
Some auto insurers are sending refunds to customers as crash rate falls - prostoalex
https://www.npr.org/sections/coronavirus-live-updates/2020/04/06/828187071/some-auto-insurers-are-sending-refunds-to-customers-as-crash-rate-falls
======
surge
It's worth mentioning some states have caps on how much insurance can make, in
other words if they're not absorbing a base amount of risk, they have to give
the money back because people are paying too much to insure against something
where the risk is low. I've gotten checks back from auto insurance before
where they made too much money that year due to lack of payouts.

~~~
taneq
This sounds like a great system on face value, but it also adds a perverse
incentive for insurers to drive _up_ repair costs (and hence their premiums)
in order to increase their own revenue. I've heard this effect put forward as
one reason that the U.S. medical system's prices are so overinflated.

~~~
triceratops
Fortunately (afaik) there are no in/out of network auto mechanics, and the
mechanics don't negotiate rates with the companies (again afaik). The barriers
to setting up an auto repair shop are also far lower than setting up a
hospital.

~~~
taneq
Insurance companies don't dictate 'preferred repairers' where you live?

~~~
reaperducer
Preferred does not mean mandatory. It is illegal for an insurance company to
require you to use their repair shop.

~~~
rickstones
No but some (UK insurers at least) write into the policy that you pay a lesser
excess if you use one of their preferred garages

~~~
taneq
Yep, same in Australia (at least last time I made an insurance claim, which
was something like 15 years ago).

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csours
Anecdote: The few times I've driven in the last couple weeks I've noticed at
least one person driving like they forgot how to drive. I don't know if
everyone is just amazed that the streets are empty, or if people really have
forgotten how to drive or what, but it's very eerie.

~~~
jetrink
I noticed something similar. My theory is that the set of people who are
unwilling to heed stay-at-home orders has a significant overlap with the set
of people who are inattentive or reckless drivers. As a result, there is a
disproportionate number of bad drivers still on the roads.

~~~
hanniabu
Anecdotal, but I've had to still go to work and many of the people I see
driving are old, like 60+ (lots of gray hair/ wrinkles).

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yborg
State Farm is in theory a mutual company, i.e. owned by its policy holders.
Years ago (like more than 20) I used to get the occasional profit distribution
check, but that stopped happening in the 2000s. Apparently they discovered the
concept of Hollywood accounting.

~~~
JonathonW
IIRC, the last time I checked (sometime back last year), State Farm actually
had spent the last few years running at an underwriting loss— they were taking
in less in premiums than they were distributing in claims. They were mostly
remaining solvent (and paying admin costs) through investment income.

Which is probably about how they should operate. As a mutual company, if
they’re routinely having to return profits to policyholders, their premiums
are too high.

~~~
icelancer
>> State Farm actually had spent the last few years running at an underwriting
loss

This is common amongst mutual and non-mutual companies. The spreads are pretty
thin and a few ticks of variance in one direction can drive down profits
massively. It's not a great business to be in.

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smaili
Interesting tidbit at the at end of the article I thought others may enjoy:

> Allstate reports that while accidents are less frequent, the crashes that do
> occur seem to be more severe. The likely culprit? Speed: Drivers can go
> faster than usual on pandemic-emptied streets.

~~~
floatingatoll
Drivers who drive rudely are being way more rude around here now that the
roads are empty. Like, they used to hit 35mph because there was traffic
obstacles in their way, and now they’re hitting 45mph (in our 25).

~~~
smaili
45 in a 25? That's incredibly aggressive - and scary!

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samfisher83
Also some of these companies are mutual companies meaning they are owned by
their policy holders.

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jl2718
They would have to lower rates otherwise by law, and presumably take a loss
next year. If they lower rates too much, they will get way too many short-term
customers. If they don’t lower enough, they will lose many long-term
customers. This is a half-measure.

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unexaminedlife
This is the kind of thing that will separate companies in the future. If
you're a good corporate citizen consumers will notice in ways current
generations don't. We don't notice in the numbers necessary for companies to
change their behavior.

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carfacts
Called this a few weeks back: Ask HN: Will auto insurance premiums go down?
[https://news.ycombinator.com/item?id=22719791](https://news.ycombinator.com/item?id=22719791)

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jbigelow76
My wife and I were already considering dropping my car from the two car policy
we have when it renews next month. I personally think we'll be in a "shelter
in place" mode through most of June at the earliest and with us both working
remote and daycares being shut down here in my part of TX the need to cover
two cars no longer exists. If I need to re-add the car to the policy in July
or August at least I'll have saved maybe a few hundred bucks, but if our
insurer joins this trend the hassle of dropping might not be worth it.

~~~
gambiting
But...if you take it off the policy, there's still risk of having it stolen or
it burning down, that then obviously isn't covered.

And...few hundred bucks from June to August?? How expensive are your policies?
I'm paying £400(~$500) per year for a fully comprehensive policy on a brand
new Volvo XC60, dropping the policy for a month or two would save me so little
money it's almost not worth the hassle.

