7. Pandemic triggers premium returns
Posted On: Dec. 29, 2020 2:40 PM CST
As a result of the COVID-19 pandemic and resulting restrictions, insurers faced reduced exposures in many lines.
Fewer people at work and fewer miles driven meant that insurers saw their claims levels dropping.
California Insurance Commissioner Ricardo Lara in May issued an order requiring insurers to return partial insurance premiums to consumers and businesses to address reduced exposures.
Details of the order — which covered workers compensation, commercial auto, commercial liability, commercial multiperil, medical malpractice and other insurance lines — was the seventh most read workers compensation article on Business Insurance’s website in 2020.
The order required insurers to provide an adjustment to the premium in the form of a credit, reduction, return of premium, or other adjustment as soon as possible and no later than Aug. 11, 2020.
The order came after some insurers had already indicated they would be returning some premium.
For example, small-business insurer Next Insurance reduced April premiums by 25% for general liability, professional liability and commercial auto insurance customers.
Allstate announced a “Shelter-in-Place Payback” that would grant policyholders a 15% reduction in their monthly premiums in April and May.
Farmers Insurance in April announced its Farmers Cares initiative, which provided a 20% monthly credit on business owners policy coverage for two months on upcoming premium notices in the restaurant, office, retail and service sectors.
Meanwhile, renewal discussions among commercial insurers and their clients began to focus on changing exposures and exposure values resulting from the pandemic. Discussions also included rescheduling premium payments and provisions for payment extensions.