Consumer Advocates Demand Halt to Auto Insurance Rate Hikes During Pandemic

More than 20 insurance companies are requesting rate hikes in California; consumer group claims some increases would hit essential workers the hardest

Light traffic is seen in this aerial view of the maze in Oakland.
Jane Tyska/Digital First Media/East Bay Times via Getty Images

A state-wide consumer advocacy group wants California Insurance Commissioner Ricardo Lara to suspend all auto insurance rate hikes until at least September 1. 

“At this unprecedented and calamitous moment in our history, you have the opportunity and responsibility to take decisive action to protect California’s consumer,” reads the letter to Lara from Consumer Watchdog.

The Los Angeles-based public interest group notes that Lara on April 13 ordered auto insurance companies to refund a portion of premiums paid in March and April because Californians are driving less and having few accidents. But Consumer Watchdog said at least 21 California insurance companies are still requesting rate increases. 

“Refunds and rate increases are incompatible,” the group wrote Lara. “You cannot simultaneously order premium refunds to customers and also approve rate increases.”

Some of the pending rate increases that Consumer Watchdog objected to came from companies like the California Auto Insurance Company (CAIC), Farmers Insurance Exchange, and Esurance Property and Casualty Insurance Company. The rate increases from those companies had been filed for approval from the state prior to the pandemic.

One of the proposed rate increases, according to the group, would require essential workers to pay more for their insurance than most other drivers. The group said another insurer withdrew its proposed rate hike on Monday, in the face of Consumer Watchdog’s objection. 

Consumer Watchdog’s executive director, Carmen Balber, said current rates are based on “pre-pandemic projections of accidents, losses, and claims that obviously do not reflect the unprecedented shutdown of virtually all economic activity in the state.” Balber said that means current rates are likely too expensive under Proposition 103, the state’s voter-approved insurance law. Consumer Watchdog said Prop. 103 clearly prohibits “excessive” rates.

California Insurance Commissioner Ricardo Lara told NBC 7 his attention on auto insurance rates in the state has been a priority.

“We are requiring insurance companies to report to the Department about how they are adjusting premiums, in order to make sure they are adequate and reflective of the times we are in now,” Lara said in an emailed statement. “Under California law (Proposition 103) approved by voters, the Department will not approve rate filings that are excessive, inadequate, or unfairly discriminatory.”

The Insurance Commissioner’s office would not comment on whether it planned to approve or deny the specific rate increases cited in Consumer Watchdog’s letter, but instead called attention to an April 13 bulletin the office issued requiring “insurance companies to return or credit an appropriate amount of premiums, not just for automobile insurance, but also for other lines of insurance where risk has dropped.”

To read Commissioner Lara’s full statement, click here.

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