California Orders 3 Insurers to Give Refunds for Those Who Drove Less During Pandemic

October 6, 2021

California Insurance Commissioner Ricardo Lara on Wednesday directed three auto insurance companies to reimburse California drivers the excess premiums they were charged from the start of the pandemic, or face legal action.

The commissioner’s order is directed at Allstate Northbrook Indemnity Co., Mercury Insurance Co., and CSAA Insurance Exchange. Together, these companies insure roughly 20 percent of all California drivers.

Further analysis by the California Department of Insurance of data received directly from auto insurance companies shows the three carriers have the greatest gap between what they initially refunded drivers, and what they should have refunded, to provide proper premium relief to their policyholders since the start of the COVID-19 pandemic, according to CDI.

Shortly after Gov. Gavin Newsom issued “stay-at-home” orders to help stop the spread of the pandemic in March 2020, Lara ordered all property/casualty insurance companies doing business in California in lines of insurance impacted by the pandemic to make appropriate premium refunds to consumers. As the pandemic continued, Lara extended his refund order through June 2020 and beyond “as conditions warrant.”

Lara in March ordered insurance companies to continue to provide appropriate premium refunds or credits as the CDI obtained further data showing the risk of loss had fallen dramatically, and insurance companies had overcharged consumers.

The department’s analysis found that from March to September 2020 insurance company groups returned on average 9% of auto premiums, but the department’s analysis found they should have refunded nearly double that amount (17%) over the seven-month period.

The three insurance companies named in the order have 30 days to respond.


Topics Carriers California COVID-19

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