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Some auto insurers are sending refunds to customers as crash rate falls

199 points by prostoalex 7y ago

peteretep 7y ago
I don't like this. It seems to set a precedent that in the opposite situation (I dunno, a haze that pushes up auto-accidents?) then they might take the opposite tack. People pay insurance to (massively simplified) even out payments for unlikely events, and messing around with that -- even in a direction that short-term seems good for consumers -- seems questionable.
- metric10 7y ago
  But they do this already. In Colorado many insurers raised rates when we had a large hail storm that caused widespread damage. Allstate roughly doubled my premium because of it (or so they said), even though I parked my car in a garage both at home and at work at the time. I found a better rate elsewhere, but I’m sure others just paid it. So the fact that they’re offering a reduction seems fair, I guess. Although I wonder if they’re really only seeing a 15% reduction in costs.
- javagram 7y ago
  That concept already exists, but instead of charging customers, the insurance company calls on its own insurance company. https://en.wikipedia.org/wiki/Reinsurance https://en.wikipedia.org/wiki/Reinsurance
- ultimoo 7y ago
  What's stopping them from increasing premiums today? They quote every 3 - 6 months and can increase premiums across the board if auto-accidents trend upward. If you are referring to increasing premiums in the middle of a quote cycle, that's not possible due to how the terms of the quote are worded. The insurance industry is regulated.
- 1123581321 7y ago
  There’s no mechanism for that other than increasing renewal rates for actuarial reasons, which for auto would be a longer term trend. As the other commenter pointed out, reinsurance covers expensive disasters.
maerF0x0 7y ago
Geico?
- xhkkffbf 7y ago
  I'm hoping but I'm guessing they won't. SOme of the insurers are set up as cooperatives and so they pretty much need to do it. Geico is just designed to feed the ad agencies and Warren Buffet's pocket.
- kossae 7y ago
  Just wanted to update here, as I did send them an e-mail after seeing this post. They are willing to adjust premiums if you give them a few bits of information such as how many miles you now drive per week on quarantine. I've yet to get a response as to how much the premium will be reduced, but it sounded promising.
- rajnathani 7y ago
  It seems that now they are also providing some money (credits) back: https://www.cnbc.com/2020/04/08/warren-buffetts-geico-offers-2point5-billion-in-credits-as-coronavirus-cuts-driving.html https://www.cnbc.com/2020/04/08/warren-buffetts-geico-offers...
  - odysseus 7y ago
    Yep, details at: https://www.geico.com/about/coronavirus/ https://www.geico.com/about/coronavirus/ The credit will be coming off your policy renewal bill.
Sherl 7y ago
I want to tell you all AAA California is being scummy and you need to call them to get a refund credit to be posted into your account.
surge 7y ago
It's worth mentioning some states have caps on how much insurance can make, in other words if they're not absorbing a base amount of risk, they have to give the money back because people are paying too much to insure against something where the risk is low. I've gotten checks back from auto insurance before where they made too much money that year due to lack of payouts.
- chrisseaton 7y ago
  Ah that explains it. Otherwise doesn't a refund go against the whole idea of insurance? The idea is you pay a premium not knowing if you'll need it or not, and they take on all the risk if you do need it. If you ask for your premium back because you didn't need it you're missing the point of insurance.
  - ceejayoz 7y ago
    Brand loyalty is a thing, too, though. "Allstate did me a solid when they didn't have to" is a pretty good PR move, especially if they're suddenly awash in cash due to reduced claims.
    - harikb 7y ago
      If it was just PR, companies will spend $10 on ads talking about it for every $1 they give away. Give credit to the regulation when it works - next time someone says regulation is bad.. remember this.
      - AnthonyMouse 7y ago
