Two of California’s biggest auto insurance companies--Allstate Insurance and Mercury Casualty--lifted suspensions on sales of new policies Thursday, moves that eased somewhat a crunch on availability of new insurance triggered by passage of Proposition 103.
However, some consumers are being forced to pay as much as 20% to 30% more for insurance because low-priced policies are less available, insurance agents reported. At least 40 companies continue to temporarily suspend sales of new auto or homeowner policies in the state--delaying sales of homes and cars--while firms not currently offering insurance here are reluctant to enter to fill the void, they said.
Allstate, the state’s fourth-largest auto insurance carrier, and Mercury, the eighth-largest, said they lifted suspensions on new sales that they had imposed in connection with Tuesday’s passage of Proposition 103, which cuts auto and other property-casualty insurance rates by 20% from last year’s levels. Some smaller firms were also reported to have lifted their suspensions, insurance agents said.
The actions were taken in response to a stay granted Thursday by the state Supreme Court that temporarily freezes implementation of Proposition 103 until the court can rule on its constitutionality.
“We’re resuming business as usual,” an Allstate spokeswoman said.
However, if the court lifts its stay--a distinct possibility, according to some industry officials--the firm would “have to see why they did it” before determining whether to reimpose the suspension, she said.
The moves mean that nearly all of the state’s 10 largest auto insurers, which together account for two-thirds of California auto premiums written, are continuing to offer new policies, although at pre-Proposition 103 rates.
For example, State Farm, the state’s largest auto insurer, was selling new policies at old rates but informing customers that refunds might be available later if Proposition 103 is upheld, said Pete Ingham, the firm’s general counsel.
“Consumers should be able to find insurance, although they may have more trouble if they are not good drivers,” state Insurance Commissioner Roxani Gillespie said. “It’s not a go-go market, but there is availability.”
Gillespie said that if consumers cannot find insurance carriers offering new policies, they should call the state Insurance Department.
One holdout among the top 10 is the Automobile Club of Southern California, the state’s fifth-largest carrier. As of late Thursday afternoon, it was accepting applications for new policies but not putting them into force, a spokeswoman said.
But while most of the biggest firms were still offering new policies, at least nine companies with smaller market shares, including Travelers Insurance and Fireman’s Fund Insurance, have already withdrawn or intend to withdraw at least partially from the state auto insurance market. The latest to join the list was Liberty Mutual Insurance Group, which announced Thursday that it has discontinued writing all personal lines of insurance in California.
Also, as many as 67 insurance carriers have suspended sales of new policies, said Joseph Annotti, spokesman for the Independent Insurance Agents and Brokers of California.
As a result, some independent agents are finding that as many as three-fourths of the firms they represent have suspended sales, said Don Stewart, executive director of American Agents Alliance, a Pasadena-based association of agents and brokers.
That in turn has forced some customers to pay more for new insurance because discount policies for better drivers are less available. More expensive policies in some cases are the only ones available.
“A lot of firms offering preferred rates aren’t competing,” Stewart said. “Agents could have gotten you a lesser rate three days ago than today.”
He said agents were searching for carriers not currently offering auto insurance in California to see if they might be willing to come in to pick up the slack, since such carriers will not necessarily be forced to offer lower rates mandated by Proposition 103.
“But not many firms are interested in coming to California under these circumstances,” Stewart said. “This is no longer a desirable state until this gets cleared up.”
Stewart and other agents said they had not yet heard of any layoffs among agents or insurance companies, but job losses or agency closures are expected if current conditions continue.
Some layoffs may eventually be in store at Fireman’s Fund, which announced its withdrawal from the state auto insurance market Wednesday. The firm is reviewing the status of 300 workers at the San Diego headquarters of its western region personal insurance business, spokesman John Kozero said. A small number of layoffs could result, but no decision will be made until next February, he said.
Also contributing to today’s insurance coverage were Glenn F. Bunting, Jim Bates, Tyler Chin, Maureen Fan, Adrianne Goodman, Lee Harris, Sheldon Ito, Kimberly Jackson, Karl Kahler, Roxana Kopetman, Hugo Martin, Jeff Miller, Julio Moran, Amy Pyle, Jeffrey L. Rabin, Shawn Smith, George Stein, Sheryl Stolberg, Mike Ward, Tim Waters, Martha Willman and Ken Yamada in Los Angeles, Bill Billiter, A. Dahleen Glanton and Carla Rivera in Orange County, Denise Hamilton and Jesse Katz in Ventura, H.G. Reza in San Diego and Norma Kaufman in San Francisco.
LEADING INSURERS’ RESPONSES TO PROP. 103
COMPANY RESPONSE State Farm Mutual Auto Accepting new policies at pre-103 rates California State Accepting new policies at pre-103 rates Auto Assn. Farmers Accepting new policies at pre-103 rates Allstate Lifted suspension on new policy sales; accepting new policies at pre-103 rates Auto Club of So. Calif. Suspended issuing new policies 20th Century Accepting new policies at pre-103 rates Mercury Casualty Lifted suspension on new policy sales; accepting new policies at pre-103 rates