With Less Driving, State Farm May 'Return Value' To Policyholders
State Farm said Tuesday it will decide by the end of the week how to “return value” to its policyholders who are driving a lot less because of coronavirus stay-at-home orders.
Less driving means fewer car crashes. Fewer car crashes means big savings for auto insurers. At least two competitors, Allstate and American Family Insurance, have decided to pass those savings along to their customers.
In a statement, Bloomington-based State Farm said “as a mutual insurance company, we make decisions based upon what is in the best, long-term interests of our policyholders, taken as a whole.” It described the COVID-19 crisis as “without modern precedent.”
“With schools and businesses closed, and orders to shelter in our homes proliferating, we know our auto insurance policyholders are driving much less than anticipated,” State Farm said. “We are closely monitoring our automobile insurance loss trends and are considering how best to take this into account and return value to our auto insurance policyholders. We expect a decision in this regard by the end of the week.”
Allstate said Monday its’ going to send out some $600 million in premium refunds. All 18 million drivers with Allstate auto policies will be receiving 15% of their premium, credited to their bank account, credit card or Allstate account.
“This is about fairness,” Allstate CEO Tom Wilson said, noting that driving mileage is down 35% to 50%, even in states that do not currently have shelter-in-place orders. “This is about doing it and not waiting to be asked.”
American Family Insurance, a smaller company, will be sending checks of $50 per car to more than 2 million customers. All told, American Family has $200 million in rebates on the way.
Chief Operating Officer Telisa Yancy said American Family is acting “out of responsibility to our customers.”
Some other insurers, while not yet offering across-the-board pandemic rebates, can adjust premiums on a case-by-case basis for drivers who are suddenly not driving.
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