Auto insurers under pressure to share COVID-19 savings
Photo | Grant Welker
I-290 through Worcester
Massachusetts regulators are urging all the state's automobile insurance companies to at least consider joining several that have announced plans to give partial rebates or discounts to policy-holders amid a sudden decline in driving brought about by COVID-19 restrictions.
Insurance Commissioner Gary Anderson is in discussions with a number of insurance companies about ways they can help customers weather COVID-19 - including the possibility of refunds or discounts due to a decline in miles driven, a spokeswoman for the agency, Carolyn Assa, said.
Attorney General Maura Healey also is calling on insurers to share savings stemming from reduced driving with motorists.
"It's incredibly important that car-insurance companies are responsive to consumers throughout this crisis and should consider reducing rates to reflect decreased risk. This is an area that we will continue to monitor," said Alex Bradley, a Healey spokesman.
The Division of Insurance and Attorney General share oversight of automobile insurers and both play key roles in the annual rate-setting process.
As of Thursday mid-day, Allstate, GEICO and Liberty Mutual had announced rebates or discounts. Allstate already has won Division of Insurance approval to issue rebates or offer off-setting documents. All such applications are receiving expedited reviews, Assa said.
The refunds or discounts vary by company, but GEICO says its nationwide discount will average around $150 on a $1,000 annual auto-insurance bill.
Of the insurers that announced plans to give refunds, GEICO has the largest presence in the Massachusetts automobile insurance market with the third-largest share, according to the website agencychecklists.com. Liberty Mutual ranks 5th and Allstate 15th.
MAPFRE Insurance, the largest player in the state's automobile insurance market by far with nearly a quarter of premiums collected and Safety, which is second in the market, have not announced discounts publicly or said through spokespersons contacted by State House News Service that they are seeking to offer rebates or discounts. Applications to the Division of Insurance are not public records until they're approved.
Arbella is putting together a plan to share savings due to low driving volume with policy-holders and likely will announce it next week, a spokeswoman said.
The Massachusetts Insurance Federation, which represents companies that write about 80 percent of the property and casualty policies -- including automobile coverage -- in the state, opposes forced refunds, Executive Director John P. Murphy said. Companies are "doing it on their own," he said.
"Moreover, Murphy added, a reduction in claims will lead to future savings for policy-holders because the state's rate-setting process factors in claim history. "Rates are based on losses," he said. "To the extent there are reduced losses, that ultimately will inure to the benefit of drivers down the road."
The Division of Insurance discussions with insurers accompany the agency's March 23 issuance of a memo asking market participants to "explore all possible ways to relax due dates for premiums payments; to extend grace periods; waive late fees, non-sufficient funds fees, installment fees and penalties; allow payment plans for premiums payments; assist affected policyholders to find ways that insurance policies do not lapse; and consider cancellation or non-renewal of policies only after exhausting other efforts to work with policyholders to continue coverage."
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