AG Healey argues that Reduced Driving Should Lead to Reduced Premiums; Many Insurers Already Providing Relief During COVID-19 Crisis
In a letter dated April 13, 2020, the Attorney General Maura Healey called on the Massachusetts Commissioner of Insurance to formally and immediately reduce all personal auto insurance premiums during the COVID-19 pandemic.
“People all across the state are staying home to reduce the spread of COVID-19,” said AG Healey in an official announcement. “As a result, there are fewer drivers on the road, fewer car accidents, and lower risk involved, so people should be paying less. At a time when many are struggling financially, we should do everything we can to cut costs for families.”
AG Healey cites statistics from a recent NYTimes article that “travel in Massachusetts is down from the prior-year period by about 50% to 55%.” The AG goes on to argue that while official data regarding the reduction in Massachusetts automobile accidents is not yet available, an analysis done for California indicated that, “…a 60% reduction in driving has resulted in a 50% reduction in accidents.”
She concludes writing, ” Our office has continued to encourage other carriers to adopt reductions. A reduction in premiums is actuarially sound (it reflects the decrease in risk because of significantly fewer miles driven), and is socially and economically appropriate given the financial hardships facing policyholders. In the current state of emergency, we believe all insurance companies should lower their premiums and all policyholders should receive a reduction in premium.”
A majority of the largest personal auto insurers in Massachusetts already have announced premiums
While the Attorney General acknowledged that some insurers have already begun to offer stay-at-home premium refunds or credit, citing many of the Top 25 auto insurers in the country, the letter fails to mention that a majority of the largest personal auto insurers in Massachusetts already have offered credits or refunds to their policyholders.
