Geico will offer about $2.5 billion of credits to its 19 million auto and motorcycle policyholders, reflecting the decline in driving and therefore car crashes stemming from the coronavirus pandemic. The insurer, part of billionaire Warren Buffett’s Berkshire Hathaway conglomerate holding company, will offer a 15% credit on policies up for renewal between April 8 and Oct. 7. That averages up to about $150 per auto policy and $30 per motorcycle policy. Full details of Geico's Giveback Credit program can be found here.
The company has also paused cancellation of coverage due to non-payment and policy expiration through at least April 30, 2020 and potentially later depending on the state the policyholder lives in.
The announcement came one day after Allstate announced its Shelter-in-Place Payback program, which will return more than $600 million to policyholders, mostly through a payback of 15% of premiums for April and May on about 18 million policies.
Geico said vehicle accidents are down considerably, though it expects a return to near-normal levels as the pandemic subsides.
“The ongoing crisis has widespread effects that will linger,” Geico Chief Executive Todd Combs said in a statement. “Our customers have been loyal, and we are committed to doing all we can to help them.”
State Farm and Progressive are also reviewing their premium practices in light of the decline in driving, according to Reuters.
Liberty Mutual and its subsidiary Safeco are issuing 15% refunds on two months of premiums, or about $250 million that will go back to consumers. The companies will also pause cancellations for not paying, and won't issue late fees.
American Family Insurance said it's issuing $200 million in refunds or $50 for every car it insures.
Progressive and State Farm are looking at the issue.
Geico earned $35.57 billion of premiums in 2019, and paid out $28.94 billion, or 81.3%, to cover loss claims. Pretax underwriting gains totaled $1.51 billion, after accounting for underwriting expenses. Berkshire, based in Omaha, Nebraska, has owned all of Geico since 1996.
Material from Reuters was used in this report.