coronavirus

Some Auto Insurance Companies Are Advocating for Rate Hikes

NBC Universal, Inc.

You may have heard car insurance companies are refunding premiums to millions of consumers because of the coronavirus pandemic.

But what you may not have heard yet – is that some companies are also interested in raising your annual rates.

A potential car insurance rate hike is the last news you want to hear, with so many consumers suddenly out of work, struggling to make ends meet – and in many cases – not even driving.

Stay home orders have resulted in less driving and shorter commutes for essential workers who are on the road.

That means there is less risk of accidents right now for drivers.

Earlier this month, after all-state announced a 15% discount on auto premiums through May, several other insurance companies followed suit and California Insurance commissioner Ricardo Lara issued an order that all insurance companies have until August to issue partial refunds on premiums to drivers for the months of March and April.

But right now, 21 insurance companies currently have requests for rate increases under review by Lara's office.

Harvey Rosenfield, the founder of Consumer Watchdog, says the rates we currently pay are based on driving habits that pre-date COVID-19, and until we have new data on driving behavior and risk, no new rate increases should be approved.

Rosenfield said rates that have been requested but not yet acted upon also reflect pre-pandemic projections of losses and risk.

"So what we're saying to the commissioner is, 'suspend any proposed rate increases and get to it later," he said.

He suggested putting off any potential rate increases until Sept. 1 or later, after "we have a better idea of what people are doing and what the status is of our economy.

In an email to the NBCLA I-Team, the department of insurance says: "Commissioner Lara will not approve any rate that is excessive."

The American Property Casualty Insurance Association, which speaks for the industry, released a statement, saying, "now is not the time for arbitrary calls for rate decisions. We urge all stakeholders to support flexibility in the marketplace."

The organization insists that it is already helping consumers based on data related to COVID-19.

Full Statement from David A. Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA):

Insurers are working to provide immediate relief directly to policyholders; flexibility needed to allow private, competitive markets to work

"Insurers have announced billions of dollars in premium rate relief to their policyholders.

Insurance is a data driven industry. Rates are continuously adjusted based on losses and claims costs. If regulators allow insurers flexibility, private competitive markets will work to the benefit of consumers.

For example, the impact of COVID 19 on driving patterns are reflected in the data some companies are seeing on crash frequency and severity and a number of companies have already responded. Some commercial lines policies, such as workers compensation, are audited each year to reflect changes in risk and claims so premiums are adjusted at that time.

Now is not the time for arbitrary calls for rate decisions. We urge all stakeholders to support flexibility in the marketplace.

There are a number of ways that auto and commercial insurers are currently helping customers manage costs. During this extraordinary crisis, companies are voluntarily offering arrangements for:

Working with closed commercial businesses to provide premium benefits that reflect the current environment.

Refunds and discounts for drivers who are logging less miles during shelter-in-place orders;

Flexible payment solutions for families, individuals, and businesses—providing additional time to make payments;

Waiving insurance premium late fees for families, individuals, and businesses;

Pausing cancellation of coverage for personal and commercial lines due to non-payment and policy expiration, which includes personal auto, commercial auto, homeowners, business owners, renters, boat, motorcycle, condo, mobile home, personal umbrella, and landlord.

Suspending personal auto exclusions for restaurant employees who are transitioning to meal delivery services using their personal auto policy as coverage;

Adding more online account and claims services for policyholders;

Shifting more resources to anti-fraud and cyber security units, in recognition of the bad actors who will prey on victims during times of crisis; and

Adopting new technologies and remote solutions to minimize any interruptions in service, collision repair, and claims handling, such as using virtual inspection technology to complete damage inspections.

"Individuals going through extraordinary life circumstances should call their insurer or agent to discuss their options."

For more information go to the Department of Insurance website here.

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