21st Century Insurance Hit with Class Action Over Allegedly Insufficient Premium Refunds Amid Pandemic

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

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

According to the suit, although the California Insurance Commissioner ordered insurance companies like the defendant to issue premium refunds to policyholders amid the COVID-19 pandemic as stay-at-home orders and remote work significantly reduced the insurers’ loss exposure, 21^st Century issued insufficient refunds and “simply stopped returning premium altogether” after May 2020. The case alleges that the defendant’s premium refunds were “far lower than they should have been” in light of the state insurance commissioner’s orders and the ongoing 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 the state’s businesses and residents, whose activities were “severely curtailed” due to statewide “shelter-in-place” orders, the lawsuit explains. The commissioner went on to state that as a result of this decrease in activity, many insurance policies’ projected loss exposures were misclassified or overstated given insurers did not face the same level of risk as they did pre-pandemic, the complaint says.

Per the case, the commissioner ordered private passenger auto 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 extended the refunds through June 2020 and the following months as appropriate, the suit relays.

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

The lawsuit alleges that 21^st Century’s refunds fell well below these recommended amounts and similar estimates released by other industry experts. According to the case, the defendant was well aware of the need to adequately refund its policyholders yet “steadfastly refused” to do so even in the face of multiple orders issued by the California Insurance Commissioner.

The case looks to cover California residents who purchased personal automobile, motorcycle or RV insurance from 21^st Century covering any portion of the time period between March 1, 2020 and March 1, 2021.

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