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US insurers return $12 billion in COVID premiums

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Nearly $US8.5 billion ($12 billion) in premiums have been returned to US property and casualty (P&C) policyholders in the six months to June 30 because of COVID-19, according to a report by AM Best.

About 49% of the returns came in the form of reduction in premium income, with 218 insurers disclosing they gave back about $US4.14 billion ($5.8 billion) during the period.

Other underwriting expense made up $US1.2 billion ($1.7 billion) in reported returns, policyholder dividends $US3.1 billion ($4.4 billion) and premium balances charged off $US4.3 million ($6.1 million)

AM Best says auto-related coverage appears to be the most prevalent line where returns were made. Other lines where returns were reported include general liability, workers’ compensation, event cancellation and inland marine.

Some insurers that have not returned premiums have indicated they plan to do so in the third quarter while others have preferred to allow forbearance measures such as extending payment terms for premiums and suspending terminations for late or non-payments, or reported that they intended to lower rates.

AM Best says it is too to determine the net impacts of the decline in exposures related to the reduction in premiums and any estimates would necessarily be very rough.