443 Insurers Seek Rollback Exemptions : 15 Top Sellers of Auto Coverage Try to Avoid Prop. 103-Mandated Rate Cuts
Insurance Commissioner Roxani Gillespie has announced that 443 property-casualty insurers doing business in the state, including all 15 of the top sellers of personal auto coverage and 14 of the top 15 sellers of homeowners’ coverage, have filed applications to be exempted from Proposition 103-mandated rate rollbacks.
This means that 281 of California’s 724 licensed property-casualty insurers apparently have not filed such applications, although department officials cautioned Monday that most of these might not be required under the law to give rollbacks in any case.
Milo Pearson, chief of rate regulation for Gillespie, estimated that as many as 100 of the companies that did not file sell workers’ compensation insurance, which is not affected by the rollback provisions in Proposition 103.
Others of those companies that did not file may be licensed to sell Proposition 103-regulated lines of insurance but do not actually do so, Pearson said.
Consumer advocate Steven Miller, who examined the filings, said some companies may have filed under collective group names although he said there were some indications that as many as 150 companies required to file for rollbacks exemptions, if they were going to get any, had not done so.
Gillespie will provide a complete list of companies that have voluntarily agreed to give rollbacks or are required to give them by virtue of not filing for exemptions in a week or two, department aides said.
In the meantime, Gillespie declared, “most applications simply asked to maintain current rate levels. The department has started reviewing the exemption applications and will be announcing public hearings or issuing decisions on them shortly.”
According to the recent state Supreme Court decision upholding most of Proposition 103, companies will be exempted from the rollback requirement if Gillespie finds that the rate reduction would deny them a “fair return” on their investment. Gillespie has indicated that in some cases she may order smaller rollbacks than specified under Proposition 103. The initiative provided for 20% cuts from rates in effect in November, 1987.
The only company among the top 15 sellers to voluntarily implement the rollbacks in either auto or homeowners insurance was USAA (United Services Automobile Assn.), which has announced it will cut premiums for its homeowner lines.
On the other hand, USAA Casualty, the company’s standard as compared to its preferred sales auto firm, was one of only three carriers among the top 15 in either auto or homeowners to ask Gillespie for permission to raise its rates above current levels. It asked for a 9.9% increase. A standard firm sells to riskier drivers than the preferred firm.
Most other firms were content to try to hold to their present prices, giving no rollbacks but asking for no increases either.
In order of sales, the insurers asking for exemptions from the rollbacks in auto insurance were State Farm Mutual, California State Auto Assn. (the Northern California Auto Club), Allstate, Farmers, the Automobile Club of Southern California, 20th Century, Mid-Century (the Farmers standard seller), Mercury Casualty, USAA, State Farm Fire and Casualty (the State Farm standard seller), GEICO, Hartford Underwriters, and Safeco.
Rate Increases
USAA Casualty, one of two of the top 15 firms asking for a rate increase, is the 14th-largest seller. The 15th largest, Progressive Casualty, asked for a 0.38% rate increase.
In homeowners insurance, only All West, the 11th-biggest seller, asked for an increase--4.9%. USAA, which agreed to give the 20% rollback, is the 6th-biggest seller of homeowners’ insurance.
Requesting exemptions from homeowners’ rollbacks, in order of sales, were State Farm Fire and Casualty, Allstate, Farmers, California State Auto Assn., Safeco, Fireman’s Fund, Chubb Insurance, Aetna Casualty and Surety, 20th Century, Blue Ridge, Prudential, West American, and Transamerica.
In her statement, Gillespie said for the first time that she will order “special audits” of the rollback exemption filings “as deemed necessary,” thus apparently acceding to calls in recent weeks from some consumers’ groups for such detailed audits.
Gillespie has promised to complete all decisions on rate rollbacks by Nov. 8.
