WASHINGTON: Geico Corp, part of billionaire Warren Buffett’s Berkshire Hathaway Inc, said on Tuesday it will offer about US$2.5 billion of credits to its 19 million auto and motorcycle policyholders, reflecting the decline in driving stemming from the coronavirus pandemic.
The insurer said it will offer a 15% credit on policies up for renewal between April 8 and Oct 7, averaging about US$150 per auto policy and US$30 per motorcycle policy.
Geico said it has about 18 million auto customers and 1 million motorcycle customers.
The announcement came one day after Allstate Corp said it would return more than US$600 million to policyholders, mostly through a “payback” of 15% of premiums for April and May on about 18 million policies.
Many Americans are driving less because of stay-at-home orders aimed at curbing the pandemic.
Geico said vehicle accidents are down considerably, though it expects a return to near-normal levels as the pandemic subsides.
“The ongoing crisis has widespread effects that will linger,” Geico chief executive Todd Combs said in a statement. “Our customers have been loyal, and we are committed to doing all we can to help them.”
State Farm and Progressive Corp are also reviewing their premium practices in light of the decline in driving.
Geico earned US$35.57 billion of premiums in 2019, and paid out US$28.94 billion, or 81.3%, to cover loss claims.
Pretax underwriting gains totalled US$1.51 billion, after accounting for underwriting expenses.
Berkshire, based in Omaha, Nebraska, has owned all of Geico since 1996.