Keenan Briefings


COVID-19 Update: New Bulletin Orders the Refund of Premiums to Consumers & Businesses

April 16, 2020

On Monday, April 13, 2020, California Insurance Commissioner Ricardo Lara issued a Bulletin ordering insurance companies writing certain types of coverage in the state to return premiums to consumers and businesses.

The Bulletin states, “The COVID-19 pandemic has severely curtailed activities of policyholders in both personal and commercial lines. As a result, projected loss exposures of many insurance policies have become overstated or misclassified. This is especially true for policies where premiums are based partly on measures of risk such as number of miles driven, revenue, and payrolls which have all dropped significantly because of COVID-19.”

In light of these reductions, Commissioner Lara ordered insurers to make an initial premium refund for the months of March and April to all adversely impacted California policyholders in the following lines of insurance:

  • Private passenger automobile
  • Commercial automobile
  • Workers’ compensation
  • Commercial multiple peril
  • Commercial liability
  • Medical malpractice
  • Any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic.

Refunds are to be sent “as quickly as practicable,” but in any event no later than 120 days after the issuance of the Bulletin and gives insurers “reasonable flexibility” in determining how best to refund premiums quickly and fairly, including providing premium credit, reduction, return of premium or other appropriate premium adjustment. The Bulletin states that if the COVID-19 pandemic continues beyond May, the Commissioner will send out a subsequent bulletin to insurers and provide appropriate instructions.

There are a lot of open questions about how this mandate will be implemented, particularly since many insurance companies have expressed skepticism regarding the Insurance Commissioner’s regulatory authority to mandate this action. In addition, this mandate is for conventional insurance, not reinsurance, which is utilized by most public agency / joint powers authorities.

On behalf of our clients that purchase any or all of those lines of insurance in the conventional insurance market, we will continue to monitor how each insurance company plans to implement this order and we will keep you informed as additional details are made available.

A complete copy of the Bulletin can be found at:

Keenan & Associates is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.