Auto Insurance Companies Are Making a Killing On the Pandemic

flying moneyLess Traffic Equals Fewer Accidents

During the months of the shelter-in-place orders, traffic on the roads and highways throughout California was greatly reduced.  Even now, after the order has been lifted, the number of cars on the road is nowhere near the amount that was present prior to March 2020.   Because many businesses remain closed, large gatherings are still discouraged, and a lot of people are continuing to work remotely, it may be a while before traffic volume returns to normal.  With this reduction in traffic comes far fewer auto accidents, and translates into fewer automobile insurance claims being paid by insurance companies.  

According to a report by CBS News, more than 20 U.S. states reported a sizeable reduction in fatal car accidents during the months of the coronavirus pandemic. California’s fatal car crash rates dropped by a staggering 84%. Captain Salvadore Suarez of the California Highway Patrol reported that the state’s overall traffic volume was reduced by 35%. 

This all adds up to automobile insurance companies pocketing an enormous amount of money in policyholder premiums.  In an attempt to mitigate the negative optics, the insurance companies announced they would be offering credits towards future premiums to make up for the reduction in driving.  However, the math results in a highly favorable outcome towards the insurance companies' wallets.

Premium Reductions Do Not Equal the Reduction in Driving

You may be thinking that the insurance companies were acting in good faith by offering two months of premium credits and reductions, but when you take a moment to do the math, the reductions in premiums do not match the reduction in driving. Most companies offered only a 15% premium reduction.  If one family vehicle was not driven at all for two months, which was a very common scenario, that should translate into a 100% refund of two months of premiums for that vehicle. Even if the pandemic did not result in complete disuse of a vehicle, personal driving was often reduced by much more than 15% - usually limited to a few trips to the grocery store and back.  

With this unequal math, the insurance companies are reaping great financial rewards.  They collected the bulk of customers’ premiums and continue to pay far fewer claims.  It will likely be quite a while before auto accident statistics return to pre-pandemic numbers.  You would think that that insurance company would be happy with that arithmetic, but their greed is boundless. If the number of times we see Progressive Flo, Geico’s gecko, and Liberty Mutual’s emu on our televisions is any indication, they have always enjoyed outrageous profits.  Still, the insurance companies have been employing another more insidious strategy to make even more money - they have been making low ball offers on injury claims.   

What Can The Consumer Do?

There is no harm in calling your insurance company's customer service line and requesting a larger premium credit/reduction.  If your car sat in the driveway throughout March, April, and May, your discount should be greater than 15%.  This may be a case of those who ask, receive.  

Below is a video clip of an Allstate commercial featuring two movie actors - how much were they paid?  Add their fees to the costs to air the ad on prime time television and think back to your 15% premium reduction.

Personal Injury Lawyer in Sacramento

I’m Ed Smith, a Sacramento personal injury lawyer. There are still plenty of cars out on the roads, and many of them are driven by careless people.  If a negligent driver causes you or a loved one injuries, we can help hold that driver accountable for your medical expenses, lost income, and pain. Reach out to my law firm at (916) 921-6400 or (800) 404-5400.  We offer free and friendly advice with no obligation. 

I have worked on behalf of injured Sacramentans for nearly four decades.  Reviews of my services and past case successes can be reviewed at these websites:

Image by 3D Animation Production Company from Pixabay

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