~~~
jbigelow76
_But...if you take it off the policy, there 's still risk of having it stolen
or it burning down, that then obviously isn't covered._

You do have a point, I'd be pretty pissed if it was stolen. It's sitting in my
driveway and not in a garage so chances of spontaneous combustion are pretty
low :)

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desireco42
Allstate is known for being an ethical and fair company. I work for their
subsidiary and this is normal behavior for them. I am proud they are doing
this.

~~~
saagarjha
Well, that depends. Like most large companies, there's a "Criticism" section
for it on Wikipedia:
[https://en.wikipedia.org/wiki/Allstate#Criticism](https://en.wikipedia.org/wiki/Allstate#Criticism)

------
downerending
Are there any specific statistics on the fall of payouts or traffic
fatalities?

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madum0
I made all 11 first levels with 3 stars, except #3... I can't get a better
score than 16 moves. Still chasing that eureka moment. I enjoy it thanks :)

~~~
madum0
AAWWW YEAH FINALLY GOT IT! 15 MOVES BABY!

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pgrote
Insurance companies are coming out of the pandemic relatively unscathed,
because the pandemic isn't a typically covered event for business
interruption?

~~~
jmeyer2k
More importantly, pandemics are correlated risks, so the insurance company is
not reducing any risk by insuring against it.

If they did, everyone's insurance rates would go way up after a pandemic in
about the same amount as they would have to pay for the pandemic.

~~~
throwawayjava
As it is, insurance companies are _both_ not insuring against it _and also_
teeing up to massively increase rates [1].

Why only dip once when you can dip twice?

[1] [https://www.fool.com/investing/2020/03/26/health-
insurance-p...](https://www.fool.com/investing/2020/03/26/health-insurance-
premiums-could-rise-by-over-40-du.aspx)

~~~
ceejayoz
There are lot of types of insurance that exclude pandemics, but health
insurers are unlikely to be one of them.

------
jimbob45
Just got a ~15% refund through Esurance. For reference, I’ve never been
involved in any sort of insurance claim.

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peteretep
I don't like this. It seems to set a precedent that in the opposite situation
(I dunno, a haze that pushes up auto-accidents?) then they might take the
opposite tack. People pay insurance to (massively simplified) even out
payments for unlikely events, and messing around with that -- even in a
direction that short-term seems good for consumers -- seems questionable.

~~~
metric10
But they do this already. In Colorado many insurers raised rates when we had a
large hail storm that caused widespread damage. Allstate roughly doubled my
premium because of it (or so they said), even though I parked my car in a
garage both at home and at work at the time. I found a better rate elsewhere,
but I’m sure others just paid it.

So the fact that they’re offering a reduction seems fair, I guess. Although I
wonder if they’re really only seeing a 15% reduction in costs.

------
andy_ppp
It begs the question - does lockdown mean coronavirus is a net "positive" on
lives lost, as people will be saved not driving, going out, being stressed,
even catching Flu etc. I haven't seen anything about this but the question is
worth asking.

Also worth saying I fully agree with the lockdowns simply because of
exponential growth.

~~~
Shivetya
Estimates are 38,000 for 2019 in vehicle related deaths, this does not include
all the others who suffered injuries at any scale. However the virus won't
reduce this by the number it is likely to take, I am sure someone could work
it out

epidemics should be measured against the death rate from all causes across a
year. However immediate numbers are much more newsworthy and allow political
interest to drive whatever message they want from them.

so if you want to find a silver lining there are always ways to mince numbers.
to be honest looking for a silver lining is much more productive than the
panic, doom, and gloom, efforts

~~~
DangitBobby
> to be honest looking for a silver lining is much more productive than the
> panic, doom, and gloom, efforts

It certainly is not. The "panic, doom, and gloom, efforts" are what drove us
to take action in the face of unrelenting baseless optimism that would have
single handedly killed millions. Being afraid of something is _not_ the worse
thing that can happen! Please stop acting like it is!

------
maerF0x0
Geico?

~~~
rajnathani
It seems that now they are also providing some money (credits) back:
[https://www.cnbc.com/2020/04/08/warren-buffetts-geico-
offers...](https://www.cnbc.com/2020/04/08/warren-buffetts-geico-
offers-2point5-billion-in-credits-as-coronavirus-cuts-driving.html)

~~~
odysseus
Yep, details at:
[https://www.geico.com/about/coronavirus/](https://www.geico.com/about/coronavirus/)

The credit will be coming off your policy renewal bill.

------
sitkack
The lives saved from reductions in pollution and crashes is at this point
larger than the covid19 death toll. We already had a pandemic that got
displaced by a new one.

------
Sherl
I want to tell you all AAA California is being scummy and you need to call
them to get a refund credit to be posted into your account.

