Auto Insurance

Allstate and USAA Show How Insurers Should Provide Ongoing COVID-19 Premium Relief

Insurance Regulators Silent as Other Companies Delay or Deny Relief Needed Immediately

Washington, D.C. – Consumer Federation of America (“CFA”) and the Center for Economic Justice (“CEJ”) applauded Allstate and USAA for their actions to provide ongoing auto insurance premium relief in the face of fewer cars on the road, fewer miles driven, and fewer car crashes resulting from changes in driving due to COVID-19.  Both insurers have extended their monthly relief for April and May into June, reflecting the fact that current claims experience continues to be well below normal. These insurers’ relief programs track the proposals set out by the consumer organizations in a mid-March letter to the state insurance commissioners.

“Allstate and USAA continue to provide premium relief to current customers in a timely fashion in amounts we hope reflect their actual reduction in claims,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner.  “These insurers are providing relief to policyholders when they need it, and we applaud their industry leadership.”

In contrast to the Allstate and USAA current relief for June, other insurers are promising future rate cuts without addressing near term overcharges faced by existing customers.  State Farm’s recently promised average national rate reductions of 11% will not take effect until August or September and then only when customers renew their policy.  American Family has promised a 10% rate reduction starting with July renewals. GEICO continues to withhold all relief from its customers until they renew their policy with the company.

“The ‘promise-of-future-rate-cuts’ approach fails to help consumers when they need the help,” said Birny Birnbaum, Executive Director of CEJ.  “The reason for premium relief starting in mid-March is that current policyholders deserve the relief on their current policies.  Promising future relief doesn’t match the relief to the actual reduction in claims in a timely way – why should people have to wait until their policy renews in October to get relief for a massive drop in claims today?”

Against the backdrop of some insurers taking the right path and others taking the wrong path on auto insurance premium relief is the silence and inaction of all but two state insurance commissioners.  While commissioners in California and New Jersey have ordered premium relief and are collecting data to ensure relief is adequate, most state insurance regulators have done nothing to secure auto insurance premium relief, even as they have often inappropriately taken credit for insurers’ actions.

The inaction by state insurance regulators has particularly harmed those low-income and minority consumers forced to purchase insurance from so-called “non-standard” carriers.  One non-standard carrier, Dairyland, has refused to provide any relief and used a blaming-the-victim strategy.

Dairyland Insurance recently explained it is not offering discounts because, “these folks are primarily concerned with keeping their insurance intact and remaining legally compliant.”

Mr. Birnbaum said, “It’s unclear why Dairyland drivers don’t deserve the same relief as everyone else when the frequency of all accidents – regardless of insurer – is down.  Dairyland won’t give relief simply because they don’t think their customers deserve it.”