Customers and Agents Share the Confusion

With dozens of insurance companies refusing to write new policies following passage of Proposition 103, confusion reigned at insurance agencies around the state Thursday as worried customers kept telephones ringing with queries about their coverage.

An agent from Tustin, for instance, said Wednesday was bad, but Thursday was worse. “Yesterday it was the auto policies, and today some of the companies are telling me to stop writing new homeowner insurance,” said Rick Holt, an independent insurance agent.

“At first people don’t believe me when I tell them over the phone that I can’t write them a policy. About 92% of the (insurance) companies I write for are right now not not selling new policies. And where is this situation going? Nobody knows.”

William H. Mitchell, chairman of two independent insurance agencies in Costa Mesa, said Proposition 103 has caused the biggest crisis he can remember in his 30 years in the business.

“We represent about seven companies, and only two are still taking business,” Mitchell said. “Here we are wanting to place new business and we can’t. The word must be going out, because our phones are almost dead.”

Seven of the 10 insurance companies represented by Harbor Insurance Agency in San Pedro have stopped accepting business. The remaining three firms--General Accident, Unigard and Safeco--insure only what operations manager Michael Randles calls “super-preferred markets”--those people who have good jobs, own homes, generally are married and have had no tickets within the past three years.

For those who do not fall into that category, he said, “about the only thing we can do is write assigned risk at this point,” he said, echoing what dozens of other brokers are saying.

One broker came up with a way to deal with the rash of consumer complaints and queries. Dick Hodge, co-owner of Hilliard & Hodge Insurance Brokers in Irvine, said he has been giving angry customers the telephone number for Voter Revolt, the Ralph Nader-backed group that sponsored Proposition 103.

Other callers asked about the promised 20% rollback in rates that Proposition 103 is supposed to deliver.

Dave Hobbs, a Dana Point agent with Farmers Insurance Group, which is still writing new policies, said that if anyone asks him about it, “I’ll tell them that this is a matter that’s now before the courts and we don’t know what will become of it.”

But for those who expect a discount or rebate right away, Bernice Einum, manager of the J. L. Flanigan Co. insurance agency in Glendale, says they had better think twice. “They all want to know if they can deduct 20%” from their premiums. I tell them, ‘No way; you better pay.’ ”

As the day wore on, the confusion intensified.

A number of independent agents, for example, said officers from Ohio Casualty and Republic Insurance companies called them in the morning to instruct them not to issue any new policies. Less than an hour later, the same officials called to lift the restriction and instructed them to continue to issue new policies but advised them to “stay tuned” for further instructions.

More Switches

Mercury, Allstate and other firms made similar switches after the state Supreme Court ordered a stay on Proposition 103’s taking effect. But dozens of mainly smaller insurers continued to suspend sales of new policies.

“The most infuriating point is that we can’t answer many of our customers’ questions because we’re not getting any answers from the insurance companies,” said Don Lonegan, an independent agent in El Cajon. “Losing business is bad enough without having to lose your customers’ confidence.”

Larry Shea, managing partner of Barney & Barney, an agency that sells Travelers insurance, said his office was fielding calls from customers who thought that Proposition 103 applied only to auto policies.

“A lot of people are confused because they thought it would apply only to auto policies, but The Travelers said they were going to pull all of their business and personal lines out of California,” Shea said. He added that some automobile policy holders began receiving notices from The Travelers on Thursday that their policies will not be renewed.

Some brokers said they think the onslaught of customer calls has yet to come.

“Yesterday was dead; no calls. Today they’re starting to call, and tomorrow will probably be pretty bad,” said Einum of the Flanigan Co. in Glendale. “They’re reading the newspaper and getting scared.”

And, despite the furor in many agents’ offices, some brokers said the fallout from Proposition 103 and the moratoriums imposed by many insurers left their offices quiet.

“I thought my phone would be ringing off the hook with calls from people in a panic; oddly enough, it’s not,” said Rick Curtis, an Allstate agent in Westlake Village.

For those who did call searching for insurance, agents had few encouraging words.

“If I were them, I’d go to the Yellow Pages. I just don’t know who is writing out there,” said Elmer R. Jordan, who owns an independent insurance agency in Calabasas.

Insurance agent Alice Hunt of Holly-West Insurance in North Hollywood said she is telling some people that they may have no alternative now but to buy a policy with a company that places them in the assigned-risk category.

“I tell them we are out of choices,” Hunt said.

Choices Are Limited

Hodge, of Hilliard & Hodge in Irvine, said: “We normally use 15 different companies. We now have only one company . . . that is still writing (policies) . . . but they are usually for high-risk customers, and the rates are twice as high. Someone I quoted a $1,000 rate to last week, today I would have to quote $2,500.”

Don Samis, co-owner of Shears-Samis Agency in Newport Beach, said the confusion was predictable.

“This thing has come so fast,” the insurance companies “couldn’t respond rapidly enough. . . . I can understand. If you’re taking a machine going in one direction at 40 m.p.h. and tell it instantly to go in the other direction 40 m.p.h., it just doesn’t happen. Nader has said this is sour grapes. But they have no conception of what is involved, paper-wise if nothing else.”

Staff writers Bill Billiter and A. Dahleen Glanton contributed to this story.