US mutuals step up during COVID-19

Monday, 11 May 2020

ICMIF member The National Association of Mutual Insurance Companies (NAMIC), the trade association for the US mutual property/casualty insurance sector, has compiled a list of over 35 member stories of responses to COVID-19 from mutual insurance companies.

The majority of responses compiled by NAMIC (as of 14 April 2020) involve US mutual insurers offering premium relief to personal auto customers due to the change in driving habits due to the coronavirus, sharing the savings from fewer accident claims with their member/policyholders.

One example is from ICMIF member Shelter Insurance, which announced in April that it will return 30% of monthly premium to personal auto customers for April and May. The company is providing help to its agents by not reducing their compensation with this payment to customers. Shelter will also be donating a total USD 1.5 million to help local communities in the 15 states that Shelter serves.

Other US mutual have offered significant premium relief packages for auto policyholders. State Farm, the largest US P/C insurer and world’s largest mutual insurer, is returning a USD 2 billion dividend to auto insurance customers through an average premium credit of 25% from mid-March to May. This relief program will apply to 40 million vehicles, benefitting about 21 million households. Elsewhere, USAA announced it would return USD 520 million to its members through a dividend to auto insurance policyholders (plus an additional USD 280 million through a second premium dividend announced in May) and American Family would return approximately USD 200 million to its auto insurance customers, in the form of a one-time full payment of USD 50 per vehicle covered by a personal auto policy.

In the wake of reduced driving due to COVID-19, research by the Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) calculated that the total amount already committed to be returned by US auto insurers to customers through premium refunds, discounts and credits was more than USD 7 billion. Analysis by ICMIF suggests that more than half (USD 4.0 billion) of this figure returned to customers, will be by mutual insurance companies.

The CEJ and CFA also graded the premium relief actions for each auto insurers, giving a score based on the amount of premium relief, the timeframe covered by relief, and the method of delivery of the relief. In an update table of the highest graded insurers, the top five were all mutual insurers: State Farm, American Family, Tennessee Farmers, Erie Insurance and Shelter Insurance.

Other initiatives from NAMIC members include providing additional policyholder assistance, and adjusting policy cancellation, premium installment due dates, and extending grace period to provide peace of mind to policyholders who are facing financial challenges as a result of the pandemic. Also, many have donated to various emergency funds helping to fight the pandemic.

NAMIC represents more than 1,400 member companies. The association supports regional and local mutual insurance companies on main streets across America and many of the country’s largest national insurers. NAMIC member companies write USD 268 billion in annual premiums, accounting for 59% of homeowners, 46% of automobile, and 29% of the business insurance markets.

In a statement relating to COVID-19, Charles Chamness, President and CEO: “Despite the unprecedented economic disruption caused by the response to the COVID-19 pandemic, NAMIC member companies remain focused on their sole mission of serving policyholders. Mutual insurance companies have taken steps to help their policyholder members get through this crisis, including increased flexibility and the adoption of procedures to enable remote inspections and claims adjusting.”

Further research by ICMIF estimates that the total amount given by the US mutual insurers, for both the life and P&C sectors, through premium relief, support and assistance, was USD 4.3 billion.

Read more about the responses by US ICMIF members to the COVID-19 outbreak below:

Read more about the other ICMIF members from around the world that have provided premium relief to auto (motor) insurance policyholders through premium refunds: