CA Orders Insurers to Refund Premiums

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California Orders Insurers to Refund Premiums to Drivers, Businesses Hit by COVID-19 – Insurance Journal 4/13/20

California Insurance Commissioner Ricardo Lara on Monday ordered insurance companies to return insurance premiums to consumers and businesses and provide financial relief during the COVID-19 emergency.

The commissioner’s bulletin covers premiums paid for at least the months of March and April — including May if “shelter in place” restrictions continue — in at least six different insurance lines: private passenger automobile, commercial automobile; workers’ compensation; commercial multi-peril; commercial liability; medical malpractice; and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.

“With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss,” Lara said in a statement. “Today’s mandatory action will put money back in people’s pockets when they need it most.”

The group of property/casualty insurers offering auto insurance premium discounts to recognize that insureds are driving less during the coronavirus crisis continues to grow and now includes all major auto insurers. State Farm and Nationwide late last week joined the ranks of the top 10 auto insurers providing relief that already included Geico, Progressive, Allstate, USAA, Liberty Mutual, Farmers, Travelers, and American Family. In addition, since late last week, the following insurers have also announced offers: Erie, Hanover, CSAA, Kemper, MetLife Auto & Home, Mercury, Plymouth Rock, NJM and Union Mutual. According to the Insurance Information Institute, these and other auto insurers have announced refunds, discounts, dividends and credits totaling $8.1 billion.

The commissioner’s bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustments as soon as possible, and no later than August. Lara has already requested at least a 60-day grace period for policyholders to pay their premiums.

Numerous auto insurance companies have recently announced voluntary premium refunds to drivers. The bulletin extends these private personal auto policy reductions to more companies and adds commercial lines while monitoring insurance companies’ compliance with California’s consumer protection laws so that refunds are not discriminatory or inadequate.

A premium refund will not require prior approval by the California Department of Insurance if an insurance company follows certain methods outlined in the bulletin, such as using an average percentage based on an estimated change in risk or exposure. Consumers will also have the opportunity to provide their individual actual or estimated experience to their insurance company.

Lara also ordered insurance companies to report back to the department all premium refunds they have issued or expect to issue within 60 days to provide oversight and ensure companies are complying with the bulletin.

Other steps related to the outbreak the commissioner and the department have taken include:

  • Requesting a 60-day grace period for consumers and businesses to pay insurance premiums
  • Extending deadlines for insurance claims until 90 days after the statewide “state of emergency” or any other “state of emergency” has ended related to COVID-19
  • Maintaining auto insurance for those with an expired license and/or car registration
  • Extending personal auto coverage for delivery drivers for California’s essential businesses
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  • Eliminating cost-sharing for COVID-19 testing and screening
  • Reminding insurance companies that worker’s comp insurance applies regardless of a worker’s immigration status
  • Urging uninsured Californians to obtain insurance to protect their health
  • Directing health insurance companies to provide increased telehealth access for consumers
  • Directing health insurance companies to submit emergency plans on prescriptions and health access
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