State Farm and USAA announced programs to provide relief to customers on the auto insurance premiums as a result of the decline in driving due to stay-at-home orders.
Collectively, U.S. auto insurers will return more than $10 billion to their customers nationwide, according to an estimate released April 11 by the Insurance Information Institute (Triple-I). As CollisionWeek reported today, gasoline consumption in the U.S., an important indicator of traffic volume, had declined nearly 50% from mid-March through April 3.
Last week, Allstate and American Family announced programs to return premiums to auto insurance policyholders. They were joined later in the week by GEICO and Liberty Mutual.
“Insurers are again fulfilling their role as economic first responders by providing financial relief to customers when they need it most,” said Sean Kevelighan, CEO, Triple-I. “If the rest of the nation’s private-passenger auto insurers are as generous as the companies the Triple-I knows about, we project insurers will be giving customer refunds, discounts, dividends, and credits totaling $10.5 billion.”
The Triple-I’s $10.5 billion estimate is based on its analysis of 14 U.S. auto insurers who announced this week premium refunds, discounts, dividends, and credits totaling $8.1 billion. These insurers cited reduced policyholder mileage and the receipt of fewer claims amid the COVID-19 crisis as the reasons they were able to make these decisions.
Given there are hundreds of companies that sell private-passenger auto insurance in the U.S., the Triple-I looked at the industry’s cumulative market share and estimated an additional $2.4 billion in refunds, discounts, dividends and credits were forthcoming. The Triple-I has updated its Fact Sheet, Insurers Offer Forward-Looking Solutions For COVID-19 Recovery, to reflect the latest steps taken by the nation’s auto insurers.
“These are challenging financial times for millions of Americans, and the country’s auto insurers are making it easier for their customers to get through this extraordinary time in U.S. history,” Kevelighan stated.
The Triple-I estimates the typical U.S. auto insurance customer spent $1,113 in 2019 to cover a single private-passenger vehicle.
State Farm, the nation’s largest auto insurer, announced up to a $2 billion dividend that will go to its auto insurance customers. Customers do not need to take any action to receive this dividend, which will appear as a credit on their auto policy.
The dividend is part of the Good Neighbor Relief Program that also includes customer payment options and neighborhood philanthropic relief. This is the single largest dividend paid to customers in our company’s history. As the national leader in auto, home, and individual life insurance, State Farm has the financial strength necessary to help millions of customers and communities recover from the unexpected.
On average, State Farm Mutual auto customers can expect to receive a credit of about 25 percent of premium for the time period March 20 through May 31; exact percentages will vary by state. Every State Farm Mutual auto insurance customer will receive credits applied against bills beginning as early as June. We’ll continue to monitor our loss experience and respond appropriately.
“State Farm is returning value through a dividend to our customers,” said State Farm Chairman, President and CEO Michael L. Tipsord. “We insure more cars than anyone and we see from our claims activity people are driving less. This dividend is one of the ways we’re working to help our customers during this unprecedented situation.”
The insurer is providing $5 million in donations across the country. These efforts are in direct response to COVID-19 and are focused on relief and recovery efforts.
USAA, the country’s fifth largest private passenger auto insurer, will be returning $520 million to its members. This payment is a result of data showing members are driving less due to stay-at-home and shelter-in-place guidance across the country. Every member with an auto insurance policy in effect as of March 31, 2020, will receive a 20% credit on two months of premiums in the coming weeks.
As a member-owned association, USAA historically returns a portion of profits to members. In 2019, we returned $2.4 billion in dividends, distributions and bank rebates and rewards. This brings the total amount returned to members since January 2019 to nearly $3 billion.
“We understand the impact this pandemic is having on our country, and especially our military community and their families, many of whom also are working on the front lines of the crisis. Returning premiums provides timely help for our members,” said USAA President and CEO Wayne Peacock. “USAA has been facilitating the financial security of military members for nearly 100 years, and this is another way we can serve them well.”
Below is a sampling of discount programs available from other large auto insurers.
Amica Insurance
Amica Insurance announced its COVID-19 Auto Premium Relief Program, which will provide auto customers insured as of April 1, 2020, a 20% credit on their auto premiums for April and May, pending regulatory approval.
“As our nation continues to band together in an effort to curb the spread of COVID-19, we know that many aspects of everyday life have changed significantly,” said Amica Chairman, President and CEO Robert A. DiMuccio. “One that most of us have in common is that we’re sheltering in place and driving less than we did before.”
