USAA Auto Insurance Covid-19 Windfalls California Class Action

This class action claims to want to prevent a group of auto insurers from “unfairly profiting from the global Covid-19 pandemic.” The companies include United Services Auto Association, USAA Casualty Insurance Group, USAA General Indemnity Company, and Garrison Property and Casualty Insurance Company Group, which the complaint alleges have profited from the pandemic because of the reduction in driving and consequently fewer accidents requiring insurance payouts.

The class for this action is all California residents who bought personal auto insurance from USAA covering any portion of the time between March 1, 2020 to the present.

In March 2020, various states began undertaking social distancing measures, including closing schools and non-essential businesses and promulgating stay-at-home orders, to slow the spread of the pandemic.

The complaint alleges, “While many companies, industries, and individuals have suffered financially as a result of the Covid-19 pandemic, auto insurers like USAA have scored a windfall.” This is because, the complaint says, of “a dramatic reduction in driving, and an attendant reduction in driving-related accidents.”

The complaint tracks the decrease in miles traveled for each week between March 15 and April 25, seeing a decrease of 53% in the first week and more than 70% below normal for the other weeks. The complaint alleges, “Upon information and belief, decreases in pre-Covid miles traveled continued through the end of 2020 and well into 2021.”

The complaint refers to a different source, the Road Ecology Center at the University of California, Davis, to claim that “traffic collisions, including those involving injuries or fatalities, dropped by roughly half after California instituted its stay-at-home order.”

Insurance companies’ premiums are based on assumptions about future claims. The complaint quotes a joint report by the Center for Economic Justice and the Consumer Federation of America as saying, “Because of Covid-19 restrictions, the assumptions about future claims underlying insurers’ rates in effect on March 1 became radically incorrect overnight.”

The complaint 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 and the end of April of 2020.”

In April 2020, USAA said it would a portion of premiums to customers as credits on its statements. The other defendants in this case did the same. The complaint alleges that the dividends offered “represent[ed] approximately a 20% premium credit to personal auto insurance customers for three months’ worth of premiums.”

USAA later issued another premium credit to policyholders that the complaint says amounted to 10% of one month’s premium, and the companies say they later provided smaller refunds representing even smaller portions of one month’s premiums.

The complaint alleges that these refunds have been “inadequate to compensate” customers for the windfalls the companies have received, because they are nowhere near the above 30% benchmark estimated for even the early months of the pandemic.

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