SACRAMENTO, Calif.,
April 13, 2020 /PRNewswire/ -- In
stark contrast to its competitors, GEICO is not providing its
Coronavirus "credit" to millions of its current auto and motorcycle
policyholders who are driving less and filing fewer accident
claims. GEICO's so-called 15% "giveback credit" is only available
to a current customer upon the renewal of a policy
between April 8 and October 7,
2020. GEICO is also offering this credit to new customers who
sign up for GEICO coverage during this six month period. The
only motorists who are denied the discount are current GEICO
policyholders who switch to another carrier in the future, or who
won't need to renew because they are not driving due to the
pandemic.
"GEICO is violating the insurance industry norm of assisting
customers who are driving less and who desperately need financial
relief right now," stated Richard
Holober, Consumer Federation of California (CFC) Education Foundation
Director. "We plan to petition the California Department of
Insurance to compel GEICO to provide the credit now to all current
customers."
In response to calls from the CFC Foundation and other consumer
advocates, last week nearly every major auto insurer announced
discounts to policyholders who are driving less and filing fewer
claims as a result of COVID-19 Stay At Home Orders and skyrocketing
unemployment. With the exception of GEICO, all the major
insurers promising relief will provide it to their current
policyholders. The discounts are for a period of one, two, or three
months, depending upon the company. No other major insurer has
predicated a Coronavirus discount on a policy renewal, nor would
such a requirement be justified on an actuarial or public policy
basis.
GEICO policyholders who renewed shortly before April 8 have posted complaints online. One
Tweeted "My policy just renewed 4/5/2020 and will renew again on 11/5/2020. So
will we not be eligible for this." Another Tweeted "That Geico
credit some bullsh** it only takes effect when you renew I already
did that." Another Tweeted "@GEICO want a refund now….no
driving, not happy waiting until September at renewal. (who's to
say I'll even renew with you?)…"
Should Stay at Home Orders that began in March last six months,
GEICO's plan will have the perverse result that a current
policyholder who reduces driving from 1000 miles a month to 100
miles a month from March through August, for a total of 600 miles
driven during a six month policy period, would get no discount
unless he or she renews, while another driver who signs up with
GEICO on October 7 after Stay at Home
Orders are lifted would pay $150 less
for driving 1000 miles a month, or a six month total of 6,000
miles.
That new policyholder may be covered now by State Farm, Allstate
or another insurer who is giving discounts to its current
policyholders. GEICO's plan encourages motorists to double
dip by collecting a COVID-19 discount from their current insurer
now, and a second COVID-19 discount by switching to GEICO a few
months later. This anti-competitive practice unfairly disadvantages
other insurers who stepped up to the plate last week with discounts
for their customers based on current day changes in driving
behavior.
Under GEICO's scheme, current policyholders are subsidizing
future policyholders that GEICO would induce to switch carriers
after the pandemic abates and normal driving patterns resume.
GEICO is discouraging its policyholders from shopping around, since
they would be denied the discount unless they renew with GEICO.
"We are disappointed but not at all surprised that GEICO found a
way to take advantage of a human tragedy to launch a new marketing
scheme," Holober stated. "GEICO's slogan should be '15 minutes will
cost you 15% MORE if you are a GEICO policyholder' and shop around,
since the only way to get a discount is by renewing. GEICO must
change course and offer immediate relief to customers who are
driving less, with no strings attached."
Since 2013, the non-profit Consumer Federation of California
Education Foundation and its sponsor, the Consumer Federation of
California, have participated in
California Department of Insurance rate cases and regulatory
proceedings representing policyholder interests. CFC and the CFCEF
have intervened in 15 automobile and homeowners insurance cases,
saving seven million consumers over $300
million dollars in premium payments.
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SOURCE Consumer Federation of California Education
Foundation