Despite cutting personal auto insurance rates in Florida this year, Progressive Insurance may soon be required to issue refunds or premium credits to thousands of current and former policyholders. According to its latest quarterly 10-Q filing with the U.S. Securities and Exchange Commission, the insurer could breach Florida’s legal cap on underwriting profits for the three-year period spanning 2023 through 2025.
Under Florida law (Statutes 627.066 and 627.915), insurers that earn excessive profits must disclose those gains using a state-specified form. If profits exceed the allowable threshold, the Florida Office of Insurance Regulation (OIR) can mandate that companies return excess earnings to policyholders through cash payments or renewal discounts. The process is informally known within the industry as “regurgitation.”
The law provides a detailed formula for calculating excessive profits. An insurer is considered to have earned excess profits if its underwriting gain over the three most recent calendar-accident years surpasses its expected profit by more than 5% of earned premiums over the same period.
To determine this underwriting gain, the law specifies that insurers must subtract from their earned premium: incurred losses and loss adjustment expenses (as of the following March 31, projected to an ultimate value), along with administrative and sales expenses, plus any applicable policyholder dividends.
Progressive declined to comment on the situation. However, the company’s SEC filing emphasized that the final outcome won’t be known for some time due to several variables, including the impact of the 2025 hurricane season on loss reserves. More clarity is expected by the end of the year.
Florida’s property insurers also face statutory profit limitations—usually around 4.5%, according to regulatory standards and former state officials. However, property insurance companies often shift profits to affiliated entities such as managing general agents or subsidiaries, a practice that has drawn criticism from lawmakers and consumer advocates in light of recent premium hikes.
In contrast, auto insurers in Florida generally lack the flexibility to reallocate profits through affiliates, a former insurance regulator noted.
Progressive and other leading auto insurance providers in Florida have benefited from reduced claims costs in 2024, thanks in large part to legal reforms passed in 2023. These reforms eliminated one-way attorney fees and curbed abusive litigation practices, leading to substantial savings.
As a result, the state’s top five auto insurers filed for an average rate reduction of about 6% this year, a move recently highlighted by Florida’s insurance commissioner.
Still, the rate cuts might not be sufficient to keep Progressive below the statutory profit ceiling.
“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,” Progressive stated in its SEC filing.
Instances of Florida regulators finding excessive profits are relatively rare. The most recent occurred in June 2025, when Commissioner Michael Yaworsky signed a consent order requiring California Casualty Insurance Co. to issue $341,500 in refunds or renewal credits to its policyholders. Prior to that, in 2021, the OIR ordered Nationwide Mutual Insurance to return $11.5 million in excess profits on auto policies.
Progressive’s filing did not specify how much could potentially be refunded, but given the company’s strong financial performance since the 2023 reforms, the total could be significant. Notably, other major publicly traded auto insurers operating in Florida did not reference excess profit concerns in their recent disclosures.
While Florida imposes these kinds of profit caps, not every state does. For example, New Jersey limits auto insurance profits using a modified “Clifford Formula,” generally allowing returns of around 3.5%, based on a range of financial and actuarial criteria.