        For a mutual insurance company, what difference does the regulation make? Whether the customers get the money as a refund check or the mutual insurance dividend or lower premiums next period, they still get it. Even for a for-profit insurer, insurance is a fairly competitive market. They might have to give the customers the money anyway to keep them from defecting to the mutual insurance companies. Even if they didn't, that would make being in the insurance market more profitable, which would attract new competitors, which would drive down premiums/margins until the risk-adjusted return of becoming an insurance carrier was back where it was. In other words, in a competitive market the customer gets the money one way or another. This is a common occurrence with regulation. The regulation requires some good thing that would have happened regardless, the good thing happens and the proponents credit the regulation even though it was inevitable. Meanwhile you have a compliance cost, because it takes resources to keep track of the regulation and make sure you're complying with it even if it was the exact thing you were going to do anyway. That makes everyone poorer -- the compliance cost is the opposite of the windfall, so it makes it less attractive to compete in the insurance market and allows companies to pass on the compliance costs as higher premiums.
downerending 7y ago
Are there any specific statistics on the fall of payouts or traffic fatalities?
samfisher83 7y ago
Also some of these companies are mutual companies meaning they are owned by their policy holders.
unexaminedlife 7y ago
This is the kind of thing that will separate companies in the future. If you're a good corporate citizen consumers will notice in ways current generations don't. We don't notice in the numbers necessary for companies to change their behavior.
- gjs278 7y ago
  no it won’t. nobody is going to care after this. and you’d be a fool to not just use a broker for car insurance.
csours 7y ago
Anecdote: The few times I've driven in the last couple weeks I've noticed at least one person driving like they forgot how to drive. I don't know if everyone is just amazed that the streets are empty, or if people really have forgotten how to drive or what, but it's very eerie.
- deleted 7y ago
  [deleted]
- dexterdog 7y ago
  It's likely because people pay less attention when the roads are empty.
- agumonkey 7y ago
  it does trouble me, I don't know what to expect anymore (usually the flow of cars is a hint) and I also feel like the road belongs to me a bit
- jetrink 7y ago
  I noticed something similar. My theory is that the set of people who are unwilling to heed stay-at-home orders has a significant overlap with the set of people who are inattentive or reckless drivers. As a result, there is a disproportionate number of bad drivers still on the roads.
  - tonyedgecombe 7y ago
    They probably have the Toxoplasma gondii parasite. https://en.wikipedia.org/wiki/Toxoplasma_gondii https://en.wikipedia.org/wiki/Toxoplasma_gondii
  - hanniabu 7y ago
    Anecdotal, but I've had to still go to work and many of the people I see driving are old, like 60+ (lots of gray hair/ wrinkles).
  - tristor 7y ago
    Corollary: The people who are willing to heed stay-at-home orders are more intelligent, and more intelligent people drive better.
desireco42 7y ago
Allstate is known for being an ethical and fair company. I work for their subsidiary and this is normal behavior for them. I am proud they are doing this.
- saagarjha 7y ago
  Well, that depends. Like most large companies, there's a "Criticism" section for it on Wikipedia: https://en.wikipedia.org/wiki/Allstate#Criticism https://en.wikipedia.org/wiki/Allstate#Criticism
pgrote 7y ago
Insurance companies are coming out of the pandemic relatively unscathed, because the pandemic isn't a typically covered event for business interruption?
- jmeyer2k 7y ago
  More importantly, pandemics are correlated risks, so the insurance company is not reducing any risk by insuring against it. If they did, everyone's insurance rates would go way up after a pandemic in about the same amount as they would have to pay for the pandemic.
  - throwawayjava 7y ago
    As it is, insurance companies are both not insuring against it and also teeing up to massively increase rates [1]. Why only dip once when you can dip twice? [1] https://www.fool.com/investing/2020/03/26/health-insurance-premiums-could-rise-by-over-40-du.aspx https://www.fool.com/investing/2020/03/26/health-insurance-p...
    - ceejayoz 7y ago
      There are lot of types of insurance that exclude pandemics, but health insurers are unlikely to be one of them.
- jbeam 7y ago
  P&C actuary here. Can't speak for life or health insurance. The first part of this statement is definitely not true ("Insurance companies are coming out of the pandemic relatively unscathed"), but the second part ("pandemic isn't a typically covered event for business interruption") is. When it comes to underwriting margins (i.e. premium less losses less expenses) then the impact of the pandemic is very dependent on the line of business: * Auto is actually benefiting greatly, for the obvious reason that there is an unprecedented drop in the number of people on the roads. On the other hand personal auto, as a legally mandated cover, is highly regulated. I imagine a lot of these profits will be given back to consumers, as we see here. Any combination of the company being incorporated as a mutual, a publicly traded company not wanting to lose face in comparison to a mutual, or regulators forcing everyone's hands. * Business Interruption is offered alongside property insurance. The general idea is that you can recoup lost income while you rebuild after a tornado knocked down your store. It was never intended to sustain the shutdown of the entire world economy. Insurers recognized this risk after the SARS epidemic, and in response the Insurance Services Office (ISO) which provides the industry with standard policy forms for typical exposures explicitly added exclusions for virus and bacteria into the form. It is unclear if it would be covered regardless, as the usual requirement for BI payouts is "physical damage from a covered peril." Frankly, if it wasn't excluded, there would be widespread fears of insolvency throughout the sector right now. But there are plenty of other exposed lines: * Contingencies policies, which usually means some sort of event cancellation, is going to get rocked. Some have pandemic exclusions but usually the larger ones don't. Munich Re and Swiss Re are on the Tokyo Olympics tower for a combined $800 million, and the total value insured for that tower is definitely in the billions. There are plenty of other ones that are not making headlines that will make this a huge headache. * Medical malpractice insurance: more patients and more death means more lawsuits. Whether or not the lawsuit is justified does not remove an insurer's duty to defend. * Directors and Officers policies will also take a hit. Shareholders file lawsuits whenever share prices go down (duty to defend again), and companies that royally screwed up (e.g. cruise ships) are likely to actually pay out. * Workers' Compensation premium, which is calculated retrospectively based on average payroll over the period of the policy, is going to drop significantly. That is an impact to the "top line" (i.e. premium) but still a large hit to investment float. Also, after 2008 we saw an increase in claims as people were using WC to recoup income rather than reenter the job market. There will also be claims about getting COVID on the job. Hard to say how many of those will be successful (hard to prove), but I think it is safe to say that it will pay out for a lot of medical workers. * Mortgage Insurance: massive unemployment = defaults. Probably some others but you get the point. This is far reaching. And I haven't really touched investment income. For a lot of lines of business there is a focus on "top line" growth rather than "bottom line" as it is assumed that the premium float will provide investment income. P&C insurers have liabilities that typically pay out over a relatively short period of time compared to life insurers (we call this "short tail" versus "long tail"). That means that the majority of investment is in bonds, which haven't had as bad a hit as equities, but still have hurt except in the very safest investment classes. There is a real fear of corporate bond defaults so a lot of holdings have lost value.
deleted 7y ago
[deleted]
yborg 7y ago
State Farm is in theory a mutual company, i.e. owned by its policy holders. Years ago (like more than 20) I used to get the occasional profit distribution check, but that stopped happening in the 2000s. Apparently they discovered the concept of Hollywood accounting.
- AnthonyMouse 7y ago
  Maybe they just started using the money to charge lower premiums.
  - deleted 7y ago
    [deleted]
- hnu0847 7y ago
  Amica pays an annual dividend whose percentage varies based on the number and types of policies you hold with them. That said, they weren't mentioned in the article and so far I haven't seen anything related to a rate reduction.
  - pinko 7y ago
    Amica is a mutual insurance company, but the dividend is paid only if you're a mutual policyholder, as they now also offer non-mutual policies at lower rates, without the dividend. However, I believe the dividend is based on the company's claim payouts over the preceding 12 months, rather than number and types of policies you personally hold with them -- that can provide a discount on your policy rates, but not the dividend rate. So I would expect a larger-than-usual dividend from their auto insurance this year, assuming their paid claims are less than forecasted.
    - hnu0847 7y ago
      You are correct that the dividend amount also depends on Amica's claim payouts for the preceding 12 months, however I checked my statement from last year's payout and it lists a dividend percentage for each type of policy they sell, ranging from NONE (Automobile Liability and Physical Damage, Homeowners (Workers Comp)) to 20% (Boat/Yacht, Personal Umbrella Liability), so this seems to be a separate factor from their claim payouts for the preceding 12 months and also separate from the multi-policy premium discounts they offer. I will also add that these rates can also vary by state, as the statement specifically says "our latest rates in Texas". Based on what I'm seeing I wouldn't expect an increase in the annual dividend due to fewer car accidents, but a premium reduction might be possible.
smaili 7y ago
Interesting tidbit at the at end of the article I thought others may enjoy: > Allstate reports that while accidents are less frequent, the crashes that do occur seem to be more severe. The likely culprit? Speed: Drivers can go faster than usual on pandemic-emptied streets.
- floatingatoll 7y ago
  Drivers who drive rudely are being way more rude around here now that the roads are empty. Like, they used to hit 35mph because there was traffic obstacles in their way, and now they’re hitting 45mph (in our 25).
  - smaili 7y ago
    45 in a 25? That's incredibly aggressive - and scary!
jbigelow76 7y ago
My wife and I were already considering dropping my car from the two car policy we have when it renews next month. I personally think we'll be in a "shelter in place" mode through most of June at the earliest and with us both working remote and daycares being shut down here in my part of TX the need to cover two cars no longer exists. If I need to re-add the car to the policy in July or August at least I'll have saved maybe a few hundred bucks, but if our insurer joins this trend the hassle of dropping might not be worth it.
- gambiting 7y ago
  But...if you take it off the policy, there's still risk of having it stolen or it burning down, that then obviously isn't covered. And...few hundred bucks from June to August?? How expensive are your policies? I'm paying £400(~$500) per year for a fully comprehensive policy on a brand new Volvo XC60, dropping the policy for a month or two would save me so little money it's almost not worth the hassle.
  - DanBC 7y ago
    Also, in the UK cars have to be insured unless they're SORNed, and that's not something most people would not bother with for a couple of months.
  - jbigelow76 7y ago
    But...if you take it off the policy, there's still risk of having it stolen or it burning down, that then obviously isn't covered. You do have a point, I'd be pretty pissed if it was stolen. It's sitting in my driveway and not in a garage so chances of spontaneous combustion are pretty low :)
andy_ppp 7y ago
It begs the question - does lockdown mean coronavirus is a net "positive" on lives lost, as people will be saved not driving, going out, being stressed, even catching Flu etc. I haven't seen anything about this but the question is worth asking. Also worth saying I fully agree with the lockdowns simply because of exponential growth.
- Shivetya 7y ago
  Estimates are 38,000 for 2019 in vehicle related deaths, this does not include all the others who suffered injuries at any scale. However the virus won't reduce this by the number it is likely to take, I am sure someone could work it out epidemics should be measured against the death rate from all causes across a year. However immediate numbers are much more newsworthy and allow political interest to drive whatever message they want from them. so if you want to find a silver lining there are always ways to mince numbers. to be honest looking for a silver lining is much more productive than the panic, doom, and gloom, efforts
  - DangitBobby 7y ago
    > to be honest looking for a silver lining is much more productive than the panic, doom, and gloom, efforts It certainly is not. The "panic, doom, and gloom, efforts" are what drove us to take action in the face of unrelenting baseless optimism that would have single handedly killed millions. Being afraid of something is not the worse thing that can happen! Please stop acting like it is!
jl2718 7y ago
They would have to lower rates otherwise by law, and presumably take a loss next year. If they lower rates too much, they will get way too many short-term customers. If they don’t lower enough, they will lose many long-term customers. This is a half-measure.
jimbob45 7y ago
Just got a ~15% refund through Esurance. For reference, I’ve never been involved in any sort of insurance claim.
carfacts 7y ago
Called this a few weeks back: Ask HN: Will auto insurance premiums go down? https://news.ycombinator.com/item?id=22719791 https://news.ycombinator.com/item?id=22719791
madum0 7y ago
I made all 11 first levels with 3 stars, except #3... I can't get a better score than 16 moves. Still chasing that eureka moment. I enjoy it thanks :)
- madum0 7y ago
  AAWWW YEAH FINALLY GOT IT! 15 MOVES BABY!
sitkack 7y ago
The lives saved from reductions in pollution and crashes is at this point larger than the covid19 death toll. We already had a pandemic that got displaced by a new one.

199 points by prostoalex 7y ago

I don't like this. It seems to set a precedent that in the opposite situation (I dunno, a haze that pushes up auto-accidents?) then they might take the opposite tack. People pay insurance to (massively simplified) even out payments for unlikely events, and messing around with that -- even in a direction that short-term seems good for consumers -- seems questionable.

metric10 7y ago
But they do this already. In Colorado many insurers raised rates when we had a large hail storm that caused widespread damage. Allstate roughly doubled my premium because of it (or so they said), even though I parked my car in a garage both at home and at work at the time. I found a better rate elsewhere, but I’m sure others just paid it. So the fact that they’re offering a reduction seems fair, I guess. Although I wonder if they’re really only seeing a 15% reduction in costs.
javagram 7y ago
That concept already exists, but instead of charging customers, the insurance company calls on its own insurance company. https://en.wikipedia.org/wiki/Reinsurance https://en.wikipedia.org/wiki/Reinsurance
ultimoo 7y ago
What's stopping them from increasing premiums today? They quote every 3 - 6 months and can increase premiums across the board if auto-accidents trend upward. If you are referring to increasing premiums in the middle of a quote cycle, that's not possible due to how the terms of the quote are worded. The insurance industry is regulated.
1123581321 7y ago
There’s no mechanism for that other than increasing renewal rates for actuarial reasons, which for auto would be a longer term trend. As the other commenter pointed out, reinsurance covers expensive disasters.

maerF0x0 7y ago

Geico?

xhkkffbf 7y ago
I'm hoping but I'm guessing they won't. SOme of the insurers are set up as cooperatives and so they pretty much need to do it. Geico is just designed to feed the ad agencies and Warren Buffet's pocket.
kossae 7y ago
Just wanted to update here, as I did send them an e-mail after seeing this post. They are willing to adjust premiums if you give them a few bits of information such as how many miles you now drive per week on quarantine. I've yet to get a response as to how much the premium will be reduced, but it sounded promising.
rajnathani 7y ago
It seems that now they are also providing some money (credits) back: https://www.cnbc.com/2020/04/08/warren-buffetts-geico-offers-2point5-billion-in-credits-as-coronavirus-cuts-driving.html https://www.cnbc.com/2020/04/08/warren-buffetts-geico-offers...
- odysseus 7y ago
  Yep, details at: https://www.geico.com/about/coronavirus/ https://www.geico.com/about/coronavirus/ The credit will be coming off your policy renewal bill.

Sherl 7y ago

I want to tell you all AAA California is being scummy and you need to call them to get a refund credit to be posted into your account.

surge 7y ago

It's worth mentioning some states have caps on how much insurance can make, in other words if they're not absorbing a base amount of risk, they have to give the money back because people are paying too much to insure against something where the risk is low. I've gotten checks back from auto insurance before where they made too much money that year due to lack of payouts.

chrisseaton 7y ago
Ah that explains it. Otherwise doesn't a refund go against the whole idea of insurance? The idea is you pay a premium not knowing if you'll need it or not, and they take on all the risk if you do need it. If you ask for your premium back because you didn't need it you're missing the point of insurance.
- ceejayoz 7y ago
  Brand loyalty is a thing, too, though. "Allstate did me a solid when they didn't have to" is a pretty good PR move, especially if they're suddenly awash in cash due to reduced claims.
  - harikb 7y ago
    If it was just PR, companies will spend $10 on ads talking about it for every $1 they give away. Give credit to the regulation when it works - next time someone says regulation is bad.. remember this.
    - AnthonyMouse 7y ago
      For a mutual insurance company, what difference does the regulation make? Whether the customers get the money as a refund check or the mutual insurance dividend or lower premiums next period, they still get it. Even for a for-profit insurer, insurance is a fairly competitive market. They might have to give the customers the money anyway to keep them from defecting to the mutual insurance companies. Even if they didn't, that would make being in the insurance market more profitable, which would attract new competitors, which would drive down premiums/margins until the risk-adjusted return of becoming an insurance carrier was back where it was. In other words, in a competitive market the customer gets the money one way or another. This is a common occurrence with regulation. The regulation requires some good thing that would have happened regardless, the good thing happens and the proponents credit the regulation even though it was inevitable. Meanwhile you have a compliance cost, because it takes resources to keep track of the regulation and make sure you're complying with it even if it was the exact thing you were going to do anyway. That makes everyone poorer -- the compliance cost is the opposite of the windfall, so it makes it less attractive to compete in the insurance market and allows companies to pass on the compliance costs as higher premiums.

downerending 7y ago

Are there any specific statistics on the fall of payouts or traffic fatalities?

samfisher83 7y ago

Also some of these companies are mutual companies meaning they are owned by their policy holders.

unexaminedlife 7y ago

This is the kind of thing that will separate companies in the future. If you're a good corporate citizen consumers will notice in ways current generations don't. We don't notice in the numbers necessary for companies to change their behavior.

gjs278 7y ago
no it won’t. nobody is going to care after this. and you’d be a fool to not just use a broker for car insurance.

csours 7y ago

Anecdote: The few times I've driven in the last couple weeks I've noticed at least one person driving like they forgot how to drive. I don't know if everyone is just amazed that the streets are empty, or if people really have forgotten how to drive or what, but it's very eerie.

deleted 7y ago
[deleted]
dexterdog 7y ago
It's likely because people pay less attention when the roads are empty.
agumonkey 7y ago
it does trouble me, I don't know what to expect anymore (usually the flow of cars is a hint) and I also feel like the road belongs to me a bit
jetrink 7y ago
I noticed something similar. My theory is that the set of people who are unwilling to heed stay-at-home orders has a significant overlap with the set of people who are inattentive or reckless drivers. As a result, there is a disproportionate number of bad drivers still on the roads.
- tonyedgecombe 7y ago
  They probably have the Toxoplasma gondii parasite. https://en.wikipedia.org/wiki/Toxoplasma_gondii https://en.wikipedia.org/wiki/Toxoplasma_gondii
- hanniabu 7y ago
  Anecdotal, but I've had to still go to work and many of the people I see driving are old, like 60+ (lots of gray hair/ wrinkles).
- tristor 7y ago
  Corollary: The people who are willing to heed stay-at-home orders are more intelligent, and more intelligent people drive better.

desireco42 7y ago

Allstate is known for being an ethical and fair company. I work for their subsidiary and this is normal behavior for them. I am proud they are doing this.

saagarjha 7y ago
Well, that depends. Like most large companies, there's a "Criticism" section for it on Wikipedia: https://en.wikipedia.org/wiki/Allstate#Criticism https://en.wikipedia.org/wiki/Allstate#Criticism

pgrote 7y ago

Insurance companies are coming out of the pandemic relatively unscathed, because the pandemic isn't a typically covered event for business interruption?

jmeyer2k 7y ago
More importantly, pandemics are correlated risks, so the insurance company is not reducing any risk by insuring against it. If they did, everyone's insurance rates would go way up after a pandemic in about the same amount as they would have to pay for the pandemic.
- throwawayjava 7y ago
  As it is, insurance companies are both not insuring against it and also teeing up to massively increase rates [1]. Why only dip once when you can dip twice? [1] https://www.fool.com/investing/2020/03/26/health-insurance-premiums-could-rise-by-over-40-du.aspx https://www.fool.com/investing/2020/03/26/health-insurance-p...
  - ceejayoz 7y ago
    There are lot of types of insurance that exclude pandemics, but health insurers are unlikely to be one of them.
jbeam 7y ago
P&C actuary here. Can't speak for life or health insurance. The first part of this statement is definitely not true ("Insurance companies are coming out of the pandemic relatively unscathed"), but the second part ("pandemic isn't a typically covered event for business interruption") is. When it comes to underwriting margins (i.e. premium less losses less expenses) then the impact of the pandemic is very dependent on the line of business: * Auto is actually benefiting greatly, for the obvious reason that there is an unprecedented drop in the number of people on the roads. On the other hand personal auto, as a legally mandated cover, is highly regulated. I imagine a lot of these profits will be given back to consumers, as we see here. Any combination of the company being incorporated as a mutual, a publicly traded company not wanting to lose face in comparison to a mutual, or regulators forcing everyone's hands. * Business Interruption is offered alongside property insurance. The general idea is that you can recoup lost income while you rebuild after a tornado knocked down your store. It was never intended to sustain the shutdown of the entire world economy. Insurers recognized this risk after the SARS epidemic, and in response the Insurance Services Office (ISO) which provides the industry with standard policy forms for typical exposures explicitly added exclusions for virus and bacteria into the form. It is unclear if it would be covered regardless, as the usual requirement for BI payouts is "physical damage from a covered peril." Frankly, if it wasn't excluded, there would be widespread fears of insolvency throughout the sector right now. But there are plenty of other exposed lines: * Contingencies policies, which usually means some sort of event cancellation, is going to get rocked. Some have pandemic exclusions but usually the larger ones don't. Munich Re and Swiss Re are on the Tokyo Olympics tower for a combined $800 million, and the total value insured for that tower is definitely in the billions. There are plenty of other ones that are not making headlines that will make this a huge headache. * Medical malpractice insurance: more patients and more death means more lawsuits. Whether or not the lawsuit is justified does not remove an insurer's duty to defend. * Directors and Officers policies will also take a hit. Shareholders file lawsuits whenever share prices go down (duty to defend again), and companies that royally screwed up (e.g. cruise ships) are likely to actually pay out. * Workers' Compensation premium, which is calculated retrospectively based on average payroll over the period of the policy, is going to drop significantly. That is an impact to the "top line" (i.e. premium) but still a large hit to investment float. Also, after 2008 we saw an increase in claims as people were using WC to recoup income rather than reenter the job market. There will also be claims about getting COVID on the job. Hard to say how many of those will be successful (hard to prove), but I think it is safe to say that it will pay out for a lot of medical workers. * Mortgage Insurance: massive unemployment = defaults. Probably some others but you get the point. This is far reaching. And I haven't really touched investment income. For a lot of lines of business there is a focus on "top line" growth rather than "bottom line" as it is assumed that the premium float will provide investment income. P&C insurers have liabilities that typically pay out over a relatively short period of time compared to life insurers (we call this "short tail" versus "long tail"). That means that the majority of investment is in bonds, which haven't had as bad a hit as equities, but still have hurt except in the very safest investment classes. There is a real fear of corporate bond defaults so a lot of holdings have lost value.

deleted 7y ago

[deleted]

yborg 7y ago

State Farm is in theory a mutual company, i.e. owned by its policy holders. Years ago (like more than 20) I used to get the occasional profit distribution check, but that stopped happening in the 2000s. Apparently they discovered the concept of Hollywood accounting.

AnthonyMouse 7y ago
Maybe they just started using the money to charge lower premiums.
- deleted 7y ago
  [deleted]
hnu0847 7y ago
Amica pays an annual dividend whose percentage varies based on the number and types of policies you hold with them. That said, they weren't mentioned in the article and so far I haven't seen anything related to a rate reduction.
- pinko 7y ago
  Amica is a mutual insurance company, but the dividend is paid only if you're a mutual policyholder, as they now also offer non-mutual policies at lower rates, without the dividend. However, I believe the dividend is based on the company's claim payouts over the preceding 12 months, rather than number and types of policies you personally hold with them -- that can provide a discount on your policy rates, but not the dividend rate. So I would expect a larger-than-usual dividend from their auto insurance this year, assuming their paid claims are less than forecasted.
  - hnu0847 7y ago
    You are correct that the dividend amount also depends on Amica's claim payouts for the preceding 12 months, however I checked my statement from last year's payout and it lists a dividend percentage for each type of policy they sell, ranging from NONE (Automobile Liability and Physical Damage, Homeowners (Workers Comp)) to 20% (Boat/Yacht, Personal Umbrella Liability), so this seems to be a separate factor from their claim payouts for the preceding 12 months and also separate from the multi-policy premium discounts they offer. I will also add that these rates can also vary by state, as the statement specifically says "our latest rates in Texas". Based on what I'm seeing I wouldn't expect an increase in the annual dividend due to fewer car accidents, but a premium reduction might be possible.

smaili 7y ago

Interesting tidbit at the at end of the article I thought others may enjoy: > Allstate reports that while accidents are less frequent, the crashes that do occur seem to be more severe. The likely culprit? Speed: Drivers can go faster than usual on pandemic-emptied streets.

floatingatoll 7y ago
Drivers who drive rudely are being way more rude around here now that the roads are empty. Like, they used to hit 35mph because there was traffic obstacles in their way, and now they’re hitting 45mph (in our 25).
- smaili 7y ago
  45 in a 25? That's incredibly aggressive - and scary!

jbigelow76 7y ago

My wife and I were already considering dropping my car from the two car policy we have when it renews next month. I personally think we'll be in a "shelter in place" mode through most of June at the earliest and with us both working remote and daycares being shut down here in my part of TX the need to cover two cars no longer exists. If I need to re-add the car to the policy in July or August at least I'll have saved maybe a few hundred bucks, but if our insurer joins this trend the hassle of dropping might not be worth it.

gambiting 7y ago
But...if you take it off the policy, there's still risk of having it stolen or it burning down, that then obviously isn't covered. And...few hundred bucks from June to August?? How expensive are your policies? I'm paying £400(~$500) per year for a fully comprehensive policy on a brand new Volvo XC60, dropping the policy for a month or two would save me so little money it's almost not worth the hassle.
- DanBC 7y ago
  Also, in the UK cars have to be insured unless they're SORNed, and that's not something most people would not bother with for a couple of months.
- jbigelow76 7y ago
  But...if you take it off the policy, there's still risk of having it stolen or it burning down, that then obviously isn't covered. You do have a point, I'd be pretty pissed if it was stolen. It's sitting in my driveway and not in a garage so chances of spontaneous combustion are pretty low :)

andy_ppp 7y ago

It begs the question - does lockdown mean coronavirus is a net "positive" on lives lost, as people will be saved not driving, going out, being stressed, even catching Flu etc. I haven't seen anything about this but the question is worth asking. Also worth saying I fully agree with the lockdowns simply because of exponential growth.

Shivetya 7y ago
Estimates are 38,000 for 2019 in vehicle related deaths, this does not include all the others who suffered injuries at any scale. However the virus won't reduce this by the number it is likely to take, I am sure someone could work it out epidemics should be measured against the death rate from all causes across a year. However immediate numbers are much more newsworthy and allow political interest to drive whatever message they want from them. so if you want to find a silver lining there are always ways to mince numbers. to be honest looking for a silver lining is much more productive than the panic, doom, and gloom, efforts
- DangitBobby 7y ago
  > to be honest looking for a silver lining is much more productive than the panic, doom, and gloom, efforts It certainly is not. The "panic, doom, and gloom, efforts" are what drove us to take action in the face of unrelenting baseless optimism that would have single handedly killed millions. Being afraid of something is not the worse thing that can happen! Please stop acting like it is!

jl2718 7y ago

They would have to lower rates otherwise by law, and presumably take a loss next year. If they lower rates too much, they will get way too many short-term customers. If they don’t lower enough, they will lose many long-term customers. This is a half-measure.

jimbob45 7y ago

Just got a ~15% refund through Esurance. For reference, I’ve never been involved in any sort of insurance claim.

carfacts 7y ago

Called this a few weeks back: Ask HN: Will auto insurance premiums go down? https://news.ycombinator.com/item?id=22719791 https://news.ycombinator.com/item?id=22719791

madum0 7y ago

I made all 11 first levels with 3 stars, except #3... I can't get a better score than 16 moves. Still chasing that eureka moment. I enjoy it thanks :)

madum0 7y ago
AAWWW YEAH FINALLY GOT IT! 15 MOVES BABY!

sitkack 7y ago

The lives saved from reductions in pollution and crashes is at this point larger than the covid19 death toll. We already had a pandemic that got displaced by a new one.