Pandemic windfall from car insurers: Illinois insurers could have given bigger refunds and maintained the same profits

You were paying too much for auto insurance while your car was parked in your driveway or garage while you were working from home due to the COVID-19 pandemic.

That’s the main takeaway, experts say, from a rare public look at how much your premiums Illinois auto insurance companies ended up keeping.

Rarely released insurance data recently released by the Illinois Department of Insurance shows that auto insurers in Illinois have pulled the plug during the coronavirus pandemic.

And the money that boosted their bottom lines has often far exceeded the “pandemic relief” reimbursements that insurers announced in the months after the virus prompted government-ordered closures in March 2020 and widespread moves to home work.

State insurance regulators in March required all auto insurance companies doing business in Illinois to provide them with data showing how much money they collected, paid out and kept for themselves. The goal was to get a sense of the true magnitude of the premiums consumers were paying during the pandemic.

It turns out that many Illinois insurers could have easily provided larger coronavirus reimbursements while maintaining their pre-pandemic profit levels from 2019.

Illinois’ four largest auto insurers — State Farm, Allstate, Progressive and Geico — together took on about $280 million more in premiums in 2020 than they needed to maintain profitability in 2019. That’s the case even after accounting for the much-vaunted $220 million in pandemic relief reimbursements from insurers to customers, according to an analysis of new data by the Consumer Federation of America and the Illinois Public Interest Research Group, two nonprofit organizations. lucrative consumer advocacy. .

“It shows they took advantage of an opportunity — a crisis — to profit at our expense,” says Abe Scarr, state director for the Illinois PIRG.

Abe Scarr, state director for the Illinois PIRG.

Douglas Heller, director of insurance for the Consumer Federation, which has been pushing auto insurers to provide more relief since the start of the pandemic, says the numbers are “quite austere” as he lays out big pandemic bargains from auto insurers in the ‘Illinois.

According to consumer groups analysis, Northbrook-based Allstate took in about $82.5 million more in premiums in Illinois than it needed to maintain its profit level in 2019. is even after accounting for around $34 million that it returned in pandemic refunds.

After factoring in its pandemic reimbursements, Allstate used about 50 cents of every premium dollar to pay claims in Illinois in 2020, according to the groups’ analysis of loss rate data. Allstate.

Allstate was quick to send out refunds after the pandemic.

But, says Heller, “they ended up being one of the stingiest.”

Portrait of Douglas Heller, director of insurance for the Consumer Federation of America.

Douglas Heller of the Consumer Federation of America.

Asked about the numbers, Allstate spokeswoman Tanya Robinson said, “We were the first insurer to respond to declining driving in March 2020 by returning $1 billion to drivers nationwide and later reducing fares in Illinois when there were fewer drivers on the road. We continue to ensure that our customers get excellent value and coverage for their money.

Allstate’s reduced rates for drivers were short-lived, however. This spring, Allstate increased premiums for its Illinois customers by about 12% on average, one of the largest increases ever.

As the pandemic boosted Allstate’s results, the company gave CEO Thomas Wilson a 7.7% raise in 2020, bringing his total compensation to $21.1 million.

Allstate CEO Thomas Wilson and Monique Coleman at an April 2018 event at the Peppermint Club in Los Angeles.

Allstate CEO Thomas Wilson and Monique Coleman at an April 2018 event at the Peppermint Club in Los Angeles.

The insurer also embarked on a buying spree, acquiring National General Holdings Corp. for $4 billion and Safe Auto for $300 million.

Representatives for State Farm, Progressive and Geico did not respond to requests for comment.

But two industry groups pushed back on criticism from consumer groups, saying insurers “took immediate appropriate action” to make reimbursements in 2020. But they say total miles driven have rebounded rapidly and dangerous trends emerged, such as more speeding and fewer people. wearing seat belts.

They point to traffic crash data from the National Highway Traffic Safety Administration, which showed 38,824 people were killed nationwide in crashes in 2020, the highest number of road fatalities since 2007. In Illinois, 1,194 people died in crashes in 2020, up 18.3% from the statewide road death toll in 2019.

“Offering further premium reductions, as some groups are calling for, as the number of accidents, losses and inflation rise would be unwise and contrary to longer-term trends that have existed since the early days of the pandemic,” says Steve Schneider, vice president of state government relations for the America Property Casualty Insurance Association, a trade group representing insurers.

Kevin Martin, executive director of the Illinois Insurance Association, says the empty pandemic roads were just a short-term aberration.

“It’s important for stable and accurate insurance pricing… [to] look at long-term trends that impact drive and loss trends,” says Martin.

State Farm accounts for about 29% of the Illinois auto insurance market, followed by Allstate at 11.5%, Progressive at nearly 9%, and Geico at about 7%, according to 2020 data.

Collection and publication of auto insurance data is rarely done in Illinois, although some other states, including California, regularly make this information public. Unlike some other states, California regulators have imposed refunds on consumers rather than just suggesting companies provide them.

Caron Brookens, spokesperson for the Illinois Department of Insurance, said that while Illinois law does not give the agency the power to order refunds, “IDOI is pursuing legislation with members of the General Assembly to increase transparency and accountability in its work to regulate insurance companies.

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