Report Card to Date on the $6.5 Billion+ Promised To Auto Insurance Customers as People Drive Less Due To COVID-19 · Consumer Federation of America

  • Insurers became aware of drop in mileage and resulting drop in claims by mid-March. A glance at empty roads made clear premium relief was needed. We understand the insurance regulators have been in crisis mode and addressing many COVID19-related insurance issues — particularly health insurance issues – and we appreciate the tireless work of the regulators on behalf of insurance consumers.  Still, the inaction by regulators to prompt insurer action on auto premium relief was puzzling, particularly given CFA and CEJ’s letters of March 18 and March 30.

  • We also thank insurers that have acted to provide auto insurance premium relief, but as Doug explained, not all relief is equal. Further, it is clear that for most insurers providing relief, the amount is not enough to reflect the drop in claims.

  • More action on auto insurance premium relief is needed and state insurance regulators need to dramatically increase their engagement on the issue:

  • Immediate Relief for March, April, May

    Rates that were reasonable on March 1, 2020 became excessive by March 15.  Consumers need and are entitled to premium relief for at least part of March and all of April and May to reflect the new reality of far fewer auto claims that anticipated in current rates.  State insurance regulators should:

    1. Set out best practices and expectations for relief, consistent with CFA/CEJ’s best practices; and

    2. Direct insurers providing inadequate relief to add more relief and direct laggard insurers to act.

    Actions for June and beyond

    1. Require insurers to submit data weekly on new claim filed to allow regulators and the public to assess the impact of fewer miles in real time and to monitor future changes;[9]

    2. Direct insurers to prepare new rates for June forward.

    3. Impose a moratorium on insurance credit scoring

    Insurance Credit Scoring

    A couple of states have taken action to stop the use of certain underwriting or rating factors that, while perhaps actuarially sound prior to COVID19, have become unreliable and unfair.  The Ohio Department of Insurance issued the following guidance regarding insurance rating related to expired drivers licenses.[10]

    1 2 3 4 5 6 7 8 9 10 11