COVID-19 Department of Insurance Update

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

The Commissioner's Bulletin covers premiums paid for at least the months of March and April — including the month of 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.

The Commissioner's Bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible, and no later than August 2020. Commissioner Lara has already requested at least a 60-day grace period for policyholders to pay their premiums so that insurance policies are not canceled for nonpayment of premium during this challenging time. Together, these two actions will give consumers and businesses substantial financial relief.

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. Falling payroll and receipts due to closure orders have also dramatically reduced risk of a liability loss for businesses.

Several auto insurance companies have recently announced voluntary premium refunds to drivers. Today's 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.

Commissioner Lara also ordered insurance companies to report back to the Department of Insurance all premium refunds they have issued or expect to issue within 60 days, in order to provide oversight and ensure companies are complying with the Bulletin. 

Today's action builds on other steps the Department of Insurance has taken to assist consumers during the COVID-19 emergency: