Insurers ordered to rebate more to drivers
California Insurance Commissioner Ricardo Lara wants the state’s auto insurers to return more money to drivers — refunds for the drop in traffic and collisions that occurred as millions of Californians stayed home during the pandemic.
Lara said Thursday that insurance companies refunded an average of 9% of premiums to customers during the first seven month of the pandemic, after he ordered the firms to return some premium money as the state implemented a stayathome order and car use plunged. However, the state Insurance Department found that companies should have refunded 17% over that period, Lara said.
He ordered insurers to report by April 30 how they will return the additional money to California customers.
“My order saved California drivers more than $1.75 billion last year — the most in the nation,” Lara said in a statement. “But while millions of us stayed home helping to fight the spread of the virus and reducing the risk of accidents for our essential workers, insurance companies continued to collect inflated premiums.”
Lara said there was ample evidence that peo
ple drove less last year and thus got into fewer accidents. From March to September, injury claims fell by 41.7% and property damage liability claims fell by 40.4% compared to 2019, he said.
The order affects companies that include Allstate, Farmers, USAA, State Farm and the CSAA Insurance Group.
The American Property Casualty Insurance Association, which represents the industry, said in a statement that insurers would “report the appropriate data” to the Insurance Department in response to Lara’s order. But it added that “unfortunately, highway data demonstrates some dangerous trends” during the pandemic.
The group said the National Highway Traffic Safety Administration found that traffic deaths “increased significantly in the first nine months of 2020, despite overall vehicle miles traveled decreasing.” The insurance association also said driving has picked up in recent months and is approaching prepandemic levels.