Filed-Rate Doctrine Does Not Prevent Challenge to Insurers’ Auto Rates During COVID-19 Pandemic

    The federal district court considered a challenge to GEICO’s premium rates as unconscionably excessive in light of a reduction in the insurance risk pool due to the COVID-19 pandemic. Thomas v. GEICO Cas. Co., 2023 U.S. Dist. LEXIS 19332 (N. D. Ill. Feb. 6, 2023).

    During the COVID-19 pandemic, there was a reduction in driving. In response to fewer accidents, GEICO instituted a “GEICO Giveback” program, which applied a 15% premium reduction to new and renewed auto insurance policies. Plaintiffs sued, alleging that the premium deduction was insufficient as compared to the overall reduction in GEICO’s customers’ risk profiles. Therefore, the program was unfair and deceptive, in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. GEICO moved for judgment on the pleadings.

    The issue was whether the “filed-rate” doctrine prevented the court from awarding plaintiffs damages. The doctrine prohibited courts from invalidating or modifying a rate that was filed with a public utility or common carrier’s regulator. As a result, plaintiffs generally could not seek damages based on the difference between the actual rate and a hypothetical lawful rate. Deference to regulator agencies was prudent because rate regulation was one of legislative control and was not a judicial function. 

    The court considered whether the Illinois’ version of the filed-rate doctrine applied to rates for personal automobile insurance, which were filed with the Illinois Department of Insurance. The Illinois Supreme Court had not addressed the issue. An Illinois intermediate appellate court, however, had found that the filed-rate doctrine was not applicable to auto insurance rates in Illinois. Corbin v. Allstate Corp., 140 N.E. 3d 810 (Ill. Ct. App. 2019). 

    The court adopted the persuasive reasoning in Corbin. One aim of the filed-rate doctrine was deference to the regulatory authority of state regulatory agencies. But when the relevant state agency played no role in insurance rate approval, application of the doctrine made little sense. Accordingly, the court declined to abdicate the responsibility to assess whether GEICO’s pandemic-era rates were deceptive or unfair in deference to non-existent state rate-setting authority. Therefore, GEICO’s motion was denied.