N. California Firm Gets Top Ranking on Auto Insurance
The state Insurance Department on Tuesday issued a report of complaints against auto insurance companies in California, showing that among the 25 largest sellers, doing 90% of all business in the state, the California State Auto Assn., serving Northern California, had the best record.
Second best was the military-affiliated USAA company, while State Farm was third best. Among others of the largest sellers, 20th Century ranked fifth, Farmers sixth, Allstate 10th and the Automobile Club of Southern California was tied for 11th.
The figures were for all complaints received in 1985 at the Insurance Department for personal, not commercial, auto coverage. They did not include complaints made to the companies themselves.
Direct comparisons were achieved by listing complaint ratios for each 1,000 vehicles that each of the companies insured during the year.
By this measure, among the 25 largest sellers, the California State Auto Assn. had a complaint ratio of .073, USAA .094 and State Farm .102.
By contrast, those at the bottom of the list of 25 had much higher ratios. Sentry Insurance ranked 22nd with a ratio of .526, Mercury General 23rd with a ratio of .582, J. C. Penney Companies 24th with a ratio of .656 and Teledyne group 25th with a ratio of 1.510.
The Insurance Department study released Tuesday differed from a report issued last January on 1984 complaint records.
That study recorded only complaints that departmental investigators had ruled justified. This study, by contrast, records all complaints, deemed justified or not. In addition, the 1984 ratios referred to the number of complaints per million dollars of premiums written, while the present ratios are pegged to the number of cars insured.
Insurance Commissioner Roxani M. Gillespie, sensitive to complaints that the last study was misleading, said the department was determined this time to be more precise. Even so, she expressed some reservations about the new study.
For instance, Gillespie said the rankings might be misleading if the location of the various companies’ business quarters was not taken into account.
“Remember that companies that actively write insurance in high-risk areas probably generate more complaint activity than those limiting their writings to lower-risk areas,” he said.
At another point in a written statement, she declared: “The Department cautions against selecting an automobile insurance company based only on these (complaint) factors. Complaint ratios alone should not be the sole criteria for purchasing insurance. Additional considerations should be the company’s financial condition, its pricing structure, marketing methods and other services offered.”
Two weeks ago, the Insurance Department, which has moved this year toward becoming more consumer-oriented, issued its first statewide comparative auto insurance pricing survey, showing that depending on where one lives, equivalent auto insurance coverage can vary by more than 300%.
Reaction to the complaint survey from company representatives contacted Tuesday varied, often according to where companies were ranked.
For instance, the general counsel of the top-ranking California State Auto Assn. hailed the results. “The emphasis upon service starts right at the top of this organization and has for the almost 37 years I’ve been associated with it,” said Wells Hutchins. “It’s a way of life. As a matter of fact, our motto is ‘Courteous service always available.’ ”
Urban Areas Emphasized
Those in the middle of the rankings tended to emphasize that their companies primarily serve congested urban areas where the number of claims is higher than the norm and the opportunity for disputes leading to complaints is greater.
For instance, Larry Baker, vice president and manager of the Automobile Club of Southern California--the Southland equivalent of the California State Auto Assn.--said he believes it would have been better if the Insurance Department had listed ratios for complaints per 1,000 claims made rather than autos insured.
“When you write in areas that are rural and your frequency of losses is low, you are going to have relatively few complaints,” Baker said. “That is opposed to someone like us where there are more accidents. . . . We have several hundred thousand claims per year.”
The ratio for the Auto Club was .230 complaints per 1,000 vehicles. Baker said he believes that taking everything into account, there are still relatively few complaints made against his company. He pointed out that the study showed the Auto Club insured 1,064,411 different personal vehicles in 1985, and that only 245 complaints had been filed.”
At Allstate, which ranked 10th among the 25 biggest sellers, with a ratio of .218, Dick Donegan, a regional underwriting manager based in Pasadena, said his company’s feeling was that the Insurance Department should have stuck with only listing complaints it deemed justified.
More Complaints
Donegan agreed with Baker that companies like the Auto Club and Allstate, which sell mainly in congested urban areas, are inevitably going to have more complaints than a Northern California company selling in less populated areas.
Down at the bottom of the rankings, it proved more difficult to get comment.
For instance, at 23rd-ranked Mercury General, a secretary said the company’s regular spokesman was out of the office and the top three officials of the company were all out of town. She said no one was available to make a comment.
At the 25th-ranking Teledyne Group, an assistant in the public relations department said that the company’s only authorized spokesman was Berkley Baker “and he is not here to respond.”
When Mike Crall, the president of Argonaut Insurance, part of the Teledyne group, was reached at his Menlo Park, Calif. office, he said Financial Indemnity Co. sells Teledyne’s personal auto insurance. He said Financial Indemnity wrote mainly “nonstandard, assigned risk-type policies . . . specialized risks” that are often more troublesome to handle than preferred risk insurance. Such customers, he suggested, are prone to be involved in more claims and to make more complaints.
COMPLAINTS ABOUT INSURERSThe state Department of Insurance has made public this listing of complaints that it has received against personal lines auto insurance companies. Commercial coverage is not included. These figures for 1985 are listed in order of the ratio of complaints against the leading 25 auto insurance sellers in the state, which together do about 90% of the business. Companies highest on the list had the fewest complaints for each 1,000 autos insured.
Autos Per 1,000 Company Insured Complaints Vehicles Cal. State Auto Assn. 1,526,497 111 .073 USAA 395,129 33 .084 State Farm 2,567,319 263 .102 Cal. Casualty 270,022 40 .148 20th Century 583,769 87 .149 Farmers 2,641,820 412 .156 Ohio Casualty 190,586 30 .157 Hartford Fire & Cas. 168,745 33 .195 Nationwide 228,032 49 .215 Allstate 1,288,003 281 .218 Aetna Life & Casualty 195,816 45 .230 Auto Club 1,064,411 245 .230 Safeco 272,453 69 .254 Travelers Insurance 102,022 29 .284 GEICO 323,144 110 .341 Liberty Mutual 118,112 42 .356 Century-National 96,601 35 .361 Kemper Insurance 161,515 61 .377 Fireman’s Fund 181,372 78 .431 Progressive 110,000 55 .500 Continental Casualty 118,961 62 .521 Sentry Insurance 132,797 70 .526 Mercury General 232,140 135 .582 J.C. Penney 128,094 84 .656 Teledyne Group 46,813 71 1.510
