Aide Won’t Say When State Will Move on Insurers

A deputy to state Insurance Commissioner Roxani Gillespie, under questioning by members of a state Senate committee, refused Monday to say when the Insurance Department will move against two insurers that Gillespie said weeks ago were defying provisions of Proposition 103 or other insurance laws.

One group of companies, Travelers, has begun terminating its 22,000 auto insurance policies in the state and the other, State Farm, has been charging new customers higher rates. Gillespie stated last November that both firms were violating the law.

Charlene Mathias, sent by Gillespie to testify before state Sen. Alan Robbins’ (D-Van Nuys) Insurance Committee, said it “would be improper” to say when the Insurance Department will render a decision on forcing Travelers to renew its auto insurance policies, even though a hearing was held on the matter three weeks ago.

Mathias used the same phrase when asked when the department will call a public hearing on State Farm’s post-103 policy of charging new customers more. State Farm first requested such a hearing six weeks ago after Gillespie had served the company with a notice that it was out of compliance with the law.

Robbins said he will demand that Gillespie appear before his committee next week to explain when she will act.

“If need be, this committee is prepared to push, kick and drag the (Insurance) Department into a post-Proposition 103 era of tough and fair enforcement against insurance companies that violate the law,” he said.

Also expressing impatience was state Sen. Diane Watson (D-Los Angeles), who asked: “When are we going to get tough, and when are we going to implement the law? What is going to be done?”

Later in the day, a spokeswoman for Gillespie responded: “The department is advancing its cases as expeditiously as possible. These procedures are judicial in nature. We have to do quality work on this. We’re acting in the public interest.”

At the hearing, attorneys for both Travelers and State Farm were more forthcoming with information than the Insurance Department’s representative.

Mathias, for instance, said it will be “around the end of January or early February” before a departmental hearing officer will make his recommendation on the Travelers case, that Gillespie will then take an unspecified amount of time to review it before making a decision and that Travelers will then have 20 days to appeal to a court, which would have 15 days more to consider whether to take up the appeal, before any renewals would be required.

1,800 Dropped

But Travelers’ attorney Kent Keller said that Travelers would begin renewing policies as soon as it receives an order, even though a court appeal would proceed. He noted that Travelers had originally asked Gillespie to rule on the matter in December, before any of its customers were forced by non-renewals to seek other insurance.

Keller said that so far about 1,800 of Travelers’ 22,000 auto policyholders in California have been dropped while the Insurance Department has been considering the matter.

As for State Farm, its attorney, Gene Livingston, revealed that the company has been negotiating with the Insurance Department over a possible renewal of sales to new customers at lower preferred rates.

The implication in Livingston’s remarks appeared to be that Gillespie might be holding up calling a public hearing in the matter pending a negotiated settlement.

But Mathias, in her testimony, said the call for a public hearing has been delayed to give the department more time “to make our case” against State Farm, for what Gillespie has claimed is a pricing policy that discriminates against new customers.