Some Auto Insurer Premium Discounts Should Be Bigger, Say Consumer Groups

By | April 24, 2020

Two consumer groups said on Thursday that some of the largest U.S. auto insurers, including billionaire Warren Buffett’s Geico Corp., are short-changing customers on premium rebates as Americans drive less due to stay-at-home orders aimed at curbing the coronavirus outbreak.

U.S. auto insurers will return a total of more than $7 billion in premium refunds and credits to customers through May, according to the Consumer Federation of America (CFA) and Center for Economic Justice (CEJ). Still, the drop in auto insurance claims spurred by reduced driving is far greater, the groups said.

The groups created a report card for premium relief from the nation’s 15 largest insurers, giving Geico Corp., part of Buffett’s Berkshire Hathaway Inc, a “D-” and National General Insurance and “F.”

Insurers Offering Discounts, Other Relief During Coronavirus Crisis

Insurance Journal‘s updated list of auto, business and other relief offered by insurers.

Insurers’ relief to consumers ranges from 10% to 35% of two months of premiums, with the “vast majority” of insurers giving back 15%. Some data shows motor vehicle accidents were down 50% or more, the CFA said.

The largest U.S. insurers began issuing premium relief following pressure from consumer groups. Allstate, on April 6, said it would return more than $600 million to customers, or 15% of their monthly premium in April and May.

Geico, on April 7, said it would offer about $2.5 billion of credits to 19 million auto and motorcycle policyholders between April 8 and Oct 7.

“We were concerned that a credit for two or three months might just expose our customers to large catch-up payments once events returned to normal,” a Geico spokesman said in a statement about its “D-” grade from the groups. “We acted swiftly to implement a credit across the entire policy term so our customers would see relief for an entire six months.”

A National General representative did not immediately respond to a request for comment. The groups said the insurer is among several that have still not acted to provide relief.

State Farm, which said it would return $2 billion to customers, a 25% premium credit on average, and American Family Mutual Insurance Co, which said it is returning $200 million, both received a grade of “A” from the groups.

The Travelers Companies Inc., which said it was giving U.S. personal auto insurance customers a 15% credit on their April and May premiums, received a “C+.” A spokesman did not immediately respond to a request for comment.

A company spokeswoman said Sentry Insurance, which received an “F” for not taking action, was working with customers individually through means such accepting nominal payments to ensure adequate coverage. Sentry works with “non-standard” auto consumers who do not consistently have insurance, the company said.

(Reporting by Suzanne Barlyn; Editing by David Gregorio)

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Latest Comments

  • April 24, 2020 at 5:33 pm
    Observor says:
    These consumer groups are really trial attorneys who gouge companies and consumers. In California, they become interveners per Proposition 103 and charge $500 to $600 per hour... read more
  • April 24, 2020 at 3:40 pm
    CL PM says:
    How does one form a "consumer group?" Can I just get an LLC, hang a shingle and tell everyone I represent the consumer? Is that how that works?
  • April 24, 2020 at 2:08 pm
    Milner says:
    If I was involved in making these rebate decisions, I would be cautious: 1) There is no flip side to this, when catastrophes hit insurers, no surcharges are allowed; and 2) ... read more

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