21st century insurance hit by class action lawsuit over allegedly insufficient premium refunds amid pandemic

Proposed class action claims 21st Century Insurance Co. failed to adequately reimburse California auto insurance policyholders during the COVID-19 pandemic despite being ordered to do so by the state’s insurance commissioner.

The 13-page dossier alleges 21st Century’s meager 15% premium refunds for the months of March, April and May 2020 represent a “paltry amount” compared to the windfall obtained by the insurer thanks to the “drastic decrease” in driving, accidents and insurance claims that year.

According to the lawsuit, although the California Insurance Commissioner ordered insurance companies like the defendant to issue premium refunds to policyholders amid the COVID-19 pandemic because stay-at-home orders and work at distance significantly reduced insurers’ exposure to losses, 21st Century issued insufficient refunds and ‘simply stopped issuing full premium refunds’ after May 2020. The case alleges that the defendant’s premium refunds were ‘far lower than they should have been’ in light of the orders of the state insurance commissioner and the continuing nature of the pandemic.

In April 2020, the California Insurance Commissioner issued a bulletin relaying that the COVID-19 pandemic had presented an “unprecedented challenge” for businesses and residents of the state, whose operations were “severely curtailed” due to the statewide “shelter-in-place” orders. , explains the lawsuit. The commissioner went on to say that as a result of this drop in activity, the projected loss exposures of many insurance policies were misclassified or overstated as insurers did not face the same level of risk as before the pandemic, the complaint states.

According to the case, the commissioner ordered private automobile insurance companies such as the defendant, among other types of insurers, to issue premium refunds to policyholders for the months of March and April 2020. Subsequent bulletins have extended refunds through June 2020 and subsequent months. if necessary, the combination takes over.

The lawsuit says, however, that the commissioner issued a March 2021 bulletin in which he said a review by the California Department of Insurance indicated that insurance companies had provided insufficient reimbursements and caused policyholders to pay inflated premiums in an environment of reduced risk of loss. Depending on the case, the commissioner noted that the California Automobile Assigned Risk Plan Advisory Committee recommended premium refunds of 30% for March, April and May 2020, 15% for June and July 2020 and 20% for August through December 2020.

The lawsuit alleges that 21st Century’s reimbursements have fallen well below these recommended amounts and similar estimates published by other industry experts. According to the case, the defendant was well aware of the need to adequately reimburse its policyholders, but “firmly refused” to do so, even in the face of multiple orders issued by the California Insurance Commissioner.

The case is intended to cover California residents who purchased personal auto, motorcycle, or RV insurance beginning on the 21st Century covering any part of the period between March 1, 2020 and March 1, 2021.

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