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California regulator tells 3 insurers to increase auto rebates

The California Department of Insurance has ordered three auto insurers to provide additional reimbursements to drivers it says were charged excessive premiums at the start of the COVID-19 pandemic.

Insurance Commissioner Ricardo Lara in a release said Allstate Northbrook Indemnity Co., Mercury Insurance Co. and CSAA Insurance Exchange have the largest gap between what they initially refunded policyholders and what they ought to have provided given the statewide stay-at-home order in effect for several months in 2020. An analysis performed by the regulator found that while insurers refunded about 9% of the premiums taken in between March 2020 and September 2020, they should have refunded 17% over that period.

CSAA Insurance in an email to S&P Global Market Intelligence said it is reviewing the regulator's request and noted that it has issued more than $137 million in total refunds to policyholders.

A Mercury spokesperson said the company has returned more than $175 million in premium to its California customers and "continues to provide ongoing premium relief" to customers who are driving less because of the pandemic. The spokesperson also noted that Mercury has customized billing plans for policyholders who suffered pandemic-induced financial hardship to help them remain insured.

For its part, Allstate in an email noted that it returned $1 billion to its auto policyholders across the country in response to the pandemic.

Lara initially told insurers to refund premiums to drivers and businesses in April 2020, shortly after Gov. Gavin Newsom issued a stay-at-home order to slow the spread of the coronavirus. The refunds applied to companies providing coverage for private passenger auto, commercial auto, workers' compensation, commercial multiperil, commercial liability, medical malpractice and any other lines that had reduced risk because of the pandemic.

In March 2021, the regulator instructed insurers across the state to take additional action to provide premium relief for policyholders. In his latest statement, Lara said that Allstate, Mercury and CSAA, which insure roughly 20% of drivers in the Golden State, have 30 days to determine how they will "make it right" for drivers before facing potential legal action.

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