Flash Report: Premium Relief For COVID-19 Impacted Employers

Insurance Commissioner Ricardo Lara is ordering workers’ comp carriers and insurers in other lines to refund “excess premium” for March and April to reflect the impact of the COVID-19 pandemic on business operations. Refunds are due within 120 days and can be in the form of a premium credit, reduction, return of premium, or other appropriate premium adjustment. Additional action is likely if the pandemic persists beyond May.

Some brokers, on behalf of clients, have already taken action to restate expected premium basis – payroll in the case of workers’ comp – and adjust payments accordingly.

In addition to workers’ compensation, the order applies to private and commercial auto insurance, commercial liability and multiple peril insurance, medical malpractice and “any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic,” Lara says in the order.

He says carriers can reclassify exposures to reflect the current environment or reduce the exposure base to reflect the actual or anticipated exposure. Carriers can do this without seeking the Department’s prior approval for rate or rule changes as long as these changes are consistent with the carrier’s existing rating plan.

Carriers are also being ordered to file a report with the Department within 60 days, explaining the actions they have taken or plan to take to refund premium in response to the order. The report must detail:

  • Percentage of refund applied,
  • Aggregate premium prior to, and subject to, application of refund,
  • Aggregate premium refund,
  • Average premium before and after refund,
  • Average percentage of refund, applied to each policyholder,
  • Number of in-force policies, and
  • Number of policyholders receiving refund.