and what deviations they can make from the suggested rates, but for workers comp the insurance rates are determined by the state for each class code and insurance companies cannot deviate from them.
In general though, insurance companies cannot wave a magic wand and jack up the rates to whatever they desire. In most lines of business, the state still determines the rates and insurers can deviate from those rates within a limited range based upon whether the clientele they are dealing with are considered as preferred, standard, or substandard. California is a large insurance market with plenty of competition so if a company acts unilaterally to increase their rates, then they will lose that business to competitors. If a company acts unilaterally to decrease their rates and write more business, then the state will intervene since it is not in the public interest to have an insolvent insurer so that guaranty funds have to cover the losses.
The premiums that are ordered to be refunded to the customers are not going to be recovered by the insurance companies at renewal. In fact, the insurance department is mandating refunds retroactively based upon the fact that the loss experience is coming in much less than anticipated when the rates were promulgated. This revised loss experience information will also be used in determining rates for the future. At some point in the future after the pandemic is over and claim losses return to "normal", then the rates will likely be too low and there will be a hike in premiums, but that does not necessarily mean it will occur either six months or one year later when the policy comes up for renewal. However, if there are drastic changes in consumer behavior that continue a year or two while we wait for a vaccine to arrive on the market, then the insurance companies will be mandated to charge the lower rates during that time.
I believe that the Insurance companies will either do this on their own or comply with the order and simply jack up the rates at renewal.
The insurance companies don't really have an option not to comply. If they fail to comply then they will find themselves in litigation with the insurance department that can become quite expensive and last for years. And if the courts agree with the insurance department, then the courts can order those premiums to be refunded. There can be additional sanctions levied against individual companies if they fail to comply including the loss of their licenses to conduct business.
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