By Lyle Adriano, INSURANCE BUSINESS AMERICA
August 11, 2022
A lawsuit filed in Alameda County Superior Court claims that CSAA – California’s seventh-largest auto insurance company – overcharged customers during the COVID-19 pandemic by at least $150 million.
The complaint also alleged that the insurer violated the protections of Proposition 103, as well as orders issued by California’s Insurance Commissioner to reduce rates.
According to the lawsuit, the number of miles driven by motorists sharply dropped during the onset of the pandemic in March 2020. In the same year, CSAA only paid about 48.2 cents in claims for every dollar in premiums it collected from its auto policyholders. The complaint claims that the insurer excessively charged customers by at least $250 million between March 2020 and June 2021, and that CSAA repaid only about $96 million of that total.
Because of the overcharging, CSAA’s profits on its auto insurance business jumped 665% in 2020, the complaint said.
Consumer Watchdog gathered statements from legal professionals involved in the lawsuit.
“The California Insurance Commissioner singled out CSAA as one of three companies that most flagrantly violated its orders to refund excessive premiums. Our pre-filing investigation shows that his identification of CSAA was fully justified,” said Jay Angoff, a partner at Mehri and Skalet, one of the three law firms representing CSAA policyholders in the lawsuit.
“So many Californians suffered enormously from COVID and its economic fallout, and big insurance companies like CSAA should not be allowed to profiteer during this historic pandemic,” added David Borgen, an attorney with Goldstein, Borgen, Dardarian & Ho.
“California law requires insurance companies to maintain fair rates at all times,” commented Harvey Rosenfield, a lawyer with Consumer Watchdog and the author of Proposition 103. “As a result of its pandemic profiteering, CSAA reaped an astounding financial windfall—money that belongs to its customers.”