Lawmakers delve into insurance practices in pandemic | Local News

ALBANY — As New York grappled with the initial wave of the COVID-19 pandemic, insurance companies failed to offer sufficient refunds to reflect the fact that diminished driving led to reduced collisions and injuries, consumer advocates said Friday.

At an Assembly hearing examining the pandemic’s impacts on insurance consumers and the companies that write policies, experts and industry leaders also confronted the question of whether New York should stop allowing companies to use consumer credit data to set rates for auto policies.

Chuck Bell, programs director of advocacy at Consumer Reports, told lawmakers that several states have already taken that step.

Bell said many consumers believe the rates are based on their driving records, emphasizing that credit records beyond their control play a key role in what they pay for insurance.

People with credit problems end up paying higher rates even when they have avoided having accidents, he said.

Bell called the methodology “a form of financial wealth extraction against low and moderate income people,” with the impacts particularly severe on African American and Latino drivers.

Assemblyman Kevin Cahill, D-Kingston, chairman of the Insurance Committee, and other lawmakers seeking to determine if there should be legislative responses to what transpired in the New York insurance marketplace as the virus spread through the state in early 2020.

Michael DeLong of the Consumer Federation of America said state regulators in New York and other states have not done enough to ensure consumers received adequate rebates

“Since all drivers are required to purchase auto insurance, states have a responsibility to ensure that insurance rates aren’t excessive and that it’s affordable to consumers,” said DeLong, the federation’s research and advocacy associate.

Nationwide, the insurance industry collected $42 billion in “excessive” premiums during the pandemic, and ended up refunding $13 billion of that under pressure from the federation and other consumer groups, Delong said. The difference, $29 billion, breaks down to about $130 per vehicle, he said.

Research by the federation, he said, found the insurance companies should have refunded an additional $1.6 billion to New York automobile policyholders, DeLong said.

While the pandemic led to tens of thousands of deaths in New York, Richard Loconte, president and CEO of the Life Insurance Council of New York, an industry group, said the companies he represents have managed to remain financially stable.

The companies paid out $45 billion in death benefits and annuity payments last year, Loconte said.

Responding to questions from Cahill on the financial security of investments used by the companies to fund payments for claims, Loconte said it appears the experiences of the pandemic won’t lead to increases in rates and won’t hamper their ability to keep up with the pace of claims.

“They are well-positioned to weather the current marketplace,” Loconte said.

Kristina Baldwin, assistant vice president of the Property Casualty Insurers Association of America, said companies worked to accommodate the needs of consumers by adding remote claims handling during the pandemic by adding more online accounts and claim services as well as additional resources to protect customers from fraud.

Countering the argument that companies have been making inflated profits, Baldwin said: “At the current time, insurers are struggling with a number of issues, including increased dangerous and distracted driving, rising injury and vehicle costs, rising costs from supply chain delays and rising inflation, all of which has combined to result in a significant deterioration of insurer loss results.”

Baldwin said fatalities jumped in the first nine months of 2021. “We’re right back up to driving as much as were pre-COVID, and claims frequency, after a small dip during COVID, are on the rise,” Baldwin said.

Cahill told CNHI the committee will examine ways to scale back a late 19th century law limiting the ability of insurance companies to offer rebates and discounts to customers. The industry can’t issue rebates without having them specifically approved by the state Department of Financial Services, he said.

The industry and consumers, Cahill added, are both interested in seeing technology enhancements that improve services to consumers.

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button