A national consumer watchdog group says Indiana leaders should be doing more to save Hoosiers money on their car insurance, as drivers hit the road less and cause fewer crashes.
The Consumer Federation of America wrote letters to state insurance commissioners, asking them to put pressure on auto insurance companies to give drivers some financial relief.
Indiana’s Insurance Commissioner Stephen Robertson has not responded to their letter, said Douglas Heller, an insurance expert with the Consumer Federation of America.
“We have not heard back from the Indiana Department of Insurance at this point,” said Heller.
Call 6 Investigates found a 27% drop in car crashes in Indianapolis, comparing March 2019 and March 2020.
Most drivers typically put 1,000 miles/month on their vehicles, but because of COVID-19, fewer drivers are on the road and causing fewer crashes.
“This is happening across the country—reductions as much as 50 %, 60% even 70%,” said Heller. “The math isn’t very complicated. If you’re not driving, you can’t cause accidents—insurance companies know that better than everybody because they receive the claims.”
Allstate is one of a handful of insurance companies offering its customers some relief—an average of 15% off based on April and May premiums.
"We know customers need more money back in their pocket right now,” said Meghan Cass, a spokeswoman for Allstate. “Anything we can do to help our customers we’re happy to do.”
American Family Insurance, Safeco, Geico and Liberty Mutual are also giving customers different versions of financial relief.
“Even though some insurance companies have done something, there are dozens of insurance companies that serve Indiana who haven’t yet promised to give back some of the money,” said Heller.
The Consumer Federation of America says the Indiana Department of Insurance should work on getting other insurance companies to follow suit.
"The Department of Insurance- -that's their job,” said Heller. “The way they shine during a moment of crisis is they go out and protect Indiana consumers. They should be spending their time making sure the insurance companies don't' collect a windfall while the rest of us struggle through this."
Call 6 Investigates emailed IDOI spokeswoman Jenifer Groth on April 2 and Commissioner Stephen Robertson on April 6 asking about the Consumer Federation of America’s letter, and what IDOI is doing to help Indiana drivers and consumers.
Groth responded Wednesday with a link to guidance for consumers.
“Go to the Indiana Department of Insurance COVID-19 Actions webpage at https://www.in.gov/idoi/3109.htm [in.gov] and click on the Auto Insurance Rates link,” said Groth, Deputy Commissioner Communication and Personnel at the Indiana Department of Insurance, in an email to RTV6.
INDIANA DEPT OF INSURANCE-- INFORMATION FOR INDIANA DRIVERS:
As Indiana residents are currently under a stay-at-home order issued by Governor Holcomb, the Indiana Department of Insurance (IDOI) is receiving inquiries concerning automobile insurance rates during this time of reduced driving activity. Some companies have chosen to provide premium refunds to their policyholders as claims experience is expected to improve temporarily while many Hoosiers shelter in place. Miles driven, among many other factors, is commonly used as a component in determining the premium paid by individual policyholders. Generally, the anticipated miles driven is declared at the time of application for coverage. The applicant may also be assigned a usage classification, such as pleasure class or commuter. Pleasure class is often designated for those who do not commute on a regular basis. Commuting class is assigned for those who do commute on a regular basis and there may be multiple categories for commuting class based upon distance of the commute. Some companies have implemented usage-based (telematics) products which allow insurance companies to monitor driving behavior of individual policyholders, including miles driven, and adjust rates accordingly.
It is important to note that each company that provides automobile insurance to Indiana policyholders has their own unique rating methodology. These rating formulas can vary greatly in the impact that miles driven has on an individual policyholder’s rate. Some companies use rating formulas that do not rely heavily on miles driven.
As claims experience is expected to improve during this unprecedented period of social distancing, the IDOI anticipates that the improved experience may be reflected in future rate filings for automobile insurance products. The decreased number of claims will affect the actuarial rate indications that insurers calculate in the future although how much impact it will have depends on how long the directive lasts and whether and how quickly policyholders go back to their prior driving routine once the directive is lifted.
Insurers generally use their claim experience on policies they have written compared to the premium for those policies to calculate a loss ratio. They then compare that loss ratio against an expected or breakeven loss ratio to determine if rates, on average, should increase, decrease or remain the same. An insurer’s expenses such as agent commissions and overhead are taken into account in determining their breakeven loss ratio. Insurers typically rely on anywhere from 2 to 5 years of claims experience in their actuarial projections. Insurers also will make short term rate change decisions on factors other than actuarial estimates, especially competitive information.
Miles driven is one of many variables that affects insurers overall claim experience. Others include:
- Driver behavior – e.g. defensive vs reckless driving
- Vehicle safety features
- Road conditions
- Traffic density
While some Indiana auto policyholders will be provided with immediate relief in the form of premium refunds or credits toward insurance payments due, others may benefit at a later date due to adjustments in overall auto insurance rate levels.
The following carriers are offering a credit or rebate program for their customers due to the COVID-19 pandemic:
- Allstate – Shelter-In-Place Payback
- American Family Insurance – Premium Relief
- GEICO – GEICO Giveback Credit
- Liberty Mutual – Personal Auto Customer Relief Fund
- Travelers - Stay-at-Home Auto Premium Credit Program
- USAA – Financial Relief
As a policyholder, you should first contact your agent or insurance company with any questions about your insurance policy.
Heller said the Consumer Federation of America will continue to work with insurance companies and encourage them to reduce rates for Hoosiers.
“We’re just not driving, we’re not causing accidents and they’re holding onto our money,” said Heller. “Insurance companies either have to reduce our premiums to reflect this new world or insurance companies are going to be sitting on a coronavirus windfall that they haven’t earned.”
You can try to get money back in your pocket by contacting your insurance agent and letting them know you’ve had a drastic reduction in your driving and you’d like a new rate.