Insurance Commissioner Orders Premium Returns During Coronavirus Pandemic
Early Monday, April 13th, Insurance Commissioner Ricardo Lara ordered insurance companies to return insurance premiums to consumers and businesses during the COVID-19 emergency. The Commissioner’s office said the shelter-in-place order across the state has reduced the overall risk of loss. According to a UC Davis Special Report on the Impact of COVID-19 on California Traffic Accidents, reduced driving has resulted in fewer accidents, injuries, and fatalities on public highways and roads. The Department of Insurance (DOI) press release also stated, “Falling payroll and receipts due to closure orders have also dramatically reduced risk of a liability loss for businesses.”
Notably, before this announcement, some insurance companies had already voluntarily taken action with regards to premium refunds or discounts for drivers. However, the Commissioner's Bulletin is much broader. More specifically, the premiums covered are for March, April, and May if the shelter-in-place order continues through then. Further, the six categories of premiums covered by the order include private passenger automobile, commercial automobile, workers’ compensation, commercial multi-peril, commercial liability, and medical malpractice. The order would also apply to “any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.”
Insurance companies have until August 2020 to comply with the order—whether through premium credits, reductions, return of premiums or other appropriate premium adjustments. Commissioner Lara also ordered companies to report back to the DOI within 60 days to provide oversight and ensure compliance.
For a copy of the DOI press release, please see http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/release038-2020.cfm.