‘Insurance: Open the Books’

I would like to straighten out the misconception that the data upon which insurance rates are based is kept secret by the companies. Your editorial is very misleading.

The truth is that every insurance company doing business in the state of California must file an annual statement with the Insurance Department. These statements are open to public inspection.

These annual statements contain nationwide premium, expense and loss figures broken down for 30 different types of insurance coverage. All of the data upon which rates are based is included. Assets of the company and liabilities are listed as well as investment income and operating income or loss.

Every three years each insurance company is subject to a financial audit by Insurance Department personnel to determine its solvency and to see if its market practices are proper.

Periodically, each insurance company is subject to a rating examination by Insurance Department personnel to determine if its rates are being properly applied.

The idea that insurance company records are kept confidential is a favorite smoke-screen argument made by the trial lawyers who are fighting to keep benefits high, which keeps rates high, so that they can collect one-third of any recovery from insurance companies. If benefits are reduced so that rates can be contained, the trial lawyers would lose out. I hope this motivation on the part of the trial lawyers is kept in mind in determining the accuracy of their arguments.

HARRY D. BOYD

Los Angeles

(Boyd is an insurance company officer.)