The impact of the coronavirus has significantly altered many of the ways of life previously considered “normal” in the U.S., and there seems to be no end in sight to these changes. Perhaps one of the biggest is that millions of Americans are now working from home on a daily basis, rather than commuting to work via car. This brings with it a number of notable alterations to American life and, some argue, may require entire industries to reconsider how they do business.

The auto insurance industry is one such sector, and a recent letter to the various state-level insurance commissioners around the country from the Consumer Federation of America and the Center for Economic Justice highlights this issue. In the letter, the organizations ask that state governments do what they can to mitigate monthly auto insurance premiums for vehicle owners who have been affected by the coronavirus shutdown, perhaps including asking insurers themselves to provide financial relief.

The argument the organizations make is straightforward: The vast majority of miles driven in the U.S. are those made as people commute to and from work, and with many now forced to stay home, the number of miles being driven on American roads is down significantly. This new reality brings with it the fact that fewer vehicles on the road mean fewer accidents, and thus fewer claims that cost auto insurers money.

Traffic is thinning out all over the U.S.Traffic is thinning out all over the U.S.

Consequently, the CFA and CEJ note that if insurers set rates assuming a typical person would drive 1,000 miles per month, and that number is now more like 200 or less because they aren't commuting two ways five days a week, insurers could be in a position to pocket large amounts of additional money at a time when many people face financial difficulties.

The reality of the situation
While it may be too early to make such demands of the auto insurance industry, some of the issues they bring up in their letter seem to ring true to industry insiders – at least to a certain extent, according to the Insurance Journal. For instance, various publications note that major cities around the U.S. are seeing traffic drop to 20-30% of their normal levels on any given weekday, significantly reducing congestion and allowing drivers to move more freely on major roadways.

However, many observers believe most states have bigger issues to consider these days than auto insurance premiums. While commissioners in two states – Vermont and Delaware – had already responded to the letters feeling cautiously optimistic, many of their colleagues are unlikely to follow through on those recommendations. If changes do come, they certainly won't be immediate. Moreover, it's likely those rates would shift naturally for many drivers over time, rather than at the direction of regulators artificially altering policy.

Robert Hartwig, a University of South Carolina economics professor and former director of the Insurance Information Institute, told the Insurance Journal that while insurers will likely enjoy a few months' worth of diminished claims, they're likely to come back just as strong as they once were when the coronavirus panic blows over.

The industry response
Two days after the Consumer Federation of America and the Center for Economic Justice published their letter, the American Property Casualty Insurance Association issued its own statement. It highlighted the fact that a number of policy providers were already independently setting up options for their own employees and policyholders to increase flexibility in a time of great uncertainty.

However, David Sampson, president and CEO of the APCIA, also cautioned that insurers would have a difficult time dealing with requirements to pay for uncovered P&C losses (largely those for companies that do not have clauses pertaining to loss of business in their coverage) but remain ready to work with government officials on other solutions to the obvious problems the pandemic presents.

Other concerns
In addition to these concerns, there are other lingering regulatory concerns for auto insurers, Insurance Business America noted. For instance, when a small Massachusetts town implemented a “volunteer driver” program to help local seniors get where they need to go, its insurer said this created major liability issues. To that end, the state legislature introduced a law (as yet unpassed) that would expand its existing Good Samaritan rules to include programs like this, but insurers still don't have a lot of clarity around what this might mean for them not only in the Bay State, but beyond.

These volunteer programs certainly exist in other places – though have likely ground to a halt in many places, given the coronavirus outbreak – and each may carry with them their own liability issues depending on how they are run, the report said. In the near future, there aren't likely to be any hard and fast answers forthcoming.

With a likely major slowdown in claims already upon the industry, now may be the time for those within it to keep careful tabs on regulatory changes that may affect how they do business going forward. This is a time of great change for tens of millions of people, and insurers need to be ready to respond.