INSURANCE INDUSTRY WINDFALL?
With a radical decrease in accidents, crime, and human activity, insurers are poised for windfall profits…
For most people, insurance is a means of personal risk management, a way to provide a modicum of certainty and protection from major financial losses. In exchange for this protection, you are charged a premium. Theoretically, premiums are calculated on an actuarial basis that ensures the premium pool will statistically cover all of the projected or anticipated losses plus the operational costs and profit of the insurer. Including the multi-million dollar salaries of the senior executives who guide these massive enterprises.
The surprise over “voluntary” premium refunds…
I was pleasantly surprised when my insurance company “voluntarily” offered a premium discount to compensate for the lack of mileage during the “great California lockdown.” That was extremely thoughtful and considerate until I found that the greedy trial lawyers may have been planning a class action lawsuit to recover “windfall dollars” earned by the insurers when accident payouts drastically decreased. A settlement that would likely raise up to a billion dollars in settlement costs and which might earn the lawyers hundreds of millions of dollars in fees. In addition to the trial lawyers, we are seeing consumer advocacy groups like the Consumer Federation of America and the Center for Economic Justice petitioning state insurance regulators to demand that they share their cost savings and windfall profits with their premium payers.
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From the Auto Club of Southern California... The current crisis over the past few months has impacted everyone, and we continue to all work together to stop the spread of COVID-19. Our everyday lives have changed in ways we never imagined, and many of our members, like you, have been staying home, driving less, and may be struggling to make ends meet. We stand by our slogan, "We're Always with You," and in these uncertain times, we are glad to be there for you by providing legendary service and some financial relief. I'm pleased to announce you will receive a 20% premium refund in the form of a Policyholder Savings Dividend for the time your policy was in effect from March 16th to May 15th. A check for your dividend is expected to be sent out by the end of May. You do not need to take any action to receive your dividend. We are able to provide this return of premium since our member insureds have been driving less and therefore have been involved in fewer accidents. We hope this will help ease some of the financial difficulty you may be facing. Across the country, our team of dedicated professionals are committed to providing you the valuable services you've come to expect from us. Thank you for choosing us to provide for your auto insurance needs. Be safe and stay healthy. |
However, in California, insurance is highly regulated and politicized, and sometimes an instrument of governmental policy (pun intended).
California has been struggling for years as a consequence of their environmental policies and their subsidizing electric vehicles which resulted in a large decrease in tax revenue at the gas pump. So the progressive socialist democrats came up with another sneaky plan. A plan which enhances California’s surveillance activities, increases tax revenues, and allows the insurance companies to increase premiums. The concept is simple: you will pay your gas taxes and insurance premiums which would be calculated on the basis of actual miles driven – monitored by a GPS-enabled tracking system that could interrogate and transmit data from your vehicle to state-accessible servers. Allowing the state to increase tax revenues, charging more for driving in congested areas, automatically bill for toll-road access on the state’s “freeways,” and allow insurers to determine accident fault algorithmically and increase premiums.
Some possible trends…
An extension of the mandatory lock-down period by voluntary restrictions on activities.
Increased usage of private vehicles, especially by the elderly and those with chronic medical conditions, to offset the risks of using public transportation.
Lower oil prices may equate to more affordable driving and longer trips, possibly with the exception of California where gas prices also depend on state-mandated gas blends and restricted refining capacities.
An increase in erratic or drunk driving by uninsured illegal aliens who are said to form much of the agricultural, hospitality, construction, and service workforce.
Speeding on near-empty roads which are relatively free of traffic, even during the rush hour.
An increase in “driving under the influence” as individuals self-medicate to reduce the increasing anxiety of uncertain times.
New car sales may decrease due to less wear and tear on aging vehicles.
Consumers may prioritize spending to decrease insurance coverage and premium costs to increase the availability of “emergency funds.”
Bottom line…
We don’t know what we don’t know, but a number of things are certainties: death, change, taxes, and those who benefit politically and financially from disasters.
-- steve
“Nullius in verba.”-- take nobody's word for it!
“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw
“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius “A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell “Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar “Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS