Lawmakers and consumer advocates are renewing a call to require auto insurance companies to reduce monthly premiums, arguing that the industry has reaped big profits during the pandemic and drivers can use a break on their bills.
State Sen. Barry Finegold, D-Andover, is among those demanding the state Division of Insurance to review insurance rates, premiums and losses, and require insurers to refund premiums out of their excess profits.
“Drivers are effectively being punished for heeding public health guidelines and staying off the roads,” Finegold said. “Auto insurance companies have made windfall profits during 2020 because of reduced driving activity. As bills pile up, residents deserve and need additional relief on their insurance premiums.”
Finegold and other lawmakers wrote to Insurance Commissioner Gary Anderson in December with a similar request but said he hasn’t responded.
A spokesperson for the Division of Insurance said the agency has received the letter and “remains committed to ensuring auto insurance rates are fair and appropriate.”
Consumer advocacy groups say business closures and stay-at-home orders over the past year forced many commuters to work from home. There have been fewer crashes and insurance claims as a result.
“We know there are less people on the roads, which means less crashes, and insurance companies are reaping the profits,” said Deirdre Cummings, a legislative affairs director at the Massachusetts Public Interest Research Group. “The regulators need to investigate this to ensure that consumers aren’t getting ripped off.”
The number of accidents statewide fell roughly one-third in November and December compared to the same months in 2019, according to the state Department of Transportation. Overall there were more than 40,000 fewer accidents last year than in the prior year.
Attorney General Maura Healey’s office last month asked regulators to reduce personal automobile insurance premiums by at least 25% for new, renewal and in-force policies.
Healey’s office said the data show that the frequency of claims fell by more than 50% for liability coverage and 70% for collision coverage between 2019 and 2020.
“These windfall profits for the insurance industry come at a time when many Massachusetts families are facing severe financial distress,” Glenn Kaplan, chief of the attorney general’s Insurance and Financial Services division wrote. “They also show that the modest discounts offered by insurers this past spring were insufficient.”
Many private auto insurers voluntarily offered rebates and discounts to individual policyholders, ranging from 10% to 30%, to reflect a decline in claims.
But of 71 leading companies, just 18 gave customers credit for at least 50% of one month’s premium, according to a recent report by MassPIRG. Only eight refunded customers at least one month’s premium, the group said.
Several states, including Michigan and California, have directed insurers to reduce rates or provide rebates to reflect lower risks.
Massachusetts deregulated the auto insurance industry in 2008, allowing insurers to set their own rates. But Finegold said the industry is still regulated, and the state can intervene if rates are deemed too high or if companies are not operating in good faith.
“There’s a lot of people out there who are hurting,” he said. “As they did last year, they should give relief to consumers and we hope the commissioner will implore them to do that.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at email@example.com.