Former insurance agent sues Auto Club of Southern California
A former insurance agent at the Auto Club of Southern California has sued the company, accusing it of violating state law by penalizing agents for selling policies to previously uninsured consumers, four years after the company settled similar allegations.
California law bans auto insurers from discriminating against drivers based on their lack of previous coverage and using that as a factor in setting premiums. In 2008, the Auto Club agreed to issue $22.5 million in refunds to about 120,000 customers to settle lawsuits accusing it of imposing improper surcharges on previously uninsured drivers.
The Auto Club denied any wrongdoing in the earlier cases and said it settled to avoid protracted litigation. The company said it hadn’t received the current lawsuit and declined to comment on the specific allegations.
A company spokesman said the Auto Club “has been strongly committed to compliance with Proposition 103,” a landmark 1988 initiative that imposed stricter insurance regulation in California. “The Auto Club has provided competitively priced, high-quality auto insurance to Southern Californians for 100 years,” the spokesman said.
In the lawsuit filed Wednesday in Los Angeles County Superior Court, former agent Jill Rogers accused the Auto Club of unlawful and unfair business practices by encouraging employees to shun applicants without prior coverage. Rogers, 38, who left the Auto Club last year after working there about 15 years, said the company instructed agents to ask applicants immediately about prior insurance and paid agents less for signing up customers without previous coverage.
For instance, she said, sales commissions for previously uninsured customers were about $20 per policy compared with $100 to $500 for a customer who had prior coverage. She said the company believed applicants without prior coverage weren’t likely to be long-term customers and they weren’t worth pursuing.
“I have always thought very highly of the Auto Club, but what they’re doing is not fair,” Rogers said. “They didn’t want us to sell policies to people without prior insurance.”
Rogers said Auto Club agents purposely hung up on applicants who said they didn’t have previous coverage or quoted them excessively high premiums to make them less likely to sign up.
“This company has a commission structure based on an illegal rating factor,” said Timothy Blood, a San Diego attorney representing Rogers. She’s also represented by Consumer Watchdog, the Santa Monica advocacy group that championed Proposition 103.
Proposition 33 on the Nov. 6 ballot is seeking to change state law and allow auto insurers to grant drivers discounts based on their previous insurance history.
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