Last April – just weeks after the COVID virus first gripped our state — I ordered insurance companies to return premium savings owed to their policyholders.
My order saved consumers more than $1.75 billion last year for private passenger automobile insurance alone — the most in the nation.
At the time, I told consumers that I would collect data to make sure the givebacks matched the undeniable drop we were seeing in traffic and accidents.
Now, after reviewing that data, it’s clear that insurance companies didn’t do enough.
While millions of us did our part by staying home to help fight the spread of the virus and reduce the risk of accidents for our essential workers, insurance companies continued to collect inflated premiums.
I analyzed auto insurance company data and found bodily injury claims fell by 41.7 percent and damage claims fell by 40.4 percent from March to September 2020, compared to the same period in 2019.
Insurance companies refunded on average 9 percent of auto premiums from March to September, but my analysis found they should have returned nearly double that amount — 17 percent — over the seven-month period.
So even though auto insurance companies gave partial premium refunds back to California consumers last year, they simply didn’t give back the full amount drivers were due.
In a state of 40 million people, this can really add up. For April 2020 — the first full month of the statewide public health “stay-at-home” order — the gap between the refund indicated by insurance company data and the amount drivers received was approximately 13 percent — $220 million in excess premium for that month alone.
Worse still, many insurance companies went back to business as usual while Californians continued to stay off the roads and many businesses stayed closed. All of the top 10 auto insurance groups offered premium relief ranging from 10 to 22 percent for the months of March to May. But by October, only four companies were still offering any refunds.
Now I am ordering insurance companies to tell me — by April 30 — how they are going to make it right. More importantly, they need to tell their customers.
People can put this money to good use, paying for school clothes as campuses reopen or car repairs they might have put off.
What’s more, insurance companies need to do more to help our small businesses and restaurants. That’s why I am directing insurance companies to give us the detailed claims data for their commercial lines, as they did with driver data.
If the data shows that insurance companies overcharged our businesses, I am going to mandate that they return some premium back, especially to small businesses that have borne the brunt of pandemic closures.
Business owners know savings are even more critical now, especially while they are desperately trying to rebuild and reopen.
Insurance companies need to return a greater percentage of premiums now, and for as long as people are driving less and businesses continue to struggle. This is a safety stimulus we all need right now. And I will make sure you see the savings you deserve.