Suit accuses San Antonio's USAA of charging excessive insurance premiums during pandemic

The plaintiff's attorneys seek to certify the suit as a class action.

A federal lawsuit accuses the San Antonio-based insurer of charging "excessive, unfair premiums." - Twitter / USAA
Twitter / USAA
A federal lawsuit accuses the San Antonio-based insurer of charging "excessive, unfair premiums."
A member of San Antonio-based USAA has sued the insurance and financial services giant, alleging that it charged excessive premiums during a two-year stretch when COVID-19 lockdowns forced customers to cut back on their driving.

The plaintiff in the federal lawsuit, Philip Johnson of Bonita, California, maintains USAA incurred fewer claims as people drove less and should have passed on additional savings to members. Johnson's attorneys seek to certify the complaint as a  class-action suit.

In an emailed statement, USAA said it passed along "appropriate" auto policy dividends and credits, along with other financial relief efforts during the pandemic. USAA also noted that a December 2020 study by consumer group U.S. PIRG found that the insurer provided "better relief" than its competitors in multiple states, including California.

"We remain committed, as we have been for nearly 100 years, to providing highly competitive products and exceptional service to military members and their families," USAA officials added in a statement.

Johnson's petition asks the court to declare USAA's handling of its credit program during the pandemic illegal and to make the company compensate members for "excessive, unfair premiums" they were charged.

"USAA’s dividend and premium credit program was inadequate to compensate its customers for overpayments resulting from COVID-19," the filing alleges. "The program applied only a 20% dividend to policyholders spanning three months starting in March 2020. And although USAA reports that it offered an additional dividend and smaller premium credits later in 2020 and 2021, these amounts were still insufficient."

The lawsuit comes a month after U.S. banking regulators slapped USAA's banking subsidiary, USAA Federal Savings Bank, with a $140 million fine, alleging it failed to adequately monitor for potential money-laundering activity.

Federal regulators have also penalized USAA Federal Savings Bank two other times since 2019 over alleged breaches of banking laws.

In 2020, the feds fined the institution $85 million for violations of federal rules that it said constitute a "pattern of misconduct." The prior year, the Consumer Financial Protection Bureau ordered the bank to pay a combined $15.5 million in penalties and restitution over allegations that it skirted banking laws.

Stay on top of San Antonio news and views. Sign up for our Weekly Headlines Newsletter.

KEEP SA CURRENT!

Since 1986, the SA Current has served as the free, independent voice of San Antonio, and we want to keep it that way.

Becoming an SA Current Supporter for as little as $5 a month allows us to continue offering readers access to our coverage of local news, food, nightlife, events, and culture with no paywalls.

Join today to keep San Antonio Current.

Scroll to read more San Antonio News articles

Sanford Nowlin

Sanford Nowlin is editor-in-chief of the San Antonio Current.

Join SA Current Newsletters

Subscribe now to get the latest news delivered right to your inbox.