Geico and Mercury launch auto insurance rate hike in California [Boss Insurance]

Geico And Mercury Launch Auto Insurance Rate Hike In California

Some California drivers will be in for a nasty surprise when they open their car insurance bills this year.

That’s because California Insurance Commissioner Ricardo Lara approved major rate hikes over the past six months, ending a long COVID pause after insurance companies complained they were losing money. money and reduce the country’s largest auto market. Higher rates for Geico, Mercury and others appear instantly in the insurance renewal letters customers receive.

And more increases are on the way, say consumer advocates, even though some insurers have yet to reimburse customers for extra premium costs during the early months of the pandemic, when people drove less and had less health. accident.

“These insurance companies still owe COVID-era consumers,” said Jamie Court, president of Consumer Watchdog, the Santa Monica nonprofit that sponsored Proposition 103, the 1988 election initiative. which limited the amount that insurers can charge for auto, home and accident insurance. “The commissioner shouldn’t be giving rate hikes when he still hasn’t been able to get them to give discounts for the times we weren’t driving,” Court said.

Californians are paying an average of $2,291 in auto insurance premiums this year, up $101 from 2022, according to Bankrate analysis that found premiums were rising nationwide as people traveled more miles, drove less safely and wrecked increasingly expensive cars.

Rate increase approvals, which gained momentum in December and January, went to insurers representing more than 20% of the market, according to Consumer Watchdog’s tally. Geico, Mercury and Allstate received increases of 6.9%, while some smaller insurers got bigger hikes.

According to the consumer group, 97 additional premium rate increases have been requested, ranging from a 4.5% hike to almost 20%. The most common request is 6.9% because anything bigger than that can trigger a public hearing. Some of the biggest names on the pending list include State Farm, Progressive, Farmers and American Automobile Assn.

Geico, the state’s second-largest auto insurer after State Farm, secured a 6.9% rate increase in December that will translate to an average premium increase of $125 per year for 2.1 million policyholders of the company.

Some drivers will be hit harder than others, Consumer Watchdog attorney Daniel L. Sternberg said, especially those insured by companies that use a driver’s work and training to determine that person’s rate. .

In recent years, Consumer Watchdog has challenged rate increase requests filed by Geico, Mercury, AAA and Allstate for charging higher base rates to low-income workers than college-educated professionals. .

Using Mercury as an example, Sternberg said January’s approval of a 6.9% raise allows “unfairly discriminatory rates by using five separate grade levels based on education and occupation that Californians in the working class without a professional occupation and without a higher education will pay up to 18% higher premiums.

The insurance industry says rate increases are overdue.

In September, insurers said the California auto insurance market was on the brink of a slump because they were paying out more in claims than they were collecting from premiums in 2022. Geico shut down insurance companies last year. California retail storefronts to benefit online sales, and others spoke of the state’s slowing growth.

California waited longer than any other state to raise auto premiums after the pandemic subsided, said Denni Ritter, vice president of the American Property Casualty Insurance Assn.

When they get back on the roads, California drivers are driving faster and increasingly drunk, Ritter said, resulting in more serious crash injuries and they wreck cars with higher repair costs. higher than in the past.

“So unfortunately that’s skyrocketing costs in the car insurance business,” Ritter said, causing insurance costs to rise 25% in 2022 while premiums rose 4.5% .

As for those reimbursements, Californians are still waiting about $3.5 billion of the $5.5 billion Consumer Watchdog estimates policyholders are owed for pandemic-era excess costs.

The issue has still not been fully resolved, say state insurance officials, who argue that rate hike decisions do not interfere with missed discounts.

“These are separate processes,” said Michael Soller, deputy communications commissioner for the California Department of Insurance. Getting insurers to provide reimbursements “is an ongoing process. We have sent letters to insurance companies asking for new data. They provide that and we go through that. This is where we are.

Consumer Watchdog executive director Carmen Balber said insurance companies are “far from being in a crisis”. Drivers who receive larger insurance renewal bills should look for a better deal, she said.

“California consumers have so many options.”