Auto insurers have made billions of dollars in profits this year while offering customers promised refunds, according to consumer advocacy group.
Allstate, Geico, Progressive and other insurers pledged in April to return a portion of monthly premiums to motorists, reflecting a sharp reduction in driving due to the coronavirus pandemic. Yet while the companies have delivered on their promise, they typically return less than half of one-month payments to drivers heading home, according to a survey released Wednesday from the U.S. Public Interest Research Group that reviewed refunds in any U.S. state.
“It’s not enough what they offer,” said Jacob Van Cleef, assistant consumer monitoring at US PIRG.
Consumer advocates have argued that customers should not pay full monthly installments when many drivers are unemployed and stuck at home, citing fewer people on the road. Instead, insurers have to offer another round of big recoveries considering they are still charging customers and generating huge profits, the groups said.
The Consumers Union of America indicated that Geico posted a profit of $ 2.1 billion during the second quarter of 2020. The company gave its auto and motorcycle customers a 15% discount on insurance premiums between April and October. Geico did not immediately respond to requests for comment.
Consumer groups have urged the nation’s insurance regulators to force companies to pay adequate refunds. Van Cleef said agents should also join the fight to get state lawmakers to impose additional discounts.
“Summoning insurance companies is not going to make that happen,” Van Cleef said.
Some insurance holders have already taken the battle to court.
Clients in Illinois filed six separate lawsuits in July against insurers Allstate, American Family, Progressive, Geico and others, alleging that refunds were too low. The lawsuit against Allstate – which returned a total of $ 600 million to clients by providing a 15% credit for April, May and June – accuses the insurer of being “far short of the comfort required by any fair and reasonable actuarial analysis.”
Allstate did not immediately respond to a request for comment. Progressive, which gave its customers a 20% discount on its April bill, also did not respond to a request for comment.
The American family said it offered three rounds of refunds totaling $ 500 million. The company is giving customers a 10% discount on installments through March 2021.
Van Cleef said it was unclear whether other insurers would offer additional refunds. Even if they don’t, he said, just knowing that fact is valuable information.
“After you see how other insurance companies have handled their windfall gains, you can use that as a leverage to request better rates from your insurer or rate other insurers if you are considering switching,” he wrote in a report on the findings of the US PIRG Group. “The fair way in which the company has dealt with its customers during the pandemic may affect you when it comes time to shop around for new insurance.”