Auto insurance Overcharge

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 Auto insurance Overcharge




Auto insurance has become an important issue for us because it’s the one private market product that all Texans are forced to buy. 

They have to buy it to comply with the law if they own a car and drive a vehicle.


And so it’s important, in these kinds of products, that they are priced fairly and have costs that really reflect the costs that the insurers are experiencing.



Texas Appleseed is a public interest justice center and we work across a lot of different issue areas in order to balance the scales for Texas families so everyone has a fair shot at success and a good future in our state.


And so some of our priority areas include fair financial services, the kind of pocketbook issues that I work on, to make sure that families are being treated fairly in the financial marketplace, and particularly lower-income families, to support equity and fairness across our 

systems to have a prosperous Texas.


We told you back in April how several car insurance companies

offered rebates to customers averaging about sixty bucks, now Texas Appleseed says those refunds fall way short of what drivers 

should be getting.


When we looked at the number of refunds that auto insurers were giving people, we assessed them based on the decreases in miles driven as well as a decrease in crashes.


And what we found is that though miles driven had decreased a substantiel amont--almost seventy percent at the peak of the pandemic and crashes were down more than fifty percent and it 

made us think in looking at how the rebates were comparing to the 

reductions in crashes, that the rebates were not necessarily capturing all the reduced costs that auto insurers were experiencing.


Around thirty percent, or one in three, of the top forty companies that we looked at in Texas, offered no rebate whatsoever, and they tended to be concentrated in something called the “non-standard market,” which is a market that tends to target people who may not have had auto insurance before, or maybe considered higher risk.


Generally, it would be considered, like, the subprime version of auto insureds.


Those products tend to be most commonly accessed in lower-income communities.


They also disproportionately target African American and Latino communities in Texas.


This month, Lok found a better rate with a different insurance company for her 2015 Toyota Corolla, but when she called GEICO to let them know she’d be switching when her current policy expired, a GEICO representative told her she’d have to repay that one hundred and fifty dollar.


I kept asking her, you know, like, “where did I sign a legally binding document stating that if I were to cancel my policy that I have to pay this money back because I was under the impression that it went to my previous policy, not my new policy.” It’s a policy that goes against the market-based competition, it’s a policy that goes against the main principle of auto insurance pricing that it’s a risk-based pricing product.


People need to be free to find the best deal and not feel beholden to one particular auto insurer just because otherwise, that’s the only way that they can get the discount that they feel that they deserve.


The main thing individuals can do is call their auto insurance and let them know if, for example, you used to drive one hundred miles a week and now you drive five miles a week it’s important to let your auto insurance know that, because that can be tied into the pricing

 of auto insurance, if the car is just not being used.


Another issue that we’ve raised in some of our outreach to Texas.


Department of Insurance is the use of credit scoring in insurance pricing. So a lot of people might not know this, but credit scores can impact the cost of insurance.


It’s important for people to know that if they have any negative credit impacts that are resulting from the pandemic, that they have the right to call their auto insurance and tell them “don’t consider my credit score because I lost my job, I just, I couldn’t pay these debts because I lost my job” and so those are legitimate reasons to ask the auto insurers to overlook credit scoring data for a period of time.


And so it’s important that people know that they have those rights.


Usually, they’re supposed to send something in writing, and the Department of Insurance did ask insurance companies to accept people calling and telling them this information.


So it’s important that they have tho conversations to make sure they are being treated in the fairest possible way in terms of how insurance is priced. We've seen some concerning trends.


Some auto insurers are in their second-quarter reports are reporting record profits, and it gives us pause because, you know, of course, every business has the right to be profitable, but to profit off of a pandemic, and to profit off of pricing that isn’t related in a risk-

the abased product that isn’t related to the actual risk these businesses are experiencing-- that’s really concerning, and we would love to see the Texas Department of Insurance take an active

role to ensure accountability so that Texans are treated fairly, so that 

Texans who are desperate for extra money right now, who are struggling, get money back into their pockets if that’s what they deserve. 

The main thing individuals can do is call their auto insurance and let them know, I, for example, you used to drive one hundred miles a week and now you drive five miles a week it’s important to let your auto insurance know that, because that can be tied into the pricing

of auto insurance, if the car is just not being used.


Another issue that we’ve raised in some of our outreach to the Texas Department of  Insurance is the use of credit scoring in insurance pricing. So a lot of people might not know this, but credit scores can impact the cost of insurance.


It’s important for people to know that if they have any negative credit impacts that are resulting from the pandemic, that they have the right to call their auto insurance and tell them “don’t consider my credit score because I lost my job, I just, I couldn’t pay these debts because I lost my job” and so those are legitimate reasons to ask the auto insurers to overlook credit scoring data for a period of time.


And so it’s important that people know that they have those rights.


Usually, they’re supposed to send something in writing, and the Department of Insurance did ask insurance companies to accept 

people calling and telling them this information.



So it’s important that they have those conversations to make sure they are being treated in the fairest possible way in terms of how insurance is priced.





We've seen some concerning trends.


Some auto insurers are in their second-quarter reports are reporting record profits and it gives us pause because, you know, of course, every business has the right to be profitable, but to profit off of a pandemic, and to profit off of pricing that isn’t related in a risk-

the based product that isn’t related to the actual risk these businesses are experiencing-- that’s really concerning, and we would love to see the Texas Department of Insurance takes an active role to ensure accountability so that Texans are treated fairly so that Texans who are desperate for extra money right now, who are struggling, get money back into their pockets if that’s what they deserve.


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