Ricardo Lara, the Insurance Commissioner of California, has told insurers to refund certain premiums to customers and businesses impacted by the ongoing COVID-19 coronavirus pandemic.
In a bulletin to all property and casualty insurers and workers compensation insurers, Insurance Commissioner Lara underlined the unprecedented challenge for the region’s residents and businesses as a result of the current crisis.
The ongoing pandemic has had a significant impact on the activities of policyholders in personal and commercial lines, suggesting that projected loss exposures of many policies are now overstated or misclassified, explained Commissioner Lara.
Payrolls have declined substantially following the outbreak amid subsequent social distancing measures and business closures, while the number of vehicles on the road and the distances being driven have also fallen.
“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. Today’s mandatory action will put money back in people’s pockets when they need it most,” said Commissioner Lara.
The Bulletin applies to premiums paid for at least the months of March and April, including the month of May so long as the “shelter in place” restrictions remain in-force, in at least six different lines of business: private passenger automobile; commercial automobile; workers’ compensation; commercial multi-peril; commercial liability; medical malpractice; and any other lines of insurance where the loss exposure has fallen dramatically as a result of the coronavirus pandemic.
Insurers in the region are required to provide a premium credit, reduction, return of premium, or other appropriate premium adjustments as soon as possible, but not later than August 2020.
A report from UC Davis on the impact of COVID-19 on traffic accidents in California shows that with less people on the roads, there’s been fewer accidents, injuries and fatalities. At the same time, Commissioner Lara highlighted that closure orders have led to falling payroll and receipts, which in turn significantly reduces the risk of liability losses for businesses.
“I applaud efforts made by insurance companies to date that have offered grace periods and flexibility to consumers and businesses during this national emergency. We must do more to help our hard-working families and small businesses,” continued Commissioner Lara.
As noted, a number of auto insurers have announced initiatives designed to assist policyholders during these challenging times. Last week, Allstate revealed a $600 million Shelter-in-Place Payback scheme for customers that insure their vehicle with Allstate, Esurance, and Encompass.
