On April 13, 2020, the CA Dept. of Insurance issued a bulletin ordering insurers to provide premium reductions for certain lines of insurance. The order was issued in response to recent reports from UC Davis and the Consumer Federation of California regarding auto accidents. Those reports show that, as a result of the recent “shelter-in-place” orders, the amount of traffic accidents, injuries, and fatalities on public roads has been greatly reduced. This reduction has been so dramatic that, according to the Consumer Federation of California, auto insurance companies are making “windfall profits” because the overall risk of loss has been so significantly reduced.

In response, the Department of Insurance recognized that this reduction in risk extends beyond auto insurers. In its April 13 bulletin, the Department ordered insurers to provide premium reductions for the following lines of insurance:

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


The order provides insurers with options for calculating that reduction. However, within 120 days  – i.e. by August 11, 2020 –  insurers are required to do the following:

  • Provide each affected policyholder, if applicable, with a notification of the amount of the refund, a check, premium credit, reduction, return of premium, or other appropriate premium adjustment.
  • Provide an explanation of the basis for the adjustment, including a description of the policy period that was the basis of the premium refund and any changes to the classification or exposure basis of the affected policyholder; and
  • Offer each insured the opportunity to provide their individual actual or estimated experience.

The order presents a glaring question for both insures and policyholders: Aside from automobile, worker’s compensation, commercial, and medical malpractice, what other types of insurance have enjoyed a significant risk reduction as a result of the COVID-19 pandemic? For example, is there significantly less risk for homeowners’ insurance if the insureds are sheltering-in-place, at home? The language of the order leaves the door open for a myriad of other types of insurance and situations.

Another potential source of confusion is that insurers are required to offer policyholders the opportunity to “provide their individual actual or estimated experience” for calculating the premium reduction, e.g., providing updated mileage estimates to an auto insurer. No further guidance is provided as to what “individual experiences” may or may not be relevant or whether insurers are required to take that information in account.

The Department of Insurances has recently issued several other orders aimed at benefiting policyholders, such as requesting insurers provide a 60-day grace period for premium payments  and instructing insurers to extend deadlines for filing of COVID-19-related claims. As a result, California policyholders of all types may find much-needed relief in unprecedented times.