Barry R. Finegold
State senator, Andover Democrat
The number of car accidents has fallen substantially during the pandemic. Your monthly auto insurance premium should fall too. Drivers are being punished for following public health guidelines and limiting their travel. As bills pile up, residents deserve additional relief. The state Commissioner of Insurance should order auto insurers to provide premium refunds that reflect the ongoing decline in traffic and crashes.
There were 40,000 fewer accidents in 2020 than in 2019 in Massachusetts. The number of crashes fell by over 58 percent in April and 47 percent in May, respectively, compared to those months in 2019. Although travel has rebounded slightly since, traffic volume and accidents have remained well below historical averages: There were approximately 27 percent fewer accidents from June through December relative to that time period in 2019.
Auto insurers have failed to provide commensurate relief. Last spring, nearly all insurers in the Massachusetts market provided limited premium rebates, typically about 15 percent discounts for two months. These discounts were an important first step, but insurance companies have avoided issuing further refunds despite the sustained reduction in accidents.
The failure to lower premiums disproportionately hurts communities hardest hit by COVID-19. Auto insurers vary rates by ZIP code, and tend to charge higher premiums in low-income urban areas and communities of color. This disparity is an insidious manifestation of systemic racism. Issuing additional premium discounts would help communities that need the most help right now.
The insurance industry might point out that with emptier roads, there have been more severe accidents this year, and that vehicle theft and fraud have risen. Nonetheless, data provided by the state shows insurers’ claim payouts in Massachusetts decreased by more than 35 percent for liability coverage and 80 percent for collision coverage in the second quarter of 2020. And last September the Consumer Federation of America said auto insurers were reporting windfall profits even after providing rebates.
To date, the Division of Insurance has ordered insurers to be flexible with customers who are experiencing financial distress but the companies have not been required to reduce auto premium amounts. The commissioner should now intervene to protect consumers and order these premium refunds.
Christopher S. Stark
Executive director, Massachusetts Insurance Federation
COVID-19 tested economic resiliency unlike anything in modern times. Americans rallied to help and protect one another and auto insurers did their part by providing significant relief to policyholders. Companies suspended policy cancellations and non-renewals; waived fees; and offered payment accommodations to policyholders experiencing financial hardship. Insurers also adjusted policyholders’ mileage and/or vehicle usage to address driving decreases due to the pandemic. Additionally, more than 98 percent of private passenger auto insurers in the Commonwealth provided premium relief to policyholders through discounts, rate decreases, premium returns, or dividends.
Understanding that pricing insurance is fundamentally a prospective exercise and that insurers do not retroactively increase premiums for years when mileage or losses outsized the calculated risk, mandating arbitrary across-the-board premium refunds is not appropriate.
All drivers today do not maintain the same driving patterns as they did during the early days of the pandemic. Registry of Motor Vehicles’ data analyzed by several insurance companies showed a significant percentage of drivers increased their miles driven in 2020. Additionally, an analysis of MassDOT traffic statistics by WBUR shows that across the Commonwealth roadway congestion is now only down 10 to 35 percent compared to the 60 percent reduction in April 2020.
Similarly, while the number of crashes remains down, crash severity (more personal injuries and physical damage) has significantly spiked. Without the Commonwealth’s typical congestion, the number of low-impact crashes diminished significantly in 2020. Over the past year, more crashes involved higher speeds and impacts, increasing the cost of each crash. As noted by the Globe’s article on 2020 roadway fatalities, the sad reality is there were only three fewer fatalities in 2020 than in 2019. Moreover, the article also notes “the number of violations involving speeds over 100 miles per hour increased by about 40 percent last year … the numbers also represent a higher percentage of all citations, compared to 2019.” This further illustrates that targeting relief through future ratemaking and/or individual adjustments will direct assistance to those policyholders whose risk profiles warrant it.
Most importantly, consumers facing financial hardship due to the pandemic should contact their insurer or their agent to discuss available relief options.
As told to Globe correspondent John Laidler. To suggest a topic, please contact email@example.com.
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