Non-profit consumer advocate, Consumer Federation of California Education Foundation launched the action.
The Consumer Federation of California Education Foundation (CFCEF) has petition the state insurance commissioner to require California auto insurance companies to reduce their rates, issue credits, or issue refunds.
The CFCEF says that insurers in the state have been making massive profits at the expense of drivers.
The CFCEF’s petition accused California auto insurance companies of “making windfall profits” as a result of the stay-at-home requirements in the state. Those orders were made on March 19, keeping millions of drivers – workers, students, etc – at home for what could end up being a number of months. The non-profit stated that those individuals should qualify for a reduction in their rates or a refund on excessive premiums based on the number of miles they are no longer driving.
The organization also underscored that under state law, the number of miles driven is required to be weighted heavily in the calculation of a driver’s annual premium. The only factor that is allowed to weigh more heavily than miles driven is an individual motorist’s actual safety record.
The commissioner was asked to examine California auto insurance companies in the following ways.
- To form regulations that force insurers to inform their customers of their right to request a decrease in their premiums when emergencies require them to stay home.
- To release an bulletin immediately ordering insurers to inform their customers of that right because of their reduced mileage as a result of the COVID-19 stay-at-home order.
“The roads are empty, and the owner of GEICO has acknowledged that auto accident claims have dropped as a result. Fewer claims means windfall profits, unless customers are credited the difference,” said Richard Holober, director of the CFCEF. He was making reference to Warren Buffet’s March 13 statement “People just haven’t been driving as much and it’s noticeable. So people have changed their behavior,” as the owner of GEICO.
Holober has also stated that many lower income workers may find it difficult to keep up with current premiums from California auto insurance companies when they are unable to work at home or can only do minimal work from home.