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Insurance Carriers to Announce Premium Refunds, Credits, and Reductions in Response to Insurance Commissioner’s Latest Order.

Insurance Carriers to Announce Premium Refunds, Credits, and Reductions in Response to Insurance Commissioner’s Latest Order.

Scroll down to see updates from carriers on how they will comply with the CA Insurance Commissioner's order to provide refunds.

On Monday, April 13th, the California Department of Insurance issued a bulletin regarding “Premium Refunds, Credits, and Reductions in Response to COVID-19 Pandemic”

Insurance Commissioner Ricardo Lara recognizes that the COVID-19 pandemic has caused an unprecedented challenge for California’s businesses and residents. It has severely curtailed activities of policyholders in both their personal and commercial endeavors. As a result, projected losses of many insurance policies have become overstated or misclassified. This is especially true for policies where premiums are based partly on measures of risk such as

  • number of miles driven
  • revenue
  • payroll

which have all dropped significantly because of COVID-19.

Commissioner Lara ordered insurers to make an initial premium refund for the months of March and April to all adversely impacted California policyholders in the following lines of insurance, as quickly as practicable, but in any event no later than 120 days after the date of the Bulletin:

  • Private passenger automobile insurance
  • Commercial automobile insurance
  • Workers’ compensation insurance
  • Commercial multiple peril insurance
  • Commercial liability insurance
  • Medical malpractice insurance
  • Any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic.

If the COVID-19 pandemic continues beyond May, Commissioner Lara will send out a subsequent Bulletin to insurers and provide appropriate instructions.

Commissioner Lara granted each insurer reasonable flexibility in determining how best to quickly and fairly accomplish the refund of premium to policyholders. Insurers may comply with the premium refund order by providing a premium credit, reduction, return of premium, or other appropriate premium adjustment.

Updates from Personal Auto Insurance carriers (with whom LBW is appointed) can be found on this separate post.

This post is being updated as we receive notifications from the Commercial carriers.

Most carriers are offering some form of payment relief. They are waiving late fees and cancellation notices. Some are waiving credit card or other payment fees. If your payment will be delayed, or you need an alternate payment option, check with your carrier or your agent to confirm the accommodations being provided for your specific policy. Be sure to pay attention to the important dates that define the period they will offer this special relief. (Currently, most apply to the months of April and May.)

Following are the specific statements about refunds and credits:

Chubb

  • Chubb's U.S. small business clients whose policies renew between April 1 and August 1, 2020 will receive an automatic 25% reduction in the sales and payroll exposures used to calculate their premium as well as a 15% reduction in premiums for their commercial auto insurance.

Liberty Mutual

  • Business Owners Policy Refund: To help Liberty Mutual small commercial customers, Liberty has announced the Business Owners Policy (BOP) Refund. Here’s how it works:
    • Small commercial customers will receive a 15% refund of two months of their annual BOP premium for policies in-force, based on their premium amount as April 1, 2020, pending regulatory approval.
    • The refunds will begin in the upcoming weeks and will be issued by check to all customers.
    • The payments will happen automatically. You do not need to call Liberty to receive the refund.

Mercury Insurance

  • Mercury recognizes the COVID-19 crisis has altered driving patterns, resulting in fewer accidents and claims, so they are giving back 15% of monthly personal auto insurance premiums, 10% of monthly business auto premiums, and 15% of select commercial multi-peril policy monthly premiums for two (2) month-long periods. In California, the giveback period calculation begins on March 19, coinciding with Governor Newsom’s stay-at-home order, and in all other states it will begin on April 1. A credit will be applied to customer accounts in early May, and a second credit will be applied in early June. This is an everchanging situation, however, so Mercury’s response may continue to evolve as the pandemic continues.

The Hanover

  • In California: Bulletin 2020-3 from April 13, 2020 orders insurers to report to the Department of Insurance within 60 days and to communicate with policyholders within 120 days of the date of the bulletin. We are thoughtfully considering how to best comply with the bulletin in a way that is consistent with the needs of our customers and agent partners and will submit a response within the specified timeframe.
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