mud Show
Today's Q and A as we take a look at
auto insurance and orders auto insurance reforms. Are they working?
This is brought to you by Well Listen, as is
check Mark Collections. Each day I feature a listener question
(00:26):
that is sent by one of these methods. You may
email me Brian Mud at iHeartMedia dot com, hind me
up on social at Brian Mud Radio. You may also
use the iHeartRadio talk back feature. We'd love it if
you would enter the iHeartRadio app. Make us your number
one preset, the Brian Mudshow podcast your number two preset,
and we are always there for you for free on demand.
(00:47):
And while you're in there, look for the little microphone button.
See it, Tap it You may lay down a message
right there, maybe for a future Q and A. Today's
note is this Brian. Two quick questions on the auto
insurance story. What does Florida having the lowest insurance loss
ratio mean? As in what is it?
Speaker 2 (01:07):
Also?
Speaker 1 (01:08):
How did Florida suddenly go from worse to first? It
doesn't appear to be due to better driving based on
what I've seen.
Speaker 2 (01:16):
But Zinga's that's a good one, because I would agree
with that.
Speaker 1 (01:21):
Yeah, No, they and they are great questions, great questions,
and I'm pretty sure that you're not the only one
that's unsure of what insurance loss ratio is mean. Taking
a look at some of the reporting, I think it's
pretty clear that most of the reporters don't really know
what it means either, and they just like, well, this
is what is reported, and I'm reporting what was reported.
(01:43):
I see Joel smiling. Yeah.
Speaker 2 (01:45):
Well, my version of the story, I kept it very simple.
It's according to the insurance commissioner, five companies are lowering
their prices and that that's pretty much it. I don't
get involved in the into the insurance loss ratio, try
not to.
Speaker 1 (02:02):
Yeah.
Speaker 2 (02:02):
Yeah.
Speaker 1 (02:04):
So today's question does come following the news that after
years of significant increases and auto insurance rates in our state,
that rates are set to drop by an average of
about seven percent in Florida going forward. This was the
determination made by Florida's insurance Commissioner, Mike Yorkski after the
(02:24):
state's top five auto insurance with Joel was just referencing
progressive Geico State, Farm All State, and USAA submitted their
rate request to the state for consideration. To give you
an idea, those five companies under right seventy eight percent
of the auto insurance policies within the state. So the
(02:45):
key to the coming decline and auto insurance rates is
what you're asking about, Florida having had a huge decline
in its insurance loss ratio. So about that. The insurance
loss ratio is how much insurance companies paid out in
total auto insurance claims and related expenses. Okay, that is
(03:10):
just to service the claims that come their way. Here's
the look at the change over the past three years.
And don't get hung up on the percent, because I'm
going to break this down further. It's just to illustrate
the progress that's been made here because it really has
been traumatic. In twenty twenty two, the loss ratio was
(03:32):
eighty point five percent. Two years ago, it was seventy
four and a half percent. Last year fifty three point three.
Pretty incredible decline there. So what that greater than twenty
seven percent decline means is that two years ago, approximately
(03:53):
eighty one cents out of every dollar collected in insurance
premiums was being paid out in insurance claim related costs. Okay,
so every dollar coming through the door, eighty one cents
of that dollar going back out just to take care
of claims and the related cost of those claims. Now,
on the surface, you might think, God, that doesn't sound
(04:15):
so bad. I mean, that still leaves nineteen cents per dollar.
You know, after that, that would be a healthy margin
for a business. However, no, that is not the margin.
That is again just servicing the claims. By the time
you factor in the cost of actually running the business,
that is not sustainable, not profitable, and that's why rates
just continued to rapidly rise higher in recent years. To
(04:40):
give you an idea, what is a decent ratio and
acceptable ratio, Well, the industry average loss ratio is about
sixty five percent, So you can see how far off
we were when we were above eighty for example, and
then you know, a couple of years ago, still around
seventy five. So at sixty five percent that allows for
(05:01):
profitable operations for the insurers in a stable overall auto
insurance market. Then mid sixties level is also why we're
set to see a related decline and insurance rates this
year now that we're below sixty. Now, for years, Flordians
have been paying the price for exceptionally high payout costs
(05:23):
by insurers to attempt to bring us back in line.
So this cycle we'll see cost cut to bring us
back in line with the industry averages going the other way.
So an answer to your second question, your anecdotal observation
on point on point, Much like the biggest driver of
Florida's property insurance crisis in years gone by, the biggest
(05:45):
driver of Florida's auto insurance crisis wasn't the level of
claims activity, but rather litigation associated with it. If you're wondering,
how is it that we suddenly had this huge decline. Yeah,
you're right, it's not because we had that many fewer
acts sentence all of a sudden. No, it's not coincidental
that Florida's property insurance and auto insurance crisis peaked at
(06:09):
the same time and are improving at the same time.
Here's how the litigation reforms enacted by the state legislature
impacted Florida's auto insurance market. You had four big pieces
of reform, the elimination of one way attorney fees, so Previously,
insurers had to pay policy holders legal fees if the
(06:29):
policy holder won a lawsuit, so that insteadivized frivolous claims.
The Civil Remedies Law in twenty twenty three repeal this,
requiring both parties to cover their own legal costs. Got
rid of a law of those nonsensical lawsuits. Next up
the prohibition of assignment of benefits. You will remember, going
(06:49):
back a couple of years ago, all of the discussion
about AOB when it came to property insurance. Well, just
as property insurance, AOB abuse was a big deal. It
was too when it came to auto insurance. The number
one area where we had problems with the assignment of
benefits in the auto insurance industry auto glass repair. So
(07:16):
what happened previously is that often you would have a
windshield repair company come out and maybe make unnecessary repairs,
like something they could easily do without replacing a windshield.
Now we're just going to go ahead and replace a
whole windshield now, and you will had to often an
inflating of cost or outright fraud. You know, there are
(07:38):
times documented where people said, yeah, we replaced windshields and
they never did so. Reforms banned aob meaning that the
claims are handled directly by the policy holders. That's cut
down on a lot of abuse, tighter claims filing deadlines.
So the deadline to file insurance claims was reduced from
three to two years, and then the pre lawsuit notification
(08:02):
related policy holders are now to notify insurers at least
ten days before filing a lawsuit, and so most of
the time issues can be worked out during that ten
day period without the much more expensive process of a
drawn down legal battle. So what all of this means
in terms of savings over the next year is that
(08:23):
the average full coverage auto policy will decline by two
hundred and twenty six dollars per vehicle, but the average
minimum liability policy costing about ninety nine dollars less. So
it's good news that hopefully you will continue. It's also
a particularly good time to rate shop for auto insurance policies.
If you haven't done so in a long time, you
(08:44):
might be shocked at how much you could say by
doing a little shopping around.
Speaker 2 (08:48):
And I do have to tell you, before I heard
this story, I did notice my policy renews every six
months and my monthly premiums have gone down. I'm with
one of those five compies have gone down by fifteen
seventeen bucks a month.
Speaker 1 (09:04):
I will tell you that I was with one of
those five companies. We switched about a year ago to
another one of those five companies. We saved over three
thousand dollars between our twoes.
Speaker 2 (09:16):
LE might want to shop around, yes,
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