By Jonathan Stempel
(Reuters) – Geico, the automotive insurer owned by Warren Buffett’s Berkshire Hathaway, is not going to face class-action claims because it defends towards a lawsuit alleging it overcharged policyholders early within the COVID-19 pandemic, a federal choose dominated on Tuesday.
U.S. District Choose Sharon Johnson Coleman in Chicago mentioned policyholders in Illinois couldn’t sue as a bunch as a result of questions on calculating damages for particular person drivers would “inevitably overwhelm” questions frequent to the proposed class.
She additionally discovered no “frequent harm” from Geico’s statements that it created its “Geico Giveback” program as a result of “shelter in place legal guidelines have diminished driving” and it needed to begin “passing these financial savings” to prospects.
Class actions can let plaintiffs pursue better recoveries at much less value than in the event that they sued individually.
The case was introduced by Illinois purchasers of Geico automotive, motorbike or RV insurance coverage since March 21, 2020, together with those that visited the “What if I am driving much less?” or “Why are we doing this?” pages on Geico’s web site.
Geico in April 2020 supplied policyholders $2.5 billion of credit, together with 15% on renewals.
The plaintiffs mentioned Geico ought to have joined rival insurers resembling State Farm and Allstate by providing refunds as driving accidents declined.
They mentioned Geico ended up charging “unconscionably extreme” premiums that violated Illinois shopper safety legal guidelines.
The plaintiffs’ legal professionals didn’t instantly reply to requests for remark. Attorneys for Geico didn’t instantly reply to comparable requests.
Much less driving throughout the pandemic contributed to Geico’s “loss ratio,” or proportion of premiums paid to cowl claims, falling in 2020 to a 13-year low.
The insurer later suffered six consecutive quarters of underwriting losses, however has since rebounded by tightening requirements and decreasing insurance policies in drive. Geico earned $3.64 billion earlier than taxes from underwriting in 2023.
Berkshire, based mostly in Omaha, Nebraska, has owned all of Geico since 1996. Geico relies in Chevy Chase, Maryland.
The case is Thomas et al v Geico Casualty Co et al, U.S. District Court docket, Northern District of Illinois, No. 20-04306.
(Reporting by Jonathan Stempel in New York; Enhancing by Invoice Berkrot)
