Consumer Advocates Applaud California for Moving to Protect Consumers from Pandemic Price Gouging

Andy Spears
3 min readMar 14, 2021

The Consumer Federation of America (CFA) and Center for Economic Justice (CEJ) praised California Insurance Commissioner Ricardo Lara’s action to require insurers to give back COVID windfall profits by sending additional auto insurance premium refunds to California customers. The California Department of Insurance is also requiring ongoing refunds for consumers as long as the pandemic keeps driving and accident rates low.

“Since March 2020, consumers have been driving much less than they were before the COVID-19 pandemic, and that is still true today. As a result, crashes and claims are well below normal, which means massive insurer profits,” said J. Robert Hunter, CFA’s Director of Insurance and a former Texas Insurance Commissioner. “Commissioner Lara’s announcement is most welcome and will result in additional money being returned to California drivers. Other Insurance Commissioners should be ashamed that they have done so little; they should follow suit and stand up for the residents of their states,” he continued.

CFA and CEJ put regulators on notice in March 2020 of impending windfall profits for auto insurers due to dramatically reduced driving, fewer cars on the road, fewer accidents, and fewer auto insurance claims. The groups repeatedly pressed commissioners to require insurers to give up COVID windfall profits and return premium to consumers. The groups calculate that since the pandemic began, auto insurers nationwide have seen about $25 billion in fewer claims, while the premium relief from insurers has been half or less than that. In addition, miles driven, cars on the road and auto claim frequency are still down from pre-pandemic levels as more businesses have decided to move workers from offices to working from home.

State Farm Announces California-Only Refunds of 18% for June Through December 2020

Wednesday, State Farm announced that it would be returning an additional $400 million to California customers as a result of “better than anticipated claim results.” According to State Farm, approximately 3.5 million Californians will receive checks refunding 18% of the premium they paid between June and December 2020. The company has not announced additional refunds for drivers in any other state, and, the consumer groups noted, no other state insurance commissioner has required companies to provide additional refunds of windfall profits.

--

--

Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .