By Paul McNamara
The California insurance regulator has told insurers to refund premiums to drivers and businesses affected by the COVID-19 emergency.
The order reflects the reduced risk of loss due to ‘shelter in place’ restrictions, according to the insurance commissioner Ricardo Lara. The order covers premiums paid for at least the months of March and April — including the month of May if ‘shelter in place’ restrictions continue.
Insurance lines covered include private passenger automobile, commercial automobile, workers’ compensation, commercial multi-peril, commercial liability, medical malpractice and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.
“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 Mr Lara. “Today’s mandatory action will put money back in people’s pockets when they need it most.”
The commissioner’s bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible, and no later than August 2020. Mr Lara has already requested at least a 60-day grace period for policyholders to pay their premiums so that insurance policies are not cancelled for non-payment of premium during this time. Together, these two actions will give consumers and businesses substantial financial relief.
According to a UC Davis special report on the impact of COVID-19 on California traffic accidents, reduced driving has resulted in fewer accidents, injuries and fatalities on public highways and roads. Falling payroll and receipts due to closure orders have also dramatically reduced risk of a liability loss for businesses.
Asia Insurance Review