You may have lost $ 125 on this COVID rebate for your car
If you had auto insurance during the pandemic, you may have received a refund from your insurance company.
According to two groups of consumers, you have been cheated.
The Consumer Federation of America and the Center for Economic Justice estimate that the auto insurance industry pocketed about $ 30 billion in revenue that should have accrued to policyholders when driving slowed down last year.
An analysis released by the groups last month found that auto insurance companies raked in $ 42 billion in “excess premiums” in 2020, but provided just $ 13 billion in driver assistance.
“In virtually all states, auto insurance premiums – by law – cannot be excessive,” said J. Robert Hunter, director of insurance for the Consumer Federation of America. “The inability or unwillingness of almost all state insurance regulators to enforce the law and protect consumers raises serious questions.”
As pressure mounts on insurers to see if the payments were adequate, a major trade association for auto insurance companies called the analysis “just about everything wrong.”
Additional costs are $ 125 per vehicle
When people were told to stay home at the start of the COVID-19 pandemic last year, driving suddenly stopped for many.
Fewer cars on the road meant fewer accidents and less money required to pay insurance claims.
In response, auto insurers returned some of the money drivers spent on their policies and returned 15 to 25 percent of premium payments to policyholders, according to the AARP.
But consumer groups are now saying that was not enough.
Drivers should have recovered an additional $ 125 for each vehicle insured last year, according to the CFA / CEJ analysis.
The groups added that state-level insurance regulators had not done enough to ensure that auto insurance companies were refunding sufficient premiums to drivers and not overcharging them.
Trade group says insurers haven’t done anything wrong
But the American Property Casualty Insurance Association, a major trade group for insurers, said the analysis of consumer groups was flawed.
The association said what advocates call “profit” is primarily money used to “process claims, sell and maintain policies, and pay taxes and regulatory fees.”
The profits of auto insurance companies are less than 2 cents for every dollar of premium, according to the APCIA.
The association also noted that driving conditions have changed since the early days of the pandemic in spring 2020.
Kilometers driven have returned to pre-pandemic levels and an increase in speeding has made crashes more serious, according to the APCIA.
“If unjustified premium reductions had been ordered last year, it would simply have put further upward pressure on fares this year due to the rapid increase in kilometers driven and the higher rate of accidents and accidents. losses, ”David Snyder, APCIA vice president, international and consulting, said in a statement.
“[The consumer groups’] unjustified requests for discounts are both unfounded and potentially dangerous for the financial health and competitiveness of the insurance system, ”he added.