Aetna Resumes Sales of New Policies in State

Aetna Life & Casualty, the ninth largest seller of property and casualty insurance in California, said Wednesday it is resuming sales to new customers of auto, homeowners and commercial liability policies.

The announcement ended a two-week moratorium on such sales while the company evaluated how the state Supreme Court decision upholding most of Proposition 103 would be enforced.

A company spokesman, Jason Wright, said Aetna had concluded from statements made May 11 by state Insurance Commissioner Roxani Gillespie that the state intends to allow the insurance industry a fair rate of return in California for each line of insurance.

‘More Comfortable New’

“Our halt in new sales was temporary, while we awaited a substantive statement on how the state intended to operate,” said Wright from Aetna headquarters in Hartford, Conn. “We’re more comfortable now.”

He said the company is particularly pleased that California will allow a profit on each line of insurance in deciding whether to exempt each company from the 20% rate rollbacks from 1987 levels called for in Proposition 103.

Aetna will file for an exemption and for continuation of “pretty much” the rates it charges now, the spokesman said.

Numerous insurers have expressed satisfaction at Gillespie’s decision to allow a profit for each line of insurance, while a number of consumer groups have criticized the decision on grounds that the industry had traditionally been willing to sell some lines at a loss in a move to induce customers to also buy more profitable lines.

Aetna last year sold $103 million of private passenger auto insurance in California, $64 million of homeowners insurance and $451 million of commercial liability insurance. The moratorium on new sales affected only a small fraction of that business, since policies already in force continued to be renewed during the two-week period.

Meanwhile, another leading insurer, USAA, confirmed reports that it has stopped paying safe-driver dividends to 170,000 of its California auto insurance customers, due to what a company spokesman termed “uncertainties surrounding Proposition 103.”

Although the initiative requires all companies to begin giving a 20% “good driver” discount after Nov. 8, the immediate effect of USAA’s decision is to raise its safe drivers by about 10% on their premiums during the interim.

Exempted Californians

The USAA spokesman added that the company had paid a special one-time homeowner dividend to its homeowner policyholders earlier in the year, but had exempted the 104,000 Californians who would have otherwise received it “due to uncertainties surrounding Proposition 103.”

He did not elaborate on what uncertainties he was referring to, although Gillespie has each company’s rates under review pending her determination whether what companies, if any, will be forced to comply with the rate rollbacks called for by Proposition 103.