Firms’ Reply to Insurance Study Termed Stonewalling

A top aide to Assembly Speaker Willie Brown (D-San Francisco) Friday accused the state’s leading automobile insurance sellers and their Sacramento lobbyist of making a “grossly inadequate and outrageous” response to a questionnaire submitted by an expert commissioned by the Assembly to study auto insurance in the state.

Brown chief of staff Richard Ross charged that the 19 auto insurance sellers, several companies that sell insurance to day-care centers and industry lobbyist Clayton Jackson are “stonewalling” the $147,000 study.

Ross warned that Brown will soon introduce “five tougher bills” than those already submitted by Democrats in the Legislature to try to stem high insurance pricing.

Demand for Cooperation

“We’re going to up the ante,” Ross said, “and if they come before the legislative committees without having cooperated with our study, it may go hard with them.”

In a Jan. 17 letter to Assemblywoman Maxine Waters (D-Los Angeles), a leading sponsor of the study, Jackson said that “much of the requested information is so expensive (to produce) and/or bizarre in nature that I believe that if the carriers are going to be able to respond, the inquiry needs redesigning.”

Jackson’s letter followed letters from many of the individual insurance companies that had been queried, either turning down the request for information or seeking a delay.

The auto insurance sellers received 38 detailed questions prepared by J. Robert Hunter, head of the National Insurance Consumer Organization, who was commissioned by the Assembly Rules Committee to do the study. The sellers are:

State Farm, Allstate, Farmers, United Services, 20th Century, California Casualty, Automobile Club of Southern California, California State Automobile Assn., Fireman’s Fund, Mercury General, Geico, Dairyland, Continental, Progressive, Safeco, West American, Liberty Mutual, Aetna and J.C. Penney.

Basis of Objections

A colleague of Jackson, George Tye, executive manager of the Assn. of California Insurance Companies, said this week that the companies object to the Assembly’s choice of Hunter to head the study because he is regarded as the leading national critic of the insurance industry.

Tye also expressed fear that information provided to Hunter may end up being used in his general consultant business to the detriment of the companies, perhaps in many states.

Tye added that many of the questions seek information that is either unavailable or extremely difficult to gather and that some of it is proprietary in nature and, if released, would give competitors an improper inside look at an individual company’s business.

Hunter said that he intends to go to Sacramento on Monday to discuss with Jackson and legislative aides the question of what, if any, information the companies may be willing to provide.

Thorough Inquiry

He characterized his questions as very detailed, but said they are necessary to get an accurate picture of the automobile insurance business in the state.

The questions not only ask for a breakdown of many kinds of sales of different types of policies by zip code throughout the state, but also many details of company profits and pay-outs. A number of the questions are divided into parts and the 38 questions cover more than six pages.

Ross said that Hunter and his associates have raised with the Speaker’s office the possibility of the Assembly granting subpoena power to gain the information requested, but that Brown would rather pursue other means, such as persuasion, first.