Unprecedented times call for unprecedented measures. As insurance carriers look at the change in risk caused by the stay-at-home orders, they are realizing the savings in payouts due to a lack of cars on the road. On April 13th, California’s insurance commissioner, Ricardo Lara, issued a bulletin ordering insurance carriers to return insurance premiums to consumers and businesses in order to provide financial relief during the COVID-19 shelter-in-place.
The commissioner’s bulletin outlines that premiums paid for March and April in for 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.
Commissioner Lara grants each insurer reasonable flexibility in determining how best to quickly and fairly accomplish the refund of premium to policyholders. Insurers may comply with the premium refund order by providing a premium credit, reduction, return of premium, or other appropriate premium adjustment. Each carrier is given flexibility in how they will handle a refund.
Many carriers — such as Mercury, Travelers and Safeco — had already taken it upon themselves to pass on savings to their customers. They planned to refund customers 15% of their personal auto premium for the months of April and May. “With tens of millions of drivers out of work and facing economic hardship, it was very generous of the carriers to voluntarily pass on their savings to their customers” said Daniel Groff, president and CEO of Insurance Brokers West, Inc. in Moorpark, CA.
Customers will see the savings before August 11, 2020, but hopefully sooner. The savings will be automatically given to personal lines customers; however the specifics could vary by carrier. You do not need to contact your insurance agent in order to receive the savings.
Annual miles driven savings will also have an effect; however, this is averaged over 12 months and will not take effect until your policy renewal date. Companies like Mercury Insurance who offer a RealDrive® program that captures actual miles driven will see the effect and adjust the renewals accordingly.
Commissioner Lara has also requested that carriers offer a 60-day grace period for consumers and businesses to pay insurance premiums. Auto insurance will also be extended during this time for those with an expired license and/or car registration.
With the current push to keep local business alive amidst the stay-at-home order, companies are seeing a renewed focus on supporting local insurance agents. Studies show that $68 for every $100 spent at a local business stay in that community. “As an essential business, our office remains open, although with some employees working from home,” said Groff. “During times like this, it is so nice to take a step back and see how the community has come together focused on helping each other and local businesses.”
Insurance Brokers West
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