Geico to Give Customers $2.5 Billion With Driving Down
Geico to Give Customers $2.5 Billion With Driving Down
(Bloomberg) -- Warren Buffett’s Geico plans to offer insurance-policy credits to its auto customers as driving declines because of the widespread coronavirus-related shutdowns.
Geico, owned by Buffett’s Berkshire Hathaway Inc., will provide a 15% credit to its auto and motorcycle customers when their policies come up for renewal between April 8 and Oct. 7, the insurer said in a statement Tuesday. That translates to a total benefit to consumers of about $2.5 billion, the company estimates.
The announcement follows similar moves by rivals Allstate Corp. and American Family Insurance, which are returning money to customers. Allstate Chief Executive Officer Tom Wilson said there’s been a roughly 35% to 50% decline in driving in most states, a drop that could translate into fewer accidents that the auto insurer would have to cover. Earlier Tuesday, Liberty Mutual Insurance announced plans to give customers refunds totaling about $250 million.
Geico’s credits will also apply to new policies purchased from early April to early October. The insurer said that the shutdowns tied to the spread of Covid-19 have cut down on customers’ driving, with a bounce-back expected once the virus’s spread subsides.
“This ongoing crisis has widespread effects that will linger,” Geico CEO Todd Combs said in the statement. “That is why we wanted to give this credit for at least six months.”
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