Ricardo Lara has told insurers to return premiums on six lines of personal and commercial coverage.
California Insurance Commissioner Ricardo Lara has ordered insurers to return premiums from certain lines to businesses and consumers. This has raised pressure on those insurers to take larger steps to reduce customer financial burden caused by COVID-19.
Lara has ordered insurers to return premiums paid for March, April, and possibly May as well.
The California Insurance Commissioner’s order applies to six different coverage lines. These include passenger and commercial auto, commercial multi-peril, workers compensation, commercial liability, and medical malpractice. Lara’s order also includes certain other types of coverage lines that could face losses due to the coronavirus outbreak.
Many major insurance companies across the country have already started offering credits to their auto and motorcycle policyholders. This is to compensate them for the reduced risk they represent as they are not driving nearly as much. Most Americans have been ordered to stay at home in order to slow the virus’ spread. This reduction in the number of miles driven has also reduced the chance that they would be involved in a collision.
The California insurance commissioner pointed out that risks are lowered in many areas.
“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,” said Lara in a recent press release. “Today’s mandatory action will put money back in people’s pockets when they need it most.”
Due to Lara’s new order to insurers, those companies must provide their policyholders with a premium reduction, credit or refund. They may also make other types of “appropriate premium adjustments”. That said, these changes have been ordered as soon as possible and can be completed no later than August 2020. The purpose is to be sure that they premiums more accurately reflect the altered risk and that they do not present a burden to consumers at a time when they are least able to afford it.
According to data from the California Insurance Commissioner’s office, insurers in the state collect about $310 billion from consumers and businesses every year. The state’s insurance department is its largest consumer protection agency.