Berkshire Hathaway Unit to Refund Customers With Part Premium
Berkshire Hathaway Inc.’s. BRK.B auto insurance unit Geico has announced that it will return $2.5 billion of premium to its policyholders carrying auto insurance. This strategic move comes as a pleasant gesture to reward the company’s policyholders as it gains from lower claims amid a decline in the number of automobiles plying due to the COVID-19 impact.
The company will be crediting this amount to its nearly 19 million customers. It will be providing 15% credit on policies up for renewal between Apr 8 and Oct 7. This will amount to a rough average of $150 per auto policy and $30 per motorcycle policy.
The company has been witnessing fewer insured vehicles on road as people tend to stay home and travel less frequently as a precautionary measure against the coronavirus disease, which seems to spiral out of control.
This reduction in travel signifies a silver lining in the cloud for GEICO, which is well-equipped with big auto insurance business.
Year to date, shares of Berkshire Hathaway have lost 15.7% compared with its industry’s decline of 16.9%.
Other insurers like The Allstate Corp. ALL and The Travelers Companies, Inc. TRV are also returning a sizeable portion of the premiums to their customers.
Another company, The Progressive Corp. PGR, also with wide exposure to automobile insurance is likely to benefit from lower claims.
Allstate announced that it will provide a Shelter-in-Place payback worth above $600 million over the next couple of months (April and May), which will be almost 15% of its customers’ monthly premium.
Notably, The Travelers Companies initiated a program called Stay-at-Home Auto Premium Credit Program through which it will credit its customers an amount equivalent to 15% of auto premiums payable by members for the months of April and May.
Companies are also offering relief to their customers on non-payment of premium dues by halting their cancellation of coverage due to non-payments, allowing them to defer their premium payments without any penalty, giving them the choice to delay two consecutive premium payments and also permitting them to pay what they can afford.
The insurance industry comprising life and property plus casualty (PC) insurers has been suffering a lot due to the COVID-19-led pandemic.
However, players with exposure to auto insurance business should be relatively better placed.
Berkshire Hathaway carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
