SoylentNews is people
SoylentNews
California orders auto insurers to refund premiums due to coronavirus - Roadshow:
One of the (admittedly minor) upsides to many people being asked to stay in their homes during the COVID-19 outbreak is that, on the whole, people are driving much less. This means that they're using less gasoline, emitting fewer pollutants and not getting into so many accidents. You'd think that last thing would translate into a drop in the cost of car insurance. You'd be wrong.
Except in California, of course. California Insurance Commissioner Ricardo Lara ordered on Monday that auto insurance companies return the premiums paid for coverage for the months of March and April because of the state's shelter-in-place requirements, and that order might extend to May.
"With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss," Lara said in a statement. "Today's mandatory action will put money back in people's pockets when they need it most."
Many auto insurance companies have come under fire for their lack of action during the COVID-19 crisis, with critics accusing the companies of profiting from this pandemic. As a response, most of the major insurers, including Allstate, Geico and Nationwide, have begun to offer refunds of around 15% to customers. Still, the California order goes much further than that.
"I applaud efforts made by insurance companies to date that have offered grace periods and flexibility to consumers and businesses during this national emergency," Lara added. "We must do more to help our hard-working families and small businesses."
(Score: 3, Interesting) by edIII on Thursday April 16 2020, @06:28PM
This isn't actually that complicated, but it is definitely strange. Insurance policies can be cancelled under normal events, and depending upon reason and which side does it, there are usually refunds. This is a normal part of the insurance industry. Penalties for cancelling can be around 10% IIRC, and getting prorated returns is the normal I think. Insurance companies care more about policy retention to be honest, and they're hoping to keep customers.
What's strange about this, and nobody is asking the question, what happens to the state of insurance? Cancelled and refunded policies mean that a policy is no longer in force. People are staying at home, which does not mean they're not driving anymore. Insurance is still required. So what's happened? They can't be cancelling policies without creating a huge problem down the line.
My relatives received a letter from USAA and they apparently voluntary gave out "refunds", but they were very specific about it. It wasn't a cancelled policy, which is usually what a refund is tied to. Instead, it was a credit against the account. Insurance policies are still in place and active. My relatives didn't actually receive a check or anything. USAA was far more generous than 15%, they waived many months of premiums.
The state better be really careful here. An awful lot of policies and premiums are serviced by small insurance agencies, and not carriers. I can tell you that clawing back money from the agencies is going to be a mix of impossible and catastrophic. Money was already spent on payroll, information management platforms, etc. Carriers have the money to issue credits, but not checks back the policy holders. A full refund always implies that the company no longer has to provide services, and that's not an option here. Not even during COVID 2020.
They can only "refund" a part of the policy premium. Surely they can do more than 15%, but they can't do 100% without fucking everyone. What you want is for them to recalculate and reissue policies, which is actually a very interesting proposition, but has its own caveats. It's still a much better proposition than a refund.
Technically, lunchtime is at any moment. It's just a wave function.