The American Property Casualty Insurance Association is responding strongly to new litigation the group says is an attempt to capitalize on the ongoing pandemic by targeting the auto insurance marketplace.
Class action lawsuits were filed in Nevada against 10 major auto insurance companies this week, contending that the companies charged excessive insurance premiums during the pandemic by failing to account for a drop in driving and crashes.
The lawsuits, which acknowledge that some insurers provided discounts over the emptier roads and drop in claims, say the discounts did not offer “any meaningful relief that actually reflects the reduction in cars on the road and reduced driving during the pandemic,” according to the court filings. The rates that were charged violate state law against excessive premiums, the lawsuits contend.
The APCIA, the primary national trade association for home, auto, and business insurers, disagrees.
“The plaintiffs’ bar is leaving no stone unturned during the pandemic. The latest play is targeting the auto insurance marketplace,” Stef Zielezienski, APCIA’s executive vice president and chief legal officer, said in a statement. “Litigation profiteering is a direct threat to long-term economic recovery. The insurance industry is working to rebuild communities and yet this type of lawsuit abuse has the opposite effect.”
Zielezienski contends that the suits are from enterprising attorneys misconstruing facts about highway data and auto insurance to recruit new business during the pandemic, which he said will ultimately impact the marketplace and consumers.
In 2020, auto insurers voluntarily provided more than $14 billion in refunds and credits to policyholders for reduced driving during the pandemic, and the industry has deployed more than $220 million in philanthropic contributions during COVID-19 to support local communities, according to the APCIA.
“Insurers understood the urgency of helping businesses and individuals recover from the unprecedented crisis caused by the COVID-19 pandemic,” he said. “Insurers are committed to serving policyholders during this difficult time and will continue to adapt claims handling procedures to meet the new virtual needs required to pay claims quickly and efficiently. Policyholders are encouraged to communicate any reduction in their driving habits to their insurer to discuss adjustments in premiums if those changes have not happened automatically.”
The National Highway Traffic Safety Administration reported that traffic fatalities increased significantly in the first nine months of 2020, despite overall vehicle miles traveled decreasing during the COVID-19 pandemic, according to the group.
Now, various sources have indicated that miles driven have been increasing over the last few months and are approaching pre-pandemic levels. According to the Federal Highway Administration, 8.6 percent fewer miles were driven in September 2020, marking the smallest monthly decline since the peak of the pandemic.
“The 2020 increase in road fatalities suggests that despite improved automobile technologies and auto safety laws, driver behavior is deteriorating at a rapid pace,” he said. “Trends in reckless driving could prove even more fatal as traffic volume starts to return to pre-pandemic levels. These dangerous trends, combined with increasing litigation, medical, and auto repair costs impact the marketplace.”
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