The Consumer Federation of America and Center for Economic Justice say insurers aren’t doing enough.
The Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) have recalculated their figures for insurers and say auto insurance rebates are not large enough.
Some insurers have issued discounts and credits to policyholders in the face of COVID-19.
However, the CFA and CEJ have concluded that some of the largest insurers have fallen short of fairness in the auto insurance rebates they’ve issued in the United States. Both consumer groups calculated that insurers will return more than $7 billion in premiums to their policyholders. This money will be returned in the form of refunds and credits issued to customers throughout May.
That said, even with the widespread refunds, the CFA and CEJ stated that car insurers are still not giving enough back. When taking into account the reduced driving and shrinking rate and severity of claims, the consumer groups both concluded that the money owed to policyholders is much higher than what is being returned.
Most auto insurance rebates equated to reducing two months of premiums by 15 percent.
Still, according to the CFA and CEJ calculations, insurers should be refunding customers an amount closer to the 10 percent to 35 percent range of two months’ worth of premiums.
According to data cited by the CFA, vehicle accidents have been reduced by half or more. A Reuters report on the subject included a request for comment from GEICO, which was one of the insurers the CFA and CEJ rated with the lowest score, a D-.
Near the start of April, GEICO announced it was issuing about $2.5 billion in credits to its 19 million vehicle policyholders from April 8 through October 7. “We were concerned that a credit for two or three months might just expose our customers to large catch-up payments once events returned to normal,” said a GEICO rep quoted in the Reuters report, addressing the criticism of the company’s auto insurance rebates. “We acted swiftly to implement a credit across the entire policy term so our customers would see relief for an entire six months.”