The insurance company achieved a 665% increase in profits from 2019 to 2020
LOS ANGELES, Aug. 8, 2022 /PRNewswire/ — CSAA — the Northern California Auto Club affiliate — has overcharged its customers at least $150 million for auto insurance during the pandemic, and they will be going to court to get their money get it back, she told consumer protection today.
A lawsuit filed on behalf of CSAA policyholders in Alameda County Superior Court says the state’s seventh-largest auto insurance company overcharged premiums during the COVID-19 pandemic when many of its customers were home with their cars in their driveways had to stay. The company violated the protections of Proposition 103 and orders from the California Department of Insurance to reduce its rates. The complaint also alleges that the CSAA acted unfairly at a time of great need for many Californians.
During the pandemic, which began in March 2020, the number of miles driven by motorists fell dramatically, and auto insurance claims filed with the CSAA fell precipitously. In 2020, CSAA paid only about 48.2 cents in claims for every dollar in premiums it collected from its auto policyholders. According to the complaint, CSAA overcharged its clients by at least $250 million between March 2020 and June 2021; of that amount, CSAA repaid only about $96 million.
As a result, CSAA’s earnings from its auto insurance business soared 665% in 2020.
“The California Insurance Commissioner singled out CSAA as one of three companies most blatantly violating its over-premium reimbursement orders. Our pre-filing investigation shows that his identification was fully warranted by CSAA,” said Jay Angoff of Mehri and Skalet, one of three law firms representing CSAA policyholders in the lawsuit.
“So many Californians have suffered tremendously from COVID and its economic fallout, and large insurance companies like CSAA should not be allowed to turn a profit during this historic pandemic,” said David Borgen of Goldstein, Borgen, Dardarian & Ho.
“California law requires insurance companies to maintain fair rates at all times,” said Harvey Rosenfield, an attorney for Consumer Watchdog in the case and author of Proposition 103. “As a result of its pandemic beneficiaries, the CSAA has reaped an amazing financial windfall — money that belongs to its customers.”
Read the lawsuit.
CSAA has not been able to keep prices fair during the pandemic
Proposition 103, passed by California voters in 1988, requires insurance companies to maintain reasonable insurance prices at all times. It states that “[n]O [insurance] Rate to be approved or remain in force, which is excessive, unreasonably, unjustly discriminatory, or otherwise violate this chapter.”
In defiance of that requirement, CSAA continued to collect auto insurance premiums approved by the Insurance Commissioner in 2019 during the pandemic — based on projections of accident claims that disregarded California State’s unprecedented “stay at home” orders in March 2020. CSAA granted until Modest refunds as of June 2020 but nothing after that, despite repeated orders from the insurance regulator asking insurers to lower their rates or provide additional refunds.
The lawsuit, Early v. CSA, Case No. 22CV015548, asks the Alameda County Superior Court to order CSAA to reimburse CSAA in full for the additional costs. It will be placed under Proposition 103, which empowers consumers to sue insurance companies in court for violating the measure’s protections.
The case is being prosecuted by three nationally recognized law firms: Mehri and Skalet, a Washington, DC-based law firm that has successfully filed many class action lawsuits, including insurance-related lawsuits; Goldstein, Borgen, Dardarian & Ho, based in Oakland, California, which represents civil and labor rights; and Consumer Watchdog, a California-based nonprofit dedicated to challenging violations of Proposition 103 insurance reform.
Consumer Watchdog is a non-profit public interest organization. Visit us on the web at www.ConsumerWatchdog.org.
Read the complaint here:
Read more about Proposition 103 here:
SOURCE Consumer watchdog