Auto insurance

The fight against COVID auto insurance data could pave the way for a broader regulatory fight in Illinois

A consumer advocacy group says newly released data shows auto insurers have been making excessive profits during the pandemic — and that’s proof Illinois needs to regulate the industry more tightly.

Insurers fought against the release of COVID-era auto premium data, which was requested by a coalition of consumer groups and state lawmakers. They wanted to know how insurers made money when people started driving less because of COVID. The insurers – speaking through their trade groups – argued that the Illinois Department of Insurance’s request for data was “not supported or sanctioned by any statute or regulation”.

Eventually the insurers agreed and the data was released on July 1.

“It basically confirmed what we already knew: when you looked at the premiums that these insurance companies took in, and you compared them to their losses, and you compared 2020 to 2019, they made big windfall profits,” said Abe Scarr, director of Illinois PIRG. (Public Interest Research Group). “Much higher than they would have needed in terms of earnings just to stay where they were in 2019, which was a very profitable year by the way.”

The Illinois PIRG says its preliminary analysis shows “insurance companies could still owe Illinois auto insurance customers $896 million in pandemic relief.” Looking at Bloomington-based State Farm and the other three largest companies, Illinois PIRG says they “charged customers $280 million more than needed to maintain profitability in 2019, even after accounting for the $220 million dollars they refunded to customers in 2020.”

The Chicago-based American Property Casualty Insurance Association, an industry trade group, said the Illinois PIRG is “incorrect in its analysis of what has happened in the US auto insurance market. ‘Illinois as the COVID-19 pandemic swept the country’.

“The data shows that insurers took appropriate action immediately following shutdowns related to the COVID-19 pandemic and issued more than $14 billion in premium reductions as miles traveled decreased. However, this decline was short-lived and miles traveled quickly rebounded to pre-pandemic levels,” APCI told WGLT in a statement.

State Farm says it has returned about $2 billion in premiums to auto customers and reduced premiums by an average of 11% nationwide ($2.2 billion more over six months).

“They gave a decent refund compared to Allstate, their biggest competitor,” Scarr said. “So better, maybe, but still not good enough in our opinion.”

The APCI Group also said that “instituting further premium discounts now would be unwise as driving conditions have changed dramatically since the start of the pandemic”.

“Data shows there are more deaths, and inflationary pressures have driven up costs associated with medical care and vehicle repair. These events drive up the cost of insurance,” the association said.

The fight over auto premium data could be the precursor to a larger battle over how insurance companies are regulated in Illinois. When it released the COVID premium data, the Illinois Department of Insurance said it would “pursue legislation with members of the General Assembly to increase transparency and accountability in its work regulating premiums.” insurance companies”.

“We continue to demand transparency for consumers, and we will not allow companies to withhold information to serve their own interests instead of doing what is best for Illinois insurance consumers,” said IDOI director Dana Popish Severinghaus, who declined a request for an interview with the WGLT.

The Illinois Department of Insurance has less regulatory reach and power than similar agencies in other states, Scarr said. In many other states, regulators must approve the rate increase. In Illinois, all insurers have to do is notify the Department of Insurance, Scarr said.

One factor in this power dynamic is that Illinois is home to the headquarters of two of the nation’s largest insurers: State Farm and Allstate.

“We all know the industry is very strong in Illinois,” Scarr said. “But no one has really tried for at least a decade to challenge that and put the issue on the table. So I think it’s worth seeing what kind of response we get.

Scarr said the Illinois PIRG would support IDOI’s efforts to clarify its legal authority to request and release data obtained by insurers. Illinois PIRG would also like to see Illinois become a “pre-approval” state for rate increases, giving regulators a chance to review rate hikes before they are implemented, Scarr said. The group would also like to see state law amended to explicitly prohibit excessive or unfair rates, as other states have done, he said.