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California Insurance Commissioner Orders Customer Refunds For March, April

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Sacramento, CA — With most of California’s population hunkered down during the COVID-19 emergency, the insurance commissioner is directing insurers to return customers’ premium payments.

This week, Insurance Commissioner Ricardo Lara ordered insurance companies to adjust for how the pandemic has curtailed policyholders’ activities across multiple lines of personal and commercial insurance coverage products.

He pointed out that projected loss exposures of many policies are now overstated or misclassified, especially for policies whose premiums are based partly on measures of risk such as number of miles driven, revenue, and payrolls, which have all significantly dropped due to the emergency.

For now, Lara is specifically ordering insurers to make an initial premium refund for the months of March and April to all adversely impacted California policyholders within the next 120 days on the following lines: private passenger and commercial auto coverage; workers’ compensation insurance; commercial multiple peril and liability coverage; medical malpractice insurance; and any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic.

Insurers are being given reasonable flexibility in determining how best to quickly and fairly refund the monies to their customers. It is anticipated Lara will be following up with another order in May as the pandemic and Stay At Home order continues.

Although Lara has taken broader action to reclaim premium payments across insurance policy lines, the initial findings for his actions referenced a UC Davis Special Report on Impact of COVID-19 on California Traffic Accidents, which found that reduced driving has resulted in fewer accidents, injuries, and fatalities on public highways and roads. He also noted the Consumer Federation of California Education Foundation (CFC) recently submitted a petition for hearing to redress excessive automobile insurance rates and premiums relating to the COVID-19 pandemic.