Safeco Insurance Company Faces Class-Action Lawsuit over Automobile Insurance Rates During COVID-19 Pandemic

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By Jackson Sullivan

On November 23, 2021, in Jimmy Monge v. Safeco Insurance Company of America et al., Case No. 2:21-cv-09175-MWF-AFM (C.D. Cal.)., plaintiffs filed a class action complaint in the Central District of California on behalf of the putative class of all persons who paid insurance premiums to Safeco Insurance Company and affiliates, for automobile insurance policies covering any period from March 1, 2020, through the present. Plaintiffs allege that Defendants were unjustly enriched by the collection of, and refusal to refund, excessive auto insurance premiums during the COVID-19 pandemic. Plaintiffs further allege that Defendants violated, and continue to violate, Business and Professions Code §17200, et. seq., by engaging in the unfair business practice of collecting and retaining excessive, unfair premiums.

Plaintiffs cite UC Davis’ Special Report: Impact of Covid19 on California Traffic Accidents, showing that Californians’ reduced driving as a result of statewide shelter-in-place orders led to fewer accidents, injuries, and fatalities on public highways and roads, and thus fewer automobile insurance claims. As a result of these conditions, Department of Insurance (DOI) Commissioner Ricardo Lara issued Bulletin 2020-3 on April 13, 2020, ordering automobile insurance companies to refund premiums to affected California policyholders. However, these refunds were generally inconsistent and insufficient to provide fair, actual, and meaningful relief to consumers. [see 27:1 CRLR 193–195; 25:2 CRLR 135]

On February 22, 2022, Defendants filed a motion to dismiss the complaint on the grounds that California’s Insurance Commissioner has exclusive jurisdiction over Plaintiffs’ claims, and California law forbids courts from modifying insurance premiums that were expressly approved by the Insurance Commissioner. While Defendants acknowledged in their memorandum of points and authorities that “a handful of California courts recently allowed similar claims to proceed based on the conclusion that the plaintiffs were not really challenging their approved premiums,” they further argued that “[t]hose decisions were wrong on their facts,” and any analysis of “what would constitute a reasonable pandemic-era premium . . . belongs exclusively to the DOI.” A hearing on Defendants’ motion to dismiss is set for April 18, 2022, before Judge Michael W. Fitzgerald.

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