Facts about insurance losses and highway data trends
SACRAMENTO - The American Property Casualty Insurance Association (APCIA) issued the following statement this week in response to California Insurance Commissioner Ricardo Lara’s bulletin calling for additional policyholder premium relief from auto insurers.
“Insurers understood the urgency of helping businesses and individuals recover from the unprecedented crisis caused by the COVID-19 pandemic and took immediate action to adapt premiums when driving was reduced in 2020,” said Mark Sektnan, APCIA’s vice president. “Insurers continue to work with policyholders to adjust their policies in 2021. Policyholders are encouraged to communicate any reduction in their driving habits to their insurer to discuss adjustments in premiums if those changes have not already happened automatically.”
In 2020, auto insurers voluntarily provided more than $14 billion in refunds and credits to policyholders for reduced driving during the pandemic. In addition, the industry has deployed more than $220 million in philanthropic contributions during COVID-19 to support local communities.
“Insurers will review Commissioner Lara’s bulletin and report the appropriate data to the California Department of Insurance,” said Sektnan. “Insurers are always looking at their book of business to manage their risk and provide accurate rates to their policyholders in a competitive marketplace. Unfortunately, highway data demonstrates some dangerous trends.”
The National Highway Traffic Safety Administration reported that traffic fatalities increased significantly in the first nine months of 2020, despite overall vehicle miles traveled decreasing during the COVID-19 pandemic. Now, various sources have indicated that miles driven have been increasing over the last few months and are approaching pre-pandemic levels. According to the Federal Highway Administration, 8.6 percent fewer miles were driven in September 2020, marking the smallest monthly decline since the peak of the pandemic.
“The 2020 increase in road fatalities suggests that despite improved automobile technologies and auto safety laws, driver behavior is deteriorating at a rapid pace,” said Sektnan. “Trends in reckless driving could prove even more fatal as traffic volume starts to return to pre-pandemic levels. These dangerous trends, combined with increasing litigation, medical, and auto repair costs impact the marketplace.”
Additionally, insurers are paying major catastrophe claims from 2020. Current estimates indicate that insured pandemic losses will be more than $100 billion globally. The industry is helping communities rebuild after prolonged social unrest and handling an estimated $2 billion in insured losses, almost twice the previous record suffered in Los Angeles in the 1992 period. In addition, 2020 was a record year for natural catastrophe damage with U.S. insured losses expected to total $67 billion from record-breaking hurricanes and devastating wildfires.