California Insurance Commissioner Lara said the steep drop in the number of miles driven has greatly reduced the number of accidents and claims paid by insurers. Lara ordered insurers last year to reduce premiums and saved customers $1.74 billion last year. He went on to say they didn’t cut their prices enough to reflect the decline in claims. “The bottom line: Insurance companies overcharged customers and need to do more to make it right and help Californians recover.”
The reality is overcharges for April 2020 alone came to $220 million after the commissioners ordered car insurers to report to him by April 30, 2020 their plans for refunding premiums to drivers. His department said a review of the top 10 insurers in California who represent more than 80% of the market showed they cut their rates by 9%. An analysis by the state showed they should have cut rates by 17%. During that seven month time period claims for property damage and bodily injury dropped more than 40%.
Lara’s announcement came just a day after State Farm announced it was returning $400 million worth of car insurance premiums to its 3.5 million policyholders after “better than expected claim results.” The refunds will average $100 per policy and cover the second half of 2020. “Insurers continue to work with policyholders to adjust their policies in 2021” said Mark Sektman the vice president of an industry group. “Policyholders are encouraged to communicate any reduction in driving habits to their insurer to discuss adjustments to those premiums if those changes have not already happened automatically.”
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