USAA to return nearly $1 billion to Florida members as legal reforms help lower insurance costs

USAA said it will deliver nearly $1 billion in combined savings and returns to eligible Florida members, including a $500 million dividend, CNBC can exclusively report. 

The insurer credits Florida’s civil litigation and tort reforms as a key reason it can send money back to policyholders. USAA says its legal costs declined after Florida moved to curb what insurers have long described as legal system abuse.

In 2023, Florida passed tort reforms that shortened the statute of limitations to two years, eliminated so-called phantom damages and ended one-way attorney fee awards. Those changes were designed to reduce incentives for excessive litigation, particularly in insurance claims.

Since then, the litigation numbers have shifted sharply. Auto glass lawsuits fell from about 24,000 in the second quarter of 2023 to roughly 2,600 in the same period of 2024, according to a Milliman white paper cited by USAA. Florida had ranked second nationally for “nuclear verdict” payouts from 2009 to 2022, but dropped to tenth by 2024, according to Milliman.

The trend is also visible in homeowners insurance. Just before the reforms passed, 76% of the nation’s homeowners insurance lawsuits originated in Florida, even though the state accounted for only 9% of U.S. homeowners, according to the R Street Institute. New homeowners insurance lawsuits opened in Florida fell from 79.9% of the nationwide total in 2018 to 71.5% in 2023, with filings continuing to decline by double digits in 2024, according to R Street data.

Insurance litigation filings in Florida fell 23% year over year from 2023 to 2024 and remained below pre-2018 levels, according to a 2025 statement from Florida Gov. Ron DeSantis’ office. Legal defense costs paid by insurers also dropped dramatically, falling to $107 million in 2024 from an all-time high of $3.46 billion in 2023, according to Florida’s Office of Insurance Regulation.

For consumers, the mechanics are straightforward: when litigation costs rise, insurers often pass those costs through in the form of higher premiums. When those costs fall, companies may have more room to cut rates, issue dividends or return capital to policyholders.

USAA says legal costs had been a significant driver of premium increases. But those costs are easing and market conditions are stabilizing. 

The insurer says that paves the way for lower rates and rebates. 

“From rate reductions to rewards programs and direct returns, our goal is to deliver meaningful, immediate relief while preserving the financial strength our members depend on,” USAA President and CEO Juan C. Andrade said in a statement to CNBC. 

The Florida example is likely to be closely watched by insurers, regulators and lawmakers in other states. Georgia and Louisiana enacted tort reforms in 2025 aimed at curbing legal system abuse, increasing transparency and better aligning damage awards with actual costs. New York is also considering similar changes, according to USAA.

A February study cited by the company found that Florida’s tort reforms have driven an average 14.5% reduction in property and casualty insurance costs compared with what would have occurred without the reforms. The study also found that lower insurance costs and improved market stability have contributed to more companies entering or returning to the Florida market, expanding consumer choice and competition.

The broader economic impact extends beyond premiums. The same study estimated that the reforms generate more than $4.2 billion in annual gross product and support about 29,370 jobs statewide, including multiplier effects. It also estimated annual fiscal gains of $206.6 million in new state tax revenue and $155.3 million for local governments across Florida.

Supporters of tort reform argue Florida now offers a consumer-facing proof point that reducing excessive litigation can lower insurance costs. Critics have warned that legal restrictions can make it harder for policyholders to challenge insurers when claims are disputed.

For now, USAA is framing the Florida action as part of a broader national effort to help military families manage rising costs. The company said about half of its policyholders are expected to see reductions in their six-month auto premiums in 2026.

The San Antonio-based financial services company, which serves military members, veterans and their families, said eligible current Florida auto policyholders are expected to begin receiving dividend payments June 15. The average payment will be about $760, with more than a quarter of eligible members receiving more than $1,000, according to the company.

The $500 million dividend will go to roughly 830,000 members who held USAA auto policies between 2023 and 2025.

The payout is part of a broader set of actions USAA says will provide nearly $1 billion in value to eligible Florida members between December 2025 and July 2026. That includes $160 million in insurance dividends paid in December 2025, $250 million in savings from two auto rate filings that reduced Florida auto rates by an average 14%, and the newly announced $500 million dividend.

Auto repair costs, weather losses and inflation remain significant pressures across the insurance industry. But USAA’s Florida payout gives insurers and reform advocates a concrete case study: when legal costs come down, policyholders can see the savings.