The California Department of Insurance Notice, dated March 18, came only one day after IIABCal urged Lara to declare that insurance agencies and brokerages are “essential businesses,” in response to “shelter-in-place” orders that, in many California counties, are now requiring non-essential businesses to close as a result of the Coronavirus pandemic.

"In response to the disruption caused by the novel coronavirus (COVID-19) outbreak, Insurance Commissioner Ricardo Lara strongly encourages all insurance companies and other Department licensees to take steps during the crisis necessary to maintain their ability to process and pay insurance claims and provide other required consumer services for insureds in a reasonable and timely manner,” the official CDI Notice declared.

“The Department recognizes that the COVID-19 outbreak continues to strain insurance industry resources and reduce the staff available to conduct mandatory on-site inspections or audits, to adjust and pay claims, process underwriting documents, and perform other required insurance transactions.”

Shelter-In-Place Order

On Monday of this week, March 16, in an action with no recent precedent, San Francisco Bay Area county health departments issued a coordinated order requiring all residents to “shelter-in-place,” and all “non-essential” businesses to cease in-person operations.  Several other California  county health departments have subsequently followed suit. 

The order did not expressly include insurance services as “essential,” but did state that essential businesses included: 

• Businesses that supply products needed for people to work from home;
• Businesses that supply other essential businesses with the support or supplies necessary to operate; and
• Professional services, such as legal or accounting services, when necessary to assist in compliance with legally mandated activities.”

In a request sent March 17 to the Department of Insurance, IIABCal General Counsel Steve Young urged Commissioner Lara to declare that insurance services are essential.

Insurance Agencies Offer Essential Services

“Insurance agencies and brokerages fall squarely within each of the three categories of essential businesses mentioned above,” Young said.  “Brokers/Agents provide a number of essential professional services to individual and commercial consumers, including issuance of certificates-of-insurance required by banks, lenders, and lien holders; meeting bonding requirements established by state, federal, and other governmental bodies; and fulfilling contractual obligations to policyholders and clients in the execution of mandated insurance requirements from state, federal, and local authorities for certain types of coverage, e.g. workers compensation.”

Other insurance regulators have taken similar action.  The Pennsylvania Insurance Commissioner has declared:  “While the business of insurance is essential, many roles and functions of insurance offices may be administered remotely or are otherwise non-essential. We encourage carriers and agencies to use their discretion in determining essential functions for essential employees. For example, an agency may determine it is appropriate to close to walk-in visitors, while remaining open for business, and available to consumers, through calls and e-mail."

Coronavirus Response Webinar

Young said agency owners would be well-advised to consider similar limitations, at least in counties with comparable shelter-in-place orders in effect.  In order to help members respond to a variety of questions about their obligations and responsibilities in light of current conditions, IIABCal will host a free Coronavirus Response Webinar for members next Wednesday, March 25, from 10-11 am.  It will be conducted by Kirstin Muller, an attorney with Hirschfeld Kraemer, LLC, a prominent labor and employment law firm.

Click here to register for the free webinar.

Clck here to add questions you want address during the webinar.

Click here to read the text of the CDI Notice.