California Insurance Commissioner Orders COVID-19 Premium Reduction Payments by Property & Casualty Insurers and Workers Compensation Insurers
Due to the impact of the COVID-19 virus, fewer workers are working, fewer construction projects are in active construction mode, fewer drivers are driving, and fewer businesses are conducting business, all across California. Prior to the onset of COVID-19 and the “stay at home” orders issued by the California Governor and various local government entities, individuals and businesses had already paid insurance premiums (or had premiums set) based on underwriting considerations that never took into account the impacts of COVID-19 and the resulting activity slow-down for individuals and businesses.
On April 13, 2020, California’s Insurance Commissioner issued BULLETIN 2020-3 to all Property and Casualty insurers and all Workers Compensation insurers, requiring them to “make an initial premium refund for the months of March and April to all adversely impacted California policyholders … as quickly as practicable, but in any event no later than 120 days after the date of this Bulletin” for the following lines of insurance:
- Private passenger and commercial automobile insurance
- Commercial multiple peril insurance
- Commercial liability insurance
- Workers’ compensation insurance
- Medical malpractice insurance
- “Any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic.”
The bulletin provides alternate means for insurers to calculate refunds, without pre-approval by the Department of Insurance. It requires insurers to report back to the Department of Insurance within 60 days regarding all actions taken (and future contemplated actions) to refund premiums.
Insureds should be on the look-out for potential refunds over the coming months. That said, we anticipate that insurers will push back, may drag their feet, and may seek to calculate refunds in a one-handed fashion to limit payouts. The insurance commissioner’s process will become clearer over the next few months, in the event that insureds seek to challenge their insurer’s response.
For further inquiries or questions, you can consult with a Task Force attorney by emailing [email protected] or contact our office directly at 949-854-7000.