Erie Insurance
Erie Insurance announced that it will reduce rates for personal and commercial auto insurance customers in 12 states and the District of Columbia.
Once approved and implemented, the estimated amount of financial relief for Erie Insurance customers is estimated to be approximately $200 million.
“For 95 years, ERIE’s promise to our customers has remained the same: to be there when they need us most,” said Erie Insurance President and CEO Tim NeCastro. “Now, more than ever, we are centered on the Golden Rule and committed to providing near perfect protection and near perfect service at the lowest possible cost.”
While some auto insurers this week announced short term auto insurance rebates, ERIE’s decision to lower rates is designed to offer more impactful relief to customers — now and in the future.
Pending regulatory approval, actual rate changes for customers will vary by state and also be based on individually purchased policies and coverage options. Once approved, premium adjustments will take effect at the time of new policy initiation or renewal.
Hanover Insurance
The Hanover Insurance Group, Inc. (NYSE: THG) announced it has created The Hanover CARES Refund, through which the company will return 15% of April and May auto premiums to its eligible personal lines customers, providing financial relief during the coronavirus pandemic. The company also announced additional customer relief measures and a commitment to contribute $500,000 to nonprofits in local communities to address needs arising from the public health crisis.
The decision to return a portion of premium payments to its customers comes as a result of governmental stay-at-home and shelter-in-place measures, which are reducing the number of vehicles on the roads, and consequently, the number of claims filed. This refund equates to approximately $30 million in premium, which will be recognized in the second quarter of 2020. Pending regulatory approvals, The Hanover will credit April in-force policies in May, and May in-force policies in June. Policyholders who have pre-paid premiums will receive credits in each of the same months.
“We recognize our customers are feeling significant stress, including financial pressure, as a result of this pandemic,” said John C. Roche, president and chief executive officer at The Hanover. “Our company has a long, proud tradition of being there when we are needed most, delivering for those who depend on us. We are committed now, as always, to do what we can to help our customers, partners and home communities manage through these difficult times.”
MAPFREE Insurance
MAPFRE Insurance announced its Staying Home Refund program, which will return 15 percent of April and May premium to its voluntary personal auto policyholders in Massachusetts, totaling over $30 million. On average, most policyholders will receive a credit of approximately $40.00. A similar credit will be provided to the company’s personal auto policyholders in its other states of operation for the same time period. The MAPFRE Staying Home Refund program is subject to regulatory approval.
“We understand that our policyholders are facing a number of challenges, as we all focus on the health and safety of our loved ones,” said MAPFRE USA President & CEO Alfredo Castelo. “We know that many of them are driving less as they stay at home during this time, and our program recognizes this change in driving behavior. We are committed to being there for our customers, so they can focus on what is most important to them.”
Mercury Insurance
Mercury Insurance today announced the company would be giving back 15% of monthly auto insurance premiums to customers in April and May. Subject to regulatory approval, the company will automatically credit customers’ accounts, providing much needed relief during this time. The Mercury Giveback program applies to personal auto policyholders in the 11 states in which they operate.
“We want our customers to know we’ve got their back,” said Mercury Insurance President and CEO, Gabriel Tirador. “For nearly 60 years, Mercury has provided best-in-class protection at an affordable price. And during these uncertain times we’re going even further by giving back more than $65 million to our customers.”
NJM Insurance
NJM Insurance Group is returning $41.7 million to policyholders as part of the NJM Policyholder Relief Program. The Program will refund 15% of the equivalent of three months of annual premium payments to the Company’s personal auto insurance policyholders.
“The NJM Policyholder Relief Program helps ensure that the premiums paid by our policyholders recognize the changes they have been required to make in their daily lives,” said Mitch Livingston, NJM President and CEO.
Policyholders can expect to receive their refunds, via check or direct deposit, in the coming weeks. The 15% refund is calculated based on an annual premium as of April 1.
Selective Insurance
Selective Insurance Company of America (NASDAQ: SIGI) announced that customers with personal and business auto insurance policies will receive a 15% premium credit for April and May related to the various COVID-19 shelter-in-place orders. The program, which is subject to expected regulatory approval, is part of the company’s ongoing efforts to support its customers, employees, independent distribution partners, and the community in these uncertain times.
“At Selective, we understand the disruption of the COVID-19 pandemic and the related governmental directives. We are giving our personal and business auto policyholders – who have helped to flatten the curve by sheltering-in-place – premium credit for driving less,” said John Marchioni, President and CEO.