With record numbers of positive COVID-19 cases, and some counties pausing opening local economies, Insurance Commissioner Ricardo Lara issued a Bulletin directing insurance companies to provide premium relief to drivers and businesses for the month of June and beyond. This new Bulletin recognizes that California consumers and businesses continue to be impacted by COVID-19 and requires that insurance carriers continue to evaluate changes in risk to their policyholders and apply additional savings as warranted through the remainder of the COVID-19 pandemic.
Recently, Governor Gavin Newsom has taken further actions to slow the spread of COVID-19, including ordering seven counties –San Joaquin County among them – to close bars, and increasing monitoring to now 19 counties that have seen an increase in positive cases. With many counties “hitting the dimmer switch” and local economies and consumers still being hit hard by this health emergency, Commissioner Lara is taking action to provide additional financial relief for consumers and businesses.
In response to Lara ordering premium relief to policyholders for the months of March, April and May, California automobile insurance companies have provided $1.21 billion in savings to drivers. That figure includes $1.03 billion in premium relief for more than 18 million policyholders while Californians struggled during the start of the COVID-19 pandemic, and an additional $180 million in future rate increases that insurance companies reduced in response to the Commissioner’s orders.
“More than $1.2 billion in premium relief and reduced future premiums represents actual savings for California policyholders, many of whom have been hit hard by the COVID-19 crisis,” said Commissioner Lara. “We are still seeing fewer accidents and insurance claims during the pandemic, and I expect the savings to keep growing. The Department of Insurance will continue our review to ensure that premium relief is adequate and fair.”
The premium relief per policy for the months of March through May as reported by the 25 largest insurance companies ranges from $19 to $155, depending on the cost of the policy and the company’s formula for providing relief. The overall average relief per policy for the top 25 carriers is $57 or 3.63 percent of a policyholder’s annual premium.
Approximately half the companies returned premium to drivers in the form of a refund or dividend, while the rest offered a credit against future premiums.
Commissioner Lara’s actions mean that California has taken some of the strongest steps to protect consumers from excessive rates. On March 18, as “stay at home” orders were beginning in California, the Consumer Federation of America sent a letter to all state insurance commissioners urging them to provide relief for excessive automobile insurance rates caused by the COVID-19 pandemic. According to the Consumer Federation of America, only California and New Jersey have directed companies to return premiums due to reduced risk through May.