As auto insurance rates rise, legal & nonprofit actions grow – Repairer Driven News

There have been recent legislative and non-profit actions announced in California and Illinois regarding high auto insurance rates while news of June rate hikes by GEICO and State Farm are just a few that don’t seem to be going away anytime soon.

Consumer Watchdog, a nonprofit organization, reported in a July 28 article that “Insurance Commissioner Ricardo Lara has rejected the Interinsurance Exchange of the Automobile Club’s (‘Auto Club’) proposed $202 million increase in auto insurance and its services and education. .-based on discrimination in which working Californians pay up to the top 9%.

The district was also included in the a request issued by Consumer Watchdog and the California Department of Insurance (CDI).

The Auto Club’s proposed 6.9% increase to more than 1 million points would mean an average annual increase of $75 per insured vehicle and $140 per point with the largest increase falling on low-income drivers who do not have the professional services Auto Club discounts. , according to Consumer Watchdog.

“These bills are as serious as they are — Californians should not have to add rate hikes by insurance companies to their growing list of financial problems,” said Benjamin Powell, an attorney for Consumer Watchdog, in a release. “These cuts to high-paying professional jobs leave low-income drivers at a disadvantage, because of their positions.”

Powell added that Lara’s 2019 study found that the Auto Club causes “a significant economic disparity.” An investigation was launched later Consumer Watchdog and 10 community and human rights organizations brought charges against CDI about the illegal and discriminatory practice of carriers in setting prices. In December 2019, the CDI issued regulations to combat this unfair discrimination but, almost three years later, the regulations have not been implemented, according to Consumer Watchdog.

Functionality has not been approved by law as an acceptable product under the Proposition 103 ballot, according to Consumer Watchdog. Proposition 103, passed by California voters in November 1988, requires approval by the state’s DOI before applying for property and casualty insurance, according to CDI. The proposal prohibits tariffs that are “excessive, inadequate, unfairly discriminatory” or that violate the tariff title.

When Repairer Driven News asked CDI for comment on the story and Consumer Watchdog’s request, it did not comment directly but said Proposition 103 “has saved drivers billions of dollars.”

Spokesman Gabriel Sanchez wrote: “Proposition 103 allowed insurance companies to offer group discounts. “This includes members of labor unions, fraternal organizations, military groups, unions, and trade unions that receive group discounts.”

The RDN also asked when CDI last approved any required upgrades.

“The California Department of Insurance has not approved any auto insurance increases since the outbreak began in March 2020,” Sanchez said. “In fact, the most important thing for Commissioner Lara is that the cost of insurance during the COVID epidemic better reflects the consumer’s driving behavior and the risk of loss. By ordering premium refunds and keeping the line on the increase in traffic, his actions so far have saved $ 2.4 billion for drivers . The Department of Insurance is also proposing new rules that would increase the number of deductions available to working families and protect the statutory group deduction.”

The proposed rules will allow “Organized groups such as teachers, firefighters, veterans, and seniors can continue to benefit from auto insurance discounts,” Sanchez added.

“But these laws prohibit auto insurance companies from offering discounts based on a person’s education or occupation — which prevents many Californians from getting these discounts.”

Consumer Watchdog’s petition also alleges that Auto Club overpaid policyholders during the COVID-19 shutdown — when accident claims dropped — and, as a result, could be owed hundreds of millions in other claims.

In the context of the pandemic, legislation should be enacted during the fall election of Sen. Jacqueline Collins (D-Chicago) “to give the Illinois Department of Insurance more power over how insurers pay,” according to the Chicago Sun-Times.

The Sun-Times reported that Collins’ goal is for the department to have the ability to return funds when the costs are too high and. prohibiting the use of “discreet” non-controlling behaviors in pricing.

“People are already hurting,” Collins told the Sun-Times. “We are a country that requires consumers to buy insurance.”

He said he sees California’s insurance law as a model that Illinois could follow, which requires DOI approval of all proposed supplements before they can begin.

At the Collision Industry Conference (CIC) on July 21, CSAA Insurance Group APD business advisor Dan Tessadri explained how carriers create premium files and said that the premium increase would take two years to complete. However, this is a reality. For example, in Illinois, “car insurers can set whatever rates they want and tell the government after they’ve already started overcharging many customers,” according to the Sun-Times.

The four largest carriers in Illinois by market share — State Farm, GEICO, Progressive, and Allstate — paid customers $280 million more than they needed to in order to maintain their 2019 profits during the pandemic, according to a recent study by the Illinois PIRG Education Fund and the Consumer Federation of America (CFA). And this was done after taking into account the $ 220 million that the four insurers were reimbursed for customer refunds in 2020, the agency said.

In March, the Illinois DOI ordered auto insurers to disclose information about the benefits they earned during the 12 months of the COVID-19 pandemic and said this information would be made available to the public by June 30. sent by 16 state senators and five unions and four activists in January to urge the department to investigate the benefits of wind generated by carriers. Auto insurers have challenged the DOI’s authority to require disclosure of benefits.

State Farm decided to raise its insurance premiums in Illinois by 3% in May, just two weeks after the 5% increase went into effect, according to Crain’s Chicago Business. The book said that data from the Illinois DOI shows that the average cost should increase by $60 per year and double.

Analysis of S&P Global Market Intelligence, which was released in late Julyfound that State Farm “continued its trend of increasing private car prices by obtaining 17 price increases in June, which will increase the group’s total income by $377.8 million” and that GEICO “could see a significant increase in private car payments from the price increase.” approved in June.”

“GEICO entities received 27 rate hike approvals in seven states during the month, which could boost the group’s total revenue by $418.7 million,” S&P concluded. “More than half of the increase is expected to come from Virginia, where regulators have signed six extensions, and two of them are on the list of major changes. Both rates went into effect on June 16 for new business and are expected to be implemented on Aug. 14 for business renewal. .

In contrast, Progressive unions cut nine rates in Arkansas, Wisconsin, Iowa, and Montana, which S&P said “could reduce the group’s total revenue by $13.3 million.”


Featured image credit: juststock/iStock

More information

CIC: Countermeasures for shops to be considered in dealing with inflationary pressures

Share it: