A new series of class action lawsuits accuse some of Illinois’ largest auto insurers of not offering enough premium relief to their customers, allegedly pocketing their customers’ premiums even as their claims fell amid the COVID-19 lockdowns.
On July 29, attorneys with the firm of Romanucci & Blandin, of Chicago, filed four class action lawsuits in Cook County Circuit Court. Each of the lawsuits target a different insurer, including American Family, Geico, Allstate and Progressive.
The complaints, however, are essentially the same, centered on the premium relief offered by the insurers in the wake of the social and economic activity restrictions imposed by Gov. JB Pritzker in the wake of the arrival of the COVID-19 pandemic in Illinois.
According to the complaints, miles driven by motorists in Illinois plunged by as much as two-thirds this spring, after Pritzker ordered many businesses closed and activities halted under his so-called stay at home order and other emergency orders issued, beginning in March.
This drop in driving, the complaints asserted, resulted in a plunging number of claims from collisions and other automotive mishaps, resulting in car damage that would be covered by the insurance policies issued by the companies.
However, the complaints claim, even as the expected expenses declined, customer premiums allegedly did not decline proportionately. This, the complaints said, resulted in an alleged windfall for the insurance companies amid the pandemic.
“Personal insurance rates are set to cover future expected claims and expenses,” the complaints said. “Auto insurers develop such rates by extrapolating from recent historical experience with premium payments, claims submitted, claim settlement expenses, and non-claim selling and administrative expenses, and then projecting future claims and costs from that data.
“As a result of COVID-19 restrictions, auto insurers' … assumptions about future claims in Illinois became dramatically overstated when, in mid-March of 2020, the state's roads emptied, and the frequency of motor vehicle accidents and insurance claims dropped precipitously and immediately. This rendered the premiums charged … grossly excessive, not only for new policyholders going forward, but also for existing policyholders whose premiums were based on the overstated and obsolete claim projections,” the plaintiffs claimed.
The complaints compared the four defendant insurers’ actions to Illinois’ largest auto insurer, State Farm.
The complaints noted State Farm gave its customers a 25% credit on their premiums.
By contrast, American Family gave customers a one-time $50 payment in April, and then a 10% credit on auto insurance policies in effect from July 1 to Dec. 31, 2020.
Progressive offered its policyholders a 20% credit.
Geico offered a 15% credit on auto policies renewed between April 8, 2020, and April 7, 2021.
And Allstate provided a 15% premium credit for the months of April, May and June 2020.
The complaints allege the insurers violated Illinois’ consumer fraud and deceptive practices law, breached their contracts in bad faith and unjustly enriched themselves at their customers’ expense.
The plaintiffs are seeking to expand each of the lawsuits to include all Illinois auto insurance customers who have held policies through each of the insurance companies since March.
The complaints seek unspecific compensatory damages from the companies for each of the counts.
Named plaintiffs in the actions include: Dino and Katerina Anagnos, against Allstate; Roxanne and James Thomas, against Geico; Peter Kopsaftis and Chris Lardakis, against Progressive; and Holly Ridings, against American Family.