Shelter-in-place orders designed to slow the spread of the coronavirus pandemic means that there are fewer cars on the roads, and, therefore, fewer accidents. U.S. insurance company Allstate is using the opportunity to return more than $600 million in auto insurance premiums to 18 million of its customers and those of its Esurance and Encompass units.
Through the company's so-called Shelter-in-Place Payback program, Allstate customers will receive, on average, 15% back of their monthly premium in April and May. Allstate will automatically deposit the funds back into the bank or credit card accounts of its customers, or apply credits to future payments depending on the preference of the policyholder. Allstate Mobile App users will get their payments first, and the company is also providing free identity protection through the end of 2020. Full details of the Shelter-in-Place Payback program can be found here.
Allstate's payback follows a data analysis by the insurer of 23 million cars showing that driving mileage is down between 35% and 50% in most states, Allstate Chief Executive Officer Tom Wilson said during a call with reporters on Monday.
The analysis, based partly on data that Allstate collects from tracking products that some customers agree to use in exchange for discounts, showed no difference between states that had shelter-in-place orders in effect and those that did not, Wilson said. Still, according to Wilson, some people who are still on the roads are driving faster on what are now less densely traveled roads, which could lead to more serious accidents.
In a similar program, American Family Insurance said on Monday that it would return a total of $200 million to auto insurance customers beginning in mid-April. Customers will receive $50 per vehicle covered by their policies, the company said.
Next Insurance, a commercial insurer in Palo Alto, California that covers small businesses also on Monday said that it would discount April commercial auto premiums by 25% because "stay at home" orders have reduced the insurers' risks.
“There are very few silver linings out there, but auto insurance companies are definitely one of them,” said Piper Sandler analyst Paul Newsome about coronavirus.
Fewer accidents generally lead to a lower claim frequency and Newsome expects insurance companies with large auto portfolios, such as Progressive, Travelers Companies and Allstate, to post good first quarter results.