The Tide Shifts In California Covid Premium Refund Cases

• Jurisdiction: California,United States,Federal
• Published date: 27 October 2023
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Sheppard Mullin Richter & Hampton
• Author: Charles A. Danaher
• topic: Insurance Law,Civil Procedure

In the wake of the Covid-19 pandemic lockdown orders, policyholders were driving less and insurance company severities and loss ratios were reduced. This resulted in a temporary increase in insurance company profits. Beginning in April 2020, the California Department of Insurance ("DOI") issued a series of Bulletins, ordering insurers to provide premium refunds to policyholders. Initially, many insurers complied, providing partial refunds during the early months of the pandemic.

Shortly thereafter, however, a wave of policyholder class action lawsuits were filed across the state, alleging that insurers violated California's Unfair Competition Law ("UCL") because additional premium refunds were owed and the ones provided were insufficient. Initially, insurers defended these suits based on the DOI's "exclusive jurisdiction" over rates and the immunity conferred under Insurance Code section 1861.1, which precludes collaterally challenging filed and approved rates. This defense...