Nevada Prohibits Adverse Action Resulting from COVID-19, Will Require Refunds for Affected Policyholders

Citizens of Nevada may be seeing a refund come their way this year after the Division of Insurance (DOI) approved regulation R087-20 on December 28, 2020. This measure prohibits personal lines property and casualty insurers from taking adverse action when re-scoring policyholders at renewal and requires that a refund be made for any increase in premium as a result.

Retroactively effective March 1, 2020, an insurer may not increase premium based on information contained in a consumer file, including information that determines an insurance score. The prohibition continues until a date two years after the termination date of the Declaration of Emergency for COVID-19 issued by the Governor on March 12, 2020. The regulation does, however, allow for favorable re-scoring if the information results in a lower premium.

These measures are similar to bulletins issued in other states directing insurers to exempt extraordinary life events related to the COVID-19 pandemic from credit-based insurance scoring. However, all companies writing personal lines property and casualty business in Nevada are required to notify the DOI via email, by February 1, 2021, as to how consumer information is used. If a company does regularly re-score their book of business, the insurer must commit to identifying all policyholders whose premiums were increased on or after March 1, 2020, and issue a refund for the increase. A rule filing is required to be submitted to the DOI by March 3, 2021 to supersede any previous rules that allowed adverse action. Insurers are encouraged to start issuing refunds as soon as the affected policyholders are identified.

To ensure your compliance, we at Perr & Knight are here to assist you in submitting your rule filing to the Nevada Division of Insurance. Please contact us today.

Reference:

Copy of approved regulation – Nevada Regulation No. R087-20

Guidance and FAQs – FAQ on Regulation R087-20