Allstate and American Family Insurance announced Monday they will refund 15% of premiums paid by its customers in April and May, which comes out to almost $800 million.
According to Fox Business, the refund is due to the significant drop in drivers on the road due to the coronavirus.
“Allstate has been helping customers overcome catastrophes for 89 years since our purpose is to make sure they are in Good Hands. We have learned to move quickly and put people first,” Chair and President Tom Wilson said in a press release. “This crisis is pervasive. Given an unprecedented decline in driving, customers will receive a Shelter-in-Place Payback of more than $600 million over the next two months. This is fair because less driving means fewer accidents. We are also providing free identity protection for the rest of the year to all U.S residents who sign up, since our lives have become more digital.”
Allstate’s refund will go to US and Canadian customers regardless if their state has quarantine restrictions. AFI, which serves customers in 19 states, will refund about $50 per car that a household has insured with the company via a one-time payment totaling $200 million.
Both companies also announced that customers can defer payments on insurance premiums without penalty due to loss of income. Additionally, both are also expanding insurance coverage for customers who use their personal vehicles to deliver food, medicine, and other goods.
Allstate is also offering free identity protection for the rest of the year with no opt-out-requirement. U.S. residents can get free identity protection through Dec. 31, 2020, regardless of whether they are already Allstate customers, by signing up in April or May.
While some are congratulating Allstate and AFI for helping its customers during a crisis, others say the money they’re giving back is a drop in the bucket compared to what each company is saving due to a significant decline in car insurance claims.
“I think it’s great what Allstate did. But where’s the rest of savings?” Dan Karr, the CEO of ValChoice asked CNN Business.
Karr, whose company acts as a watchdog for the car insurance industry, said American Family Insurance’s refund will probably equal even less of the average premium than Allstate’s target of a 15% reduction.
Allstate spokesman Justin Herndon said it’s too soon to know how far claims will decline because of the drop in driving, but “we decided to act quickly to put our customers first. This is something we’ll keep looking at.”
The coronavirus outbreak has confined citizens around the world to their homes. The virus has infected more than 300,000 people and killed more than 10,000 in the U.S. alone. Millions around the world are now telecommuting and in other countries rent and utility payments have been suspended.