Allstate will reimburse $ 600 million in premiums as coronavirus cuts pipe

0
75


Allstate Corp., one of America’s largest auto insurers, said on Monday it would reimburse more than $ 600 million in premiums to customers as many Americans drive less due to home orders to limit the epidemic of coronavirus.

Most customers will receive a 15% “refund” of their monthly premium in April and May, the company said.

State Farm and Progressive Insurance Corp (PGR.N), also among the largest American auto insurers, are also studying the decline and its potential impact on premiums.

State Farm “is considering the best way to take this into account and restore value to our auto insurance policyholders”, while Progressive “is exploring the best way to reimburse part of the premium to customers,” said company representatives.

The two companies expect to make decisions soon, they said.

“There are very few silver trims, but auto insurance companies are certainly among them,” said Paul Newsome, analyst at Piper Sandler, referring to the impact of the coronavirus epidemic on industries.

Fewer accidents generally lead to a lower claim frequency, and Newsome expects insurance companies with large car portfolios, such as Progressive, Travelers Companies Inc (TRV.N) and Allstate, to post good first quarter results.

A smaller US auto insurer, American Family Insurance, also announced Monday that it will reimburse a total of $ 200 million to auto insurance customers starting in mid-April. Customers will receive $ 50 per vehicle covered by their policies, said the Madison, Wisconsin-based company.

Allstate’s reimbursement, which will apply to the 18 million policies issued by the company and its Esurance and Encompass units, follows an analysis of data by the insurer of 23 million cars which have shown that the driving mileage was down between 35% and 50% in most states, Allstate chief executive officer Tom Wilson said during a call to reporters on Monday.

The analysis is based in part on the data Allstate collects from tracking products that some customers agree to use in exchange for discounts, as well as from other sources.

Allstate’s data showed no difference between states that had active residence orders and those that did not, Wilson said.

Still, some people who stay on the roads drive faster on what is now less traveled, which could lead to more serious accidents, said Wilson.

Next Insurance, a commercial insurer in Palo Alto, California, which covers small businesses, also said Monday that it would reduce April’s commercial auto premiums by 25% because home orders have reduced the risks of insurer.

LEAVE A REPLY

Please enter your comment!
Please enter your name here