On March 11, 2021, California Insurance Commissioner Ricardo Lara expanded his prior orders regarding premium relief for any line of insurance in California where the measures of risk have become substantially overstated as a result of the COVID-19 pandemic. In Bulletin 2021-03, the commissioner specifically required insurers writing private passenger auto coverage to „report to the Department information about the additional premium relief that they provide to consumers.“ In addition, for the report mandated under Bulletin 2020-08 and due by April 30, all reporting insurance companies must include a supplemental report to demonstrate how they plan to return additional premiums for the months of March through December 2020 where premiums remained overstated despite initial premium returns, if any.
As we advised in prior alerts, on December 3, 2020, the California insurance commissioner indefinitely extended the requirement that admitted property and casualty and workers‘ compensation insurers provide premium rebates or similar relief based on reduced risk exposures during the pandemic and report such activity to the California Department of Insurance (the Department) on a quarterly basis. That extension, as with Bulletin 2021-03, purports to apply to surplus lines carriers but cites no legal authority to require surplus lines carriers to comply.
The Department has now analyzed bodily injury, property damage and collision data for the months of January through September 2020 for the top 10 private passenger auto groups in California. Bulletin 2021-03 finds that „the Department’s review of this loss data demonstrates the premium relief that insurance companies provided to their policyholders was insufficient, leaving consumers paying inflated premiums while they continue to experience reduced risk of loss.“ In particular, the Department asserts that without supplemental premium refunds from March through September 2020, the premium refunds will be inappropriately low by nearly 50% of the expected premium adjustment over that period. Therefore, the Bulletin now requires insurers to:
„Do more“ to return additional premium relief from March 2020 forward, and report these additional premium returns to the Department; and
Communicate with policyholders about how premiums will be returned, as well as options available to consumers to reduce their ongoing premium.
In addition, for private passenger automobile insurance, if consumers are driving less, insurance companies must inform consumers about ways to reflect this change in driving patterns, such as asking consumers to report their actual driven mileage. Insurers must also continue to report on a quarterly basis pursuant to Bulletin 2020-08. If no premium relief is provided to policyholders in a calendar quarter, the report must disclose that fact and explain the justification for not providing premium relief.
The Bulletin includes a link to an Excel workbook that can be used to report the relief provided during each relevant time period, and any such reports should be emailed to RSBCovid19PR@insurance.ca.gov. These reports are public.