Pandemic-Driven Auto Insurer Dividends Skyrocket: A Deep Dive into the Numbers

Auto Insurers Return Billions to Policyholders Amidst Pandemic

The COVID-19 pandemic has led to a significant reduction in driving and accident claims, prompting auto insurers to return approximately $14 billion to policyholders. According to the National Association of Insurance Commissioners (NAIC) data from Standard & Poor's Global Market Intelligence, insurers issued $4.8 billion through the second quarter of 2020, almost $3.4 billion more than the same period a year ago. The bulk of that, $3.3 billion, is a result of pandemic-related driving patterns.

Rate Decreases and Credits Further Boost Policyholder Savings

In addition to dividends, insurers have also booked $4.7 billion in credits through lower rates and another $1.6 billion as an underwriting expense. Triple-I projects that insurers will return to customers another $338 million in dividends in the second half of the year, with rate decreases of $4.1 billion making up the remainder of the $14 billion in givebacks. State Farm, the country's largest auto insurer by premiums written, announced a $2 billion dividend to its auto insurance customers, averaging a 25 percent credit on these customers' premiums through May 31.

Charitable Giving and Future Projections

USAA has returned $1.07 billion to auto policyholders and is also adjusting its rates. On top of these, the industry has provided approximately $280 million in charitable giving specifically related to the pandemic. Looking ahead, the industry is expected to continue to see reduced claims and potentially more dividends and rate decreases for policyholders.