INDIANAPOLIS – Indiana Department of Insurance Commissioner Stephen W. Robertson recently approved requests from several auto insurance carriers to offer refunds, credits and other programs for consumers due to the COVID-19 pandemic. The total estimated amount of savings to consumers is over $129 million dollars. Indiana is already one of the states with the lowest auto insurance rates.
“I want to personally thank all of the auto insurers who have stepped up to help Hoosiers by offering discount, refund and credit programs during this pandemic,” said Commissioner Robertson.
A list of companies offering a program for their customers due to the COVID-19 pandemic can be found on the Indiana Department of Insurance COVID-19 Actions web page under Auto Insurance Rates or below:
Automobile Insurance Rates
As Indiana residents are currently under a stay-at-home order issued by Governor Holcomb, the Indiana Department of Insurance (IDOI) is receiving inquiries concerning automobile insurance rates during this time of reduced driving activity. Some companies have chosen to provide premium refunds to their policyholders as claims experience is expected to improve temporarily while many Hoosiers shelter in place. Miles driven, among many other factors, is commonly used as a component in determining the premium paid by individual policyholders. Generally, the anticipated miles driven is declared at the time of application for coverage. The applicant may also be assigned a usage classification, such as pleasure class or commuter. Pleasure class is often designated for those who do not commute on a regular basis. Commuting class is assigned for those who do commute on a regular basis and there may be multiple categories for commuting class based upon distance of the commute. Some companies have implemented usage-based (telematics) products which allow insurance companies to monitor driving behavior of individual policyholders, including miles driven, and adjust rates accordingly.
It is important to note that each company that provides automobile insurance to Indiana policyholders has their own unique rating methodology. These rating formulas can vary greatly in the impact that miles driven has on an individual policyholder’s rate. Some companies use rating formulas that do not rely heavily on miles driven.
As claims experience is expected to improve during this unprecedented period of social distancing, the IDOI anticipates that the improved experience may be reflected in future rate filings for automobile insurance products. The decreased number of claims will affect the actuarial rate indications that insurers calculate in the future although how much impact it will have depends on how long the directive lasts and whether and how quickly policyholders go back to their prior driving routine once the directive is lifted.
Insurers generally use their claim experience on policies they have written compared to the premium for those policies to calculate a loss ratio. They then compare that loss ratio against an expected or breakeven loss ratio to determine if rates, on average, should increase, decrease or remain the same. An insurer’s expenses such as agent commissions and overhead are taken into account in determining their breakeven loss ratio. Insurers typically rely on anywhere from 2 to 5 years of claims experience in their actuarial projections. Insurers also will make short term rate change decisions on factors other than actuarial estimates, especially competitive information.
Miles driven is one of many variables that affects insurers overall claim experience. Others include:
- Driver behavior – e.g. defensive vs reckless driving
- Vehicle safety features
- Road conditions
- Traffic density
While some Indiana auto policyholders will be provided with immediate relief in the form of premium refunds or credits toward insurance payments due, others may benefit at a later date due to adjustments in overall auto insurance rate levels.
The following carriers are offering a program for their customers due to the COVID-19 pandemic:
- AAA (Auto Insurance Exchange, Auto Club Group and Member Select) – Premium Refund
- Acuity Insurance – Auto Insurance Reduced-Driving Discount
- Allstate – Shelter-In-Place Payback
- American Family Insurance – Premium Relief
- Amica – COVID-19 Auto Premium Relief Program
- Auto Owners Insurance – Safe at Home Refund
- Chubb – Premium Credit
- Cincinnati Insurance Company – Stay-at-Home Personal Auto Credit
- Country Financial – Auto Refund
- Electric Insurance – Premium Refund
- Farmers Insurance – Premium Credit
- GEICO – GEICO Giveback Credit
- Grange Insurance – Auto Premium Refund
- Haulers Insurance – Auto Insurance Refund
- Indiana Farm Bureau Insurance – Premium Relief
- Kemper (Unitrin Safeguard) – Premium Credit
- Liberty Mutual – Personal Auto Customer Relief Fund
- Motorists Mutual (now part of Encova Insurance) – Policy Credit for Personal Auto Insurance
- Nationwide – Premium Refund
- Ohio Mutual Insurance Group – Personal Auto Premium Credits
- Pharmacists Mutual – Personal Auto Credit
- Progressive – Apron Relief Program
- SECURA Insurance – Auto Premium Refund
- Selective Insurance – COVID-19-Related Premium Credit
- Shelter Insurance – Relief Payment
- State Farm – Good Neighbor Relief Program
- Stillwater Insurance – Auto Credit
- The Hanover Insurance Group – The Hanover CARES Refund
- The Hartford Insurance – COVID-19 Personal Auto Payback Plan
- Travelers – Stay-at-Home Auto Premium Credit Program
- USAA – Financial Relief
- Westfield Insurance – Premium Relief for Personal Insurance Auto Customers
As a policyholder, you should first contact your agent or insurance company with any questions about your insurance policy.