Even after lowering its auto insurance rates in Florida this year, Progressive could soon be required to issue refunds to thousands of policyholders due to exceeding the state’s regulated profit cap.
In its latest 10-Q filing with the U.S. Securities and Exchange Commission (SEC), Progressive disclosed that it may breach Florida’s statutory profit limit for personal auto insurance over the three-year period from 2023 to 2025. Under Florida Statutes 627.066 and 627.915, insurers must report any excess profits, and the Florida Office of Insurance Regulation (OIR) may require them to refund customers or apply premium credits — a process sometimes referred to as “regurgitation” within the insurance industry.
According to the law, profits are considered excessive when an insurer’s underwriting gains over three calendar-accident years exceed the anticipated profit by more than 5% of earned premiums.
The underwriting gain is calculated by subtracting incurred losses, loss adjustment expenses (developed to an ultimate basis), administrative costs, and any policyholder dividends from the earned premium. This formula helps determine whether the company has profited more than allowed.
Progressive has not issued a public comment, but the SEC filing noted that a final determination will depend on factors like the 2025 hurricane season, which could impact loss reserves. More clarity is expected later this year.
Florida property insurers also face similar profit restrictions — typically around 4.5% — but can distribute profits through affiliated entities such as managing general agents or holding companies, a practice some lawmakers and consumer advocates criticize due to Florida’s high insurance rates. Auto insurers, however, often don’t have the same flexibility.
Progressive and other major auto carriers in Florida have recently enjoyed reduced loss adjustment costs, largely thanks to 2023 legislative reforms that ended one-way attorney fees and curbed excessive legal action over claims.
As a result, Florida’s top five auto insurers requested an average rate reduction of about 6% in 2024 — a move praised by Florida’s insurance commissioner in a recent bulletin.
Still, that may not be enough to keep Progressive below the profit cap.
“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,” the company wrote in its SEC filing.
The Office of Insurance Regulation rarely enforces the excessive profits statute, but there have been exceptions. In June 2025, California Casualty Insurance Co. agreed to return or credit $341,500 to policyholders. In 2021, Nationwide Mutual Insurance was ordered to issue more than $11 million in refunds or credits due to similar violations.
Progressive did not specify how much it may owe, but the filing noted that the company has experienced “strong profitability” in its Florida personal auto line since the reforms took effect.
Other major insurers with a presence in Florida did not mention exceeding profit thresholds in their regulatory filings.
While Florida enforces profit limits, not all states do. New Jersey, for example, applies a variation of the Clifford Formula, capping profits around 3.5%, according to that state’s Division of Insurance and court rulings.