COVID-19 Update: California Insurers’ Refund Order Extended
Order to Partially Refund Premiums for California Insurers Extended Through May 31, 2020
California Insurance Commissioner Ricardo Lara has extended the order for insurance companies to partially refund premiums to businesses and consumers in the midst of the coronavirus pandemic. The new bulletin issued on May 15 is directly addressed to all admitted and non-admitted property and casualty and workers’ compensation carriers operating in California. Here’s a quick recap of what the new directive could mean for your business.
This latest bulletin (Bulletin 2020-4) extends the time period established by the previous bulletin (Bulletin 2020-3). It was determined that the projected risk and loss exposure from policyholders
had been widely misclassified following the statewide stay-at-home orders which have put a major financial strain on all individuals and businesses.
Bulletin 2020-3 stipulates that insurers are to provide partial refunds of premiums for the months of March and April where projected loss exposures of certain policies have become misclassified or overstated. Commissioner Lara’s new bulletin has extended the directive through May 31, 2020 after the state of California unveiled its Pandemic Resilience Roadmap, keeping the stay-at-home
order in effect.
The commissioner is expected to issue additional directives if the stay-at-home order remains in effect until June. The new bulletin would likely reflect any changes to the classification of affected
policyholders.
The previous bulletin ordered insurers to notify California policyholders with the amount of their partial refunds, a check, premium credit, reduction, return of premium or any form of appropriate
premium adjustment by August 11, 2020. Additionally, they are required to provide an explanation of the basis for the adjustments which includes any changes to the classification or exposure of affected policyholders. This applies to the following lines of insurance:
• Workers’ compensation
• Commercial multi-peril
• Commercial liability
• Medical malpractice
• Commercial automobile
• Private passenger automobile
• Any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19
pandemic.
It is important to note that all insurers are to report all actions taken or planned to partially refund premiums in accordance with the newly released bulletin to the California Department of Insurance(CDI) by June 12, 2020. The reporting must include all adjustments made for March, April and May 2020.
Insurers can use the Microsoft Excel workbook provided by the CDI to file their reports before submitting them to the Rate Specialist Bureau at RSBCovid19PR@insurance.ca.gov.