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- Written by: Elizabeth Larson
Last April, as Californians stayed off the roads in response to public health “stay-at-home” orders, state Insurance Commissioner Ricardo Lara ordered auto insurance companies to return a percentage of paid premiums — saving drivers collectively more than $1.75 billion in 2020.
After a systematic review of data submitted by insurance companies — the only such review in the country — he has found that insurance companies continued to overcharge consumers despite drastically reduced risk of accidents and loss due to the ongoing pandemic.
On Thursday, Commissioner Lara directed auto insurance companies to report by April 30 how they will return additional premium back to California policyholders that was overcollected in 2020.
He is also directing commercial insurance companies to provide data about commercial policies held by California businesses, which could lead to additional savings for small businesses that are struggling to survive due to the pandemic.
“My order saved California drivers more than $1.75 billion last year — the most in the nation. But while millions of us stayed home helping to fight the spread of the virus and reducing the risk of accidents for our essential workers, insurance companies continued to collect inflated premiums,” said Commissioner Lara. “The bottom line: Insurance companies overcharged consumers and need to do more to make it right and help Californians recover.”
The commissioner’s review included the top 10 insurance groups representing 80 percent of the private passenger automobile insurance market. He found:
– Over seven months from March to September, insurance company groups returned on average 9 percent of auto premiums, but the department’s analysis found they should have refunded nearly double that amount —17 percent — over the seven-month period.
– Bodily injury claims fell by 41.7 percent and property damage liability claims fell by 40.4 percent during March to September 2020, compared to the same period in 2019.
– For April 2020, the first full month of the statewide “stay-at-home” order, the gap between the refund indicated by insurance company group data and the premium they actually returned was approximately 13 percent — representing about $220 million in excess premium collected by insurance companies for that month alone.
– All of the top 10 private passenger insurance groups offered premium relief ranging from 10 to 22 percent for the months of March to May. However, by December, only four insurance groups were still offering any partial refunds, despite the continuing pandemic and a multitude of counties still remaining in the purple tier, or “most restrictive” tier.
“Insurance Commissioner Lara’s order to continue refunds is welcome news to millions of California consumers and businesses continuing to experience a decline in losses and accidents as a result of this global pandemic,” said Richard Holober, president of the Consumer Federation of California. “California continues to set the standard for holding insurance companies accountable for returning additional premiums to their policyholders to promote a stronger recovery."
Commissioner Lara issued his first bulletin directing insurance companies to provide partial premium relief on April 13, 2020, as it became clear that the pandemic was reducing traffic congestion and business losses.
He extended his bulletin in May and again in December, directing insurance companies to continue to provide partial premium refunds as long as the pandemic resulted in reduced risk of loss and to report those refunds to him. The department has posted those reports publicly on its website.
Commissioner Lara’s orders included commercial insurance coverage and, today, he announced that he is seeking detailed data about commercial insurance losses dating back to last March.
“We know that for business owners, any savings matters while they are desperately trying to keep their doors open,” said Commissioner Lara. “If the data shows that insurance companies overcharged our businesses, I am going to be mandating them to return premium, especially to small business that have borne the brunt of pandemic closures.”
"We applaud Commissioner Lara's efforts to address the needs of California's small businesses as they continue to face setbacks from the pandemic," said Mark Herbert, Managing Director of California for Small Business Majority. "Every dollar counts during this challenging time, which is why it's important that commercial insurance companies share data about the amount of premiums they've returned to their small business clients. This will help ensure that small businesses are receiving their fair share of reimbursements, allowing them to put more money back into their businesses."
The commercial insurance data is expected to be available later this summer.
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“For the most part, contractors do carry workers’ compensation insurance but too often, they do not,” Sen. Bill Dodd said. “My bill will eliminate barriers to coverage so we can protect those employees who might be injured on the job.”
In California, there are about 230,000 licensed contractors in 44 different areas, from general building and engineering to electricians, plumbers and landscapers.
