Since the coronavirus outbreak began, auto insurers have been offering mostly rebates and credits to reflect the fact that cars are spending a lot more time in driveways and less time on the road.
Now, State Farm, Ohio’s biggest auto insurer, is going further, announcing plans to reduce rates for Ohio drivers by 14.3%.
The reduction will save 1.9 million customers in Ohio $174.1 million.
The reduction applies to current customers at policy renewal as well as new and returning customers.
“Current State Farm driving data and claims experience show a considerable decline in miles driven and fewer accidents,” Robert Stewart, a senior vice president, said in a statement. “As a result, we’re looking for ways to continue supporting our Ohio customers while we monitor and adjust to trends.”
Beyond the auto rate reduction, the discount in Drive Safe & Save, State Farm’s usage-based insurance program, has increased to 10%. The program allows drivers to save money based on driving behavior.
Other insurers might follow suit in Ohio, said Dean Fadel, president of industry group Ohio Insurance Institute.
“State Farm is the market-share leader in Ohio, and sometimes what the market-share leader does affects what others may decide to do,” he said.
“Different insurance companies are taking different approaches to this,” said James Lynch, chief actuary of the Insurance Information Institute. “Some are handling this as time passes (by) extending credits; some other companies have done what State Farm is doing.”
State Auto Financial, for example, announced in April that it is cutting rates by 5% when a policyholder renews.
Nationwide says it continues to monitor consumer driving behaviors and how that affects miles driven and accidents.
“As the driving public gets back behind the wheel, we plan to build additional benefit of the slowdown into future rates, on a state-by-state basis, and based on frequency and severity trends at the local level,” the insurer said in a statement. “To the extent that lower miles driven or claims volume persists, we will take that favorability into account in future renewal rates. Some of this favorability may be offset by higher repair costs driven by more high-speed crashes and higher auto repair shop costs.”