NCR Las Vegas during COVID-19
Published on April 18th 2020 in

Insurers credit billions in premiums in the USA

Major insurers have said that they would return or credit customers billions in premiums as a response to the reduced risk of crashes as a direct result of COVID-19. Their actions and a recent franchisee support announcement by appraisal firm SCA offer a look at market conditions from other sides of the collision ecosystem.

A recent CCC presentation to the OEM Collision Repair Roundtable reported that the prior 30 days had seen a 30 percent decline in estimates, according to Subaru national wholesale parts manager John Lancaster. “The shops are taking a real hit,” he said.

Independent appraisal firm SCA’s client services Vice President Phil Langley added: “While the numbers continue to evolve as more states issue lockdowns, we are seeing a reduction of claims by about 33 percent year-on-year. However, this may not be totally representative of ALL claims as we do have instances where our network is practicing their craft as essential services workers, while some insurance companies have pulled field staff. This percentage will probably increase in the short term.”

Washington-based data analytics company INRIX, estimated that travel declined for the 3rd consecutive week, but the decline has slowed. Also, Allstate CEO Tom Wilson said an analysis of 23 million cars found mileage down 35-50 percent in most states, whilst CNN Business reported modelling from ValChoice CEO Dan Karr projecting claims are down 85 percent — a statistic Karr called conservative.

The Top 5 insurers all announced credits equivalent to double-digit premium cuts as a response to reduced driving. For example: State Farm is returning value through a dividend to their customers: “We insure more cars than anyone and we see from our claims activity people are driving less. This dividend is one of the ways we’re working to help our customers during this unprecedented situation.” said CEO Michael Tipsord. In a similar vein, GEICO expected their actions to average about $150 on auto policies and $30 for motorcycle contracts for a combined $2.5 billion. “Shelter in place policies have reduced driving significantly and vehicle accidents are down considerably, and although GEICO expects a return to near normal once the impacts of COVID-19 subside, GEICO remains committed to serving its customers’ changing needs in the best way it can.” Other Top 5 insurers are taking similar measures.

Over in the appraisal world, SCA announced it would pay its franchisees a greater percentage and make payments more frequently. Appraisal volume has precipitously declined, putting many small business owners on the brink of financial challenge. I have literally grown up with many of our network partners and to see them challenged in this way breaks my heart,” said SCA President Tim Davis Jr. “We moved swiftly to electronically pay 100 percent of our network and we have reduced the time to receive payment. This initiative comes with a lot of consideration and will test SCA’s resolve, but our company is strong, and our network remains very committed to helping our customers in this time of need.”

This article courtesy of John Huetter of Repairer Driven Education (RDE). Check out their website at; http://www.repairerdrivennews.com/ for this and many other informative and educational articles on the collision repair industry.

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