Little Effect Seen From Insurance Rollbacks

Insurance Commissioner Roxani M. Gillespie said Monday that more than a third of the insurers in California have rolled back some of their rates as required by Proposition 103, but consumers saw few of the benefits.

Regulators and consumer advocates said most of the rollbacks have been made on commercial policies, and a “relatively small” number of regular consumers--10% or fewer--have seen a change in their automobile insurance rates.

“For a handful of consumers, the check is finally in the mail. But most of us are still going to have to fight for our rebates,” said Harvey Rosenfield, author of the landmark insurance reform initiative narrowly approved by voters last November.

Gillespie said that 230 firms have rolled back rates by 20% on 193 lines of personal insurance and 641 lines of commercial insurance. Another 111 lines of insurance offered by 39 companies already have rates low enough to satisfy the landmark insurance reform measure approved by voters last November.

However, only seven companies have rolled back rates on personal automobile liability coverage--the focