Auto insurance

Auto insurance industry officials respond to calls for COVID-era refunds

Re: “Time to fix the Illinois auto insurance market”, Joe Cahill, (July 22):

Recently, the Illinois Department of Insurance issued a comprehensive financial information “data call” regarding Illinois-specific auto insurance premium information with the intent of releasing this information on an Illinois-specific basis. the insurer. Despite the lack, in our view, of proper legal authority to release this information in a manner that protects the privacy and confidentiality of individual insurers’ information, the Department has compelled insurers to provide this information; and insurers, despite their apprehensions about the lack of confidentiality and privacy normally granted to them, have done their best to comply with this directive and have provided relevant financial data for the years 2019-21.

The release of the data has prompted calls from anti-insurance industry critics for retroactive auto insurance premium refunds, in addition to the more than $14 billion in premium and credit refund programs that have been provided by insurers to their customers in 2020 during the COVID-19 pandemic crisis. Additionally, insurers have given more than $220 million in philanthropic contributions during COVID to support local communities.

The criticisms focus only on the short-term period when driving has declined, but it is important for stable and accurate insurance pricing to do what insurers and most regulators have always done and examine long-term trends affecting driving and loss patterns. The volatility of responses to short-term trends would create instability for both consumers and insurers. This could mean uncertain fluctuations for consumers and the inability to rely on stability for budgetary purposes.

An analysis of motorway driving data shows that at the start of the pandemic, miles driven fell sharply but quickly returned to pre-pandemic levels. Also, driving habits have changed during the pandemic and they continue to show that more dangerous driving habits have emerged.

Although people are driving less during the worst of the pandemic, those on the road are driving more dangerously. The 2020 annual traffic accident data from the National Highway Traffic Safety Administration of the United States Department of Transportation shows that 38,824 lives were lost in traffic accidents nationwide. This is the highest death toll since 2007.

In Illinois, deaths increased by 18.3% from 2019 to 2020; this increase was more than double the national average of 6.8%.

It is essential to note that, compared to other states, Illinois auto insurance consumers continue to benefit from a healthy and highly competitive market. Even though 88% of Illinois’ population lives in urban areas and the state is the third most populous city in the nation, Illinois drivers on average only pay the 33rd highest price among the States and DC for personal auto insurance.

This is extremely beneficial to Illinois auto insurance consumers because, as the National Association of Insurance Commissioners explains, “Auto premiums tend to be higher in urban areas. a higher percentage of population in urban areas will tend to have higher average premiums.”

On average, Illinois personal auto insurance premiums have long been in the middle tier (or middle third) of the country. Its latest (2019) full coverage annual premium of $1,017, reflecting liability and physical damage coverages (collision and all perils), is 15.5% lower than the national average of $1,204.

There are approximately 230 personal auto insurance companies in this state, with no single insurance company or group dominating the market. The Herfindahl-Hirschman Index, a commonly accepted measure of market concentration, indicates that the Illinois personal auto insurance market is not concentrated and highly competitive. With an index of 948, the personal auto insurance market in Illinois is healthy in which many different companies operate to provide a wide range of auto insurance products and services to consumers.

Insurers strongly encourage drivers to minimize their risk by avoiding risky driving behaviors that could lead to an accident. Insurers will continue to advocate for better infrastructure, including reliable supply chains for essential auto parts and safer roads, to keep insurance premiums affordable for consumers.

The American Property Casualty Insurance Association, Illinois Insurance Association and National Association of Mutual Insurance Companies remain committed to additional measures to help control consumer costs, such as reforms for abuse in court, auto body repair and medical billing.

Vice President of Government Relations
American Property and Casualty Insurance Association

Executive Director
Illinois Insurance Association

Regional Vice President of State Affairs
National Association of Mutual Insurance Companies