Geico Auto Insurance Windfall from Covid-19 Mississippi Class Action

During the shutdowns for Covid-19, many people stopped commuting to work and made fewer trips away from home for shopping, eating out, socializing, or entertainment. The complaint for this class action alleges that this resulted in a windfall for Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company because fewer car trips meant fewer accidents. The complaint contends that Geico companies should refund some of the premiums they charged customers during this time.

The class for this action is all Mississippi residents who bought automobile, motorcycle, or RV insurance from Geico covering any portion of the period from March 1, 2020 to the present.

The complaint alleges that the decreases in driving have made the premiums charged by auto insurance companies “unconscionably excessive.” It says, “One published report calculates, very conservatively, that at least a 30% average refund of paid premiums would be required to make up for the excess amounts paid by consumers for just the period between mid-March 2020 and the end of April 2020.”

Geico did offer a “Geico Giveback” program in 2020, but the complaint calls it “woefully inadequate” because it provides for only a 15% discount or credit only on new or renewal policies. The complaint claims, “It does not apply to the premiums that the customer has already paid or will continue to pay on policies already in place at the start of the Covid-19 pandemic[.]”

Mississippi, like many other states, responded to the pandemic by imposing measures for social distancing to keep Covid-19 from spreading. These included the closing of schools, bars, restaurants, and casinos, cancellations of indoor gatherings of twenty or more people, and cancellation of outdoor gatherings of more than fifty people. In addition, a stay-at-home order required that Mississippians remain at home unless they had to go out for essential activities or for other specific reasons. The order was extended twice, until June 1, 2020, and not all restrictions were lifted even then.

These measures meant that people drove far less than they normally did. As a result, there were fewer cars on the road, which resulted in fewer accidents, and thus fewer payouts for insurance companies like Geico. The complaint contains a chart for the reductions in driving in March and April 2020 as compared to a January 2020 average, showing that the decrease in miles traveled for each week of that period ranged from 25% to 56%. The complaint surmises that the decreases continued in May, June, and July of 2020 and “will continue for the foreseeable future.”

The complaint claims, “Auto insurance rates, including those set by Geico, are intended to cover the claims and expenses that they expect to occur in the future, extrapolated from historical data.” The stay-at-home orders, the complaint says, quoting one report, made these projections “radically incorrect overnight.”

Article Type: Lawsuit
Topic: Insurance
Tags: Auto Insurance, Covid-19 Related, Insurance, Insurance Rates