Coronavirus updates – cancellations and rebates
April 16, 2020
We want to start by saying that some of our Chartwell clients have contracted Covid-19 with varying degrees of severity. Everyone seems to be one degree of separation from someone who has been taken ill and, in a few tragic cases, there has been loss of life. During these unprecedented times our thoughts are with those who are in mourning, and we send best wishes for a speedy recovery to those who are still battling the virus.
This special Chartwell Bulletin will address automobile insurance cancellation, premium payment moratoriums, and insurance company rebates by state.
Automobile Insurance Rebates
The largest automobile insurers who collectively write more than 72% of the US automobile premiums have announced plans to issue rebates to their policyholders. The Chicago Tribune summarized the rebates as announced by 13 national insurers. Of these personal lines insurers, Chartwell is appointed with Progressive and Travelers.
The majority of the insurers are offering a 15% credit on April and May premiums with the exceptions of State Farm (also largest market share of 17%) at 25% for two months, USAA and Progressive at 20% for two months, Farmers at 25% for one month, American Family and Nationwide at $50 per each vehicle insured.
All of the insurers except Geico will issue rebates immediately. Geico, the second largest automobile insurer with a 13% market share will instead apply a 15% credit on renewal policies beginning on April 8, which will also apply to new policyholders.
Already consumer advocacy groups are saying the rebates are inadequate.
Insurers can file with states to refund premiums or they can use these funds to lower expenses to avoid or reduce future rate increases. Many of the Americans who are insured by these companies have recently lost their jobs and may not have much of a financial cushion and for them, these rebates are critical. The Chartwell Insurance policyholder is right to be curious about how their insurer will respond to this issue and we have already received many inquiries.
On April 13
We want to start by saying that some of our Chartwell clients have contracted Covid-19 with varying degrees of severity. Everyone seems to be one degree of separation from someone who has been taken ill and, in a few tragic cases, there has been loss of life. During these unprecedented times our thoughts are with those who are in mourning, and we send best wishes for a speedy recovery to those who are still battling the virus.
This special Chartwell Bulletin will address automobile insurance cancellation, premium payment moratoriums, and insurance company rebates by state.
Automobile Insurance Rebates
The largest automobile insurers who collectively write more than 72% of the US automobile premiums have announced plans to issue rebates to their policyholders. The Chicago Tribune summarized the rebates as announced by 13 national insurers. Of these personal lines insurers, Chartwell is appointed with Progressive and Travelers.
The majority of the insurers are offering a 15% credit on April and May premiums with the exceptions of State Farm (also largest market share of 17%) at 25% for two months, USAA and Progressive at 20% for two months, Farmers at 25% for one month, American Family and Nationwide at $50 per each vehicle insured.
All of the insurers except Geico will issue rebates immediately. Geico, the second largest automobile insurer with a 13% market share will instead apply a 15% credit on renewal policies beginning on April 8, which will also apply to new policyholders.
Already consumer advocacy groups are saying the rebates are inadequate.
Insurers can file with states to refund premiums or they can use these funds to lower expenses to avoid or reduce future rate increases. Many of the Americans who are insured by these companies have recently lost their jobs and may not have much of a financial cushion and for them, these rebates are critical. The Chartwell Insurance policyholder is right to be curious about how their insurer will respond to this issue and we have already received many inquiries.
On April 13 Chubb announced that upon renewal, clients will receive a credit reflecting a 35% premium reduction for the months of April and May, with additional discounts for subsequent months, as the situation warrants. Across Chubb’s portfolio, the average credit is expected to be $110 per vehicle. Clients will not have to request the credit, it will be applied automatically at renewal. All premium and rate adjustments are subject to regulatory approval.
“In these rapidly changing times, we have been thinking about our clients and the challenges they are facing. We recognize that there has been a reduction in our clients’ driving activity as a result of this pandemic,” said Fran O’Brien, Division President, North America Personal Risk Services. “This credit reflects our commitment to providing a fair premium adjustment to our clients, while ensuring they continue to receive Chubb’s best-in-class auto coverage.”
Also on April 13 PURE announced they will provide a 15% credit on all regular auto premiums for the period of time from the introduction of state stay-at-home orders until they are lifted. As the stays are lifted, these credits will be paid in cash or applied to reduce any outstanding balance due to PURE. “We believe our purpose as an insurance company is to help our members live their lives to the fullest and pursue their passions with greater confidence. These days, we all look forward to the thought of greater human engagement and personal fulfillment. As our country pulls together to fight the spread of COVID-19, I am writing to share our evolving approach to serving our members and partner brokers. I want to specifically address the movement to refund a portion of automobile premiums for a period of time when the amount of driving has been dramatically reduced,” said Ross Buchmueller, President & CEO.
On April 9 Cincinnati Insurance announced that auto clients will receive a 15% credit per policy on their April and May premiums. No action is required by the client, to receive this discount. Cincinnati Insurance is has extended their suspension of all property casualty cancellations due to nonpayment from March 16 to May 31.
More information is available on the Cincinnati Insurance website .
“Adding this Stay-at-Home credit supports the other actions we’ve taken: pausing cancellations due to nonpayment of premium and waiving late fees until at least April 30; and waiving restrictions on policyholders now performing delivery services in efforts to protect the wellbeing of their communities,” said Will Van Den Heuvel, Senior Vice President Personal Lines.
On April 15 Berkley One announced that each client with an active auto insurance policy will receive a 20% refund on April and May auto premiums. Clients do not need to take action as the payback will be applied automatically in June, subject to requisite regulatory approvals. Intended to return money to clients when it can most help, the payback occurs during the current term as opposed to the renewal term. “We are in this together and together we are ONE,” said Kathy Tierney, President, Berkley One.
On April 24 AIG announced that automobile policyholders will receive a 25% credit back from their automobile premium accrued during the two-month period of March – April 2020. The average credit per vehicle will be approximately $69. The savings will be returned via an account credit upon each policy renewals beginning on August 1, 2020.
Travelers Insurance is offering billing relief for all U.S. customers, including suspending cancellation and nonrenewal of coverage due to nonpayment through June 15, 2020 (no interest, late fees or penalties will be charged).
We will continue to update you as more information emerges.
All the insurers we work with are currently complying with the state moratoriums on mid term insurer cancellation moratoriums (see below) and are willing to offer certain payment accommodations on an individual basis.
Cincinnati Insurance is suspending all property casualty cancellations due to nonpayment from March 16 to April 30 – or later if required by an individual state. And, they have suspended or waived late fees for the same period of time.
To help serve its customers who may be experiencing financial hardships, FEMA is extending the grace period to renew flood insurance policies under the National Flood Insurance Program (NFIP) from 30 to 120 days. This extension applies to NFIP flood insurance policies with an expiration date between February 13-June 15, 2020.
Please contact us if you need any accommodations to your payment schedule.
Cancellation Moratoriums
Some states have mandated cancellation moratoriums while others recommend accommodations:
Moratoriums issued by states that impact many of our Chartwell Insureds are listed here:
California: Effective March 18, 2020: 60-day grace period for making premium payment
Illinois: Grace period until at least April 30, 2020 for making premium payment
Indiana: Grace period between March 19 and May 18, 2020 for making premium payment
New York: Effective March 30, 2020: 60-day grace period for making premium payment. (See below for the official New York guidance)
For additional states please see the summary provided by the Independent Insurance Agents and Brokers of America as of April 24, 2020. State Regulatory Responses to COVID-19.
Special New York Notice
“A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the “regulations”) issued by the New York State Department of Financial Services (“Department”), extend grace periods and give you other rights under certain property/casualty insurance policies if you are an individual or small business and can demonstrate financial hardship as a result of the novel coronavirus (“COVID‑19”) pandemic (“affected policyholder”). These grace periods and rights are currently in effect but are temporary, though they may be extended further. Please check the Department’s website at https://www.dfs.ny.gov/consumers/coronavirus for updates.
If you are an individual, generally, personal lines property/casualty insurance policies are covered by these amendments, including auto, homeowners and renters insurance. If you are an individual and an affected policyholder, please contact us if you are uncertain whether your policy is covered.
If you are a small business, only certain types of commercial lines property/casualty insurance policies are covered by these amendments, generally including property, fire, commercial general liability, special multiperil, medical malpractice, workers compensation, commercial auto (including livery and other for-hire vehicles), and commercial umbrella insurance. A business qualifies as a “small business” if it is resident in New York State, is independently owned and operated, and employs 100 or fewer individuals. If you are a small business and an affected policyholder, please us if you are uncertain whether your policy is covered.
Moratorium on Cancellation, Non-Renewal, and Conditional Renewal
If you are an affected policyholder, there is a moratorium on your insurer cancelling, non-renewing, or conditionally renewing your property/casualty insurance policy for a period of 60 days. If you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment or report you to a credit reporting agency or a debt collection agency regarding such premium payment.
Catching up on Overdue Insurance Payments
The regulations also require your insurer to permit you, as an affected policyholder, to pay the overdue premium over a 12-month period if you did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic. This also applies if the insurer sent you a nonpayment cancellation notice prior to March 29, 2020.
How to Demonstrate Financial Hardship
If you, as an affected policyholder, are unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, you may submit to your insurer a statement that you swear or affirm in writing under penalty of perjury that you are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer shall accept as satisfactory proof. Such statement is not required to be notarized.”
Questions
If you have any questions about the New York Executive Order or regulations, please call us at 312-645-1200 or email us.