State: Insurers owe drivers more refunds
Auto insurers allegedly shortchanged California drivers on refunds ordered last year amid traffic incident drop.
SACRAMENTO >> Auto insurers shortchanged California drivers on refunds ordered last year as crashes dropped during the coronavirus pandemic, the state’s insurance regulator said Thursday.
Traffic plummeted after California imposed the nation’s first stay-home order a year ago to slow the spread of the coronavirus. But insurers said dangerous driving trends have worsened even as the number of miles driven declined.
Numbers drop
Collisions dropped by 55% and injuries and deaths from traffic accidents fell 53% in the week after Gov. Gavin Newsom’s order, University of California, Davis, researchers found. Schools and most nonessential businesses closed for months and millions of employees lost their jobs or started working from home, leaving once-clogged highways virtually traffic-free even in famously crowded Los Angeles and San Francisco.
“Millions did your part, stayed home” and drivers now deserve lower insurance costs “as long as they continue to drive less and our roads are safer as a result,” California Insurance Commissioner Ricardo Lara said in a video as he ordered companies to calculate a new round of refunds.
Commuter traffic has rebounded as California gradually reopens, but Lara said insurers “continued to overcharge drivers.”
The top 10 companies, representing 80% of the auto insurance market, saw injury claims drop nearly 42% and property damage claims fall more than 40% from last March through September, compared with the same period in 2019,
Lara said.
They returned about $1.75 billion to consumers, but he said that’s not nearly enough given their lower costs. Companies refunded about 9% of consumers’ insurance bills on average, but Lara said it should have been about 17%, or about $220 million more than they did just in April.
Allstate, Farmers, USAA, State Farm and CSAA Insurance Group are among the top 10 private passenger insurance groups. Lara’s office didn’t break down the figures by company but said there were significant differences in how much each refunded.
State Farm said it will return an additional $400 million to its 3.5 million California auto policyholders based on better-thananticipated claim results in the second half of last year. Customers will get back about 18% of their premium — an average of $100 per policy — as early as May, on top of average 6.5% rate
reductions and 27.5% dividends for the first half of last year.
The American Property Casualty Insurance Association, which represents the industry, said all insurers trimmed premiums when driving dwindled last year, continue to adjust policies as warranted by individual driving patterns and will cooperate with Lara’s latest order.
Uncertain trends
But it noted that fatalities increased nearly 5% in the first nine months of 2020 even as miles traveled dropped, according to the National Highway Traffic Safety Administration. The fatality rate went up as some drivers “engaged in riskier behavior” like speeding, driving under the influence and failing to wear seat belts, the agency said.
“Trends in reckless driving could prove even more fatal as traffic volume starts to return to pre-pandemic levels,” Mark Sektnan, vice
president of the insurance association, said in a statement. He said those trends, combined with increased litigation and medical and auto repair costs, also affect prices.
Lara ordered each company to report by April 30 how it will return the rest of the funds he said are owed.
Every company offered relief ranging from 10% to 22% for March through May, Lara said, but by December, just four insurers were still offering any refunds even though most of California was under its most restrictive shutdown rules.
Insurance companies set rates using historical data to determine how much risk is involved.
California ordered the refunds under a 1988 voterapproved law saying insurers can’t charge rates that are excessive or unfairly discriminatory. New Jersey early in the pandemic also directed companies to return premiums because of their reduced risk.
WASHINGTON >> Companies posted more open jobs in January while layoffs decreased as the economy heals slowly from the pandemic.
There were 6.9 million jobs available on the last day in January, up from 6.7 million in December, the Labor Department said Thursday. That suggests employers are getting ready to hire in the coming months.
Hiring actually began to pick up in February, according to last Friday’s jobs report, which showed that employers added 379,000 jobs, the most since October, while the unemployment rate fell to 6.2%, from 6.3%. While the economy still has 9.5 million fewer jobs than before the pandemic, February’s job gain was much higher than January’s and came after a sharp job loss in December, suggesting the economy, after stalling out late last year, is mending.
Thursday’s report tracks gross job gains and losses, while last week’s figure is a net change in total jobs. The data released Thursday also showed that layoffs fell to just under 1.7 million in January, the same pace of job cuts that was occurring before the pandemic.
Those data contrast with the number of people seeking unemployment benefits, which fell last week but remain at a very elevated level of 712,000, according to a separate report Thursday. That suggests an unusually high number of Americans are still losing jobs. The figures may vary for several reasons. The government has broadened the eligibility for unemployment benefits during the pandemic, for example by allowing those who have refused to take jobs they felt were unsafe to claim aid.
Many recipients of unemployment aid also report having to apply multiple times to get through overwhelmed state systems, potentially lifting the number of jobless claims.
Other measures of the job market also show that employers are increasingly looking to hire.
According to a survey by ManpowerGroup, an employment agency, nearly one- quarter of companies surveyed said they plan to add workers in the AprilJune quarter. That’s the most since the pandemic began. And one-third expect to return to their prepandemic hiring levels by July, while more than half expect to do so by the end of the year.
Hiring in the second quarter will be led by leisure and hospitality companies, ManpowerGroup’s survey found. That category includes restaurants, bars, hotels, and entertainment venues, the same industries that have suffered some of the worst job losses.
About 37% of companies in leisure and hospitality expect to add jobs in the next three months, the highest among the 12 large industries that ManpowerGroup surveyed. Next was transportation and utilities, which includes delivery drivers and warehouses, where 26% of companies plan to add workers.