Alabama Regulator Eases Process for Auto Insurers to Reduce Policyholder Premiums

April 14, 2020

The Alabama Department of Insurance says it will waive filing fees and allow for immediate implementation of premium reductions by insurers in an effort to provide some relief to Alabama consumers.

In a bulletin issued last week, Alabama Insurance Commissioner Jim L. Ridling urged auto insurers to consider reducing premiums to reflect the reduced exposure from policyholders driving less during the COVID-19 pandemic and provide financial relief to those insureds.

“The Alabama Department of Insurance believes it is generally understood that consumers are driving less during the pandemic and, as a consequence, being less exposed to motor vehicle accidents causing injuries and property damage,” the bulletin reads.

Many auto insurance policies calculate premiums based on exposure estimates made at the time the policy is issued, with miles driven just one example of a common exposure.

The bulletin said insurers may immediately provide relief through premium credits or the return of premium.

Insurers should submit an informational rate filing via the department’s SERFF system and include the timeframe, individual premium impact and whether the action apples to new business and/or renewal. ALDOI will waive the premium filing.

Premium reductions or retroactive return of premium made in accordance with the bulletin to accommodate COVID-10 related changes in exposure or risk profile will not be considered a rebate or unfair discrimination, ALDOI said, to the extent they are reasonably and consistently applied.

“Reasonable and consistently applied premium adjustments will likewise not be pursued by the [Alabama] Department of Insurance as violations of statutes governing returning premiums to policyholders or the frequency of premium changes, nor will the be considered out of compliance with approved rating plans, rules, or policy language,” the bulletin concluded.

All of the major auto insurers have committed to providing premium relief to policyholders dealing with the current coronavirus crisis. According to the Insurance Information Institute, the top national auto insurance companies and other auto insurers have announced refunds, discounts, dividends and credits totaling $8.1 billion.

III estimates that this total will reach $10.5 billion as more auto insurers announce their offers.

Source: Alabama Department of Insurance

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