About 55 percent claim they have no employees, making them exempt from a requirement to carry workers’ compensation insurance.
However, research and enforcement from the Contractors State Licensing Board suggests many of these claims are false, creating a widespread problem leaving workers unprotected.
Senate Bill 216 would require all concrete, heating and air conditioning and tree service contractors to carry the insurance, regardless of whether they claim employees or not. Further, it would require that by 2025, all licensed contractors in the state carry workers’ compensation insurance.
SB 216, which is sponsored by the Contractors State License Board, was approved by the Senate Business, Professions and Economic Development committee. It heads next to Appropriations.
Dodd represents the Third Senate District, which includes all or portions of Napa, Solano, Yolo, Sonoma, Contra Costa and Sacramento counties.
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California Farm Bureau President Jamie Johansson said the organization is committed to work for passage of the Farm Workforce Modernization Act, reintroduced by Reps. Zoe Lofgren, D-San Jose, and Dan Newhouse, R-Wash.
“We were early supporters of the Farm Workforce Modernization Act when it was originally introduced in 2019, and we’re pleased to see its reintroduction,” Johansson said. “Reform of federal immigration law continues to be a top priority for the California Farm Bureau, and this bill would create meaningful changes that would ease chronic employee shortages and recognize the value of farm work.”
The original bill won passage from the House of Representatives in late 2019, based in part on the support of more than 300 agricultural groups and companies.
“The Farm Workforce Modernization Act earned bipartisan support at that time by addressing both current and future needs for agricultural employers and employees,” Johansson said. “Its reintroduction will stimulate ongoing discussions about immigration policy. Its passage would improve agricultural visa programs and accommodate immigrant agricultural employees already in the United States, while enhancing border security.”
Johansson said the bill’s reintroduction comes at a particularly important time, as farmers and their employees maintain agricultural production during the COVID-19 pandemic.
“Long before the pandemic, we recognized the people who work on California farms and ranches as essential to reliable supplies of healthy food and farm products. The pandemic has only underscored the importance of assuring the people who work on farms and ranches can do so with the security of legal immigration status,” he said.
The California Farm Bureau works to protect family farms and ranches on behalf of nearly 32,000 members statewide and as part of a nationwide network of nearly 5.6 million Farm Bureau members.
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The board will also hear updates on California farmers’ markets and have a presentation on California’s Master Plan For Aging, which includes priorities to address hunger and nutritional needs of older Californians.
The meeting will be held on Tuesday, March 2, from 10 a.m. to 1 p.m. via GoToWebinar.
Meeting link: https://attendee.gotowebinar.com/register/7250741937101739276.
Webinar ID: 629-625-083.
“California’s farmers and ranchers are an invaluable part of food and nutritional assistance programs,” said CDFA Secretary Karen Ross. “There are many opportunities for engagement and great work is being done at the local level to improve access and support communities and individuals in need.”
Invited speakers include Director Kim McCoy Wade, California Department of Aging; Stacia Levenfeld and Maria Houlne, California Association of Food Banks; Steve Brazeel, SunTerra Produce; Stephen Gutwillig, Sustainable Economic Enterprises of Los Angeles; Sarah Hansen and Nicholas Anicich, CDFA’s Office of Farm to Fork; Paul Towers, Community Alliance with Family Farmers; and Allen Moy, Pacific Coast Farmers’ Market Association.
“Over the last year, we have seen an evolution in the connection between growers and food banks, food pantries and faith-based organizations,” said President Don Cameron, California State Board of Food and Agriculture. “As a result, I believe the agricultural community is valuing food donations as an integral part of business operations.”
The California State Board of Food and Agriculture advises the governor and CDFA secretary on agricultural issues and consumer needs.
The board conducts forums that bring together local, state and federal government officials; agricultural representatives; and citizens to discuss current issues and concerns to California agriculture.
This meeting will have simultaneous audio translation in Spanish and can be accessed at 844- 460-0074 at the start of the meeting.
Follow the board on twitter at www.twitter.com/Cafood_agboard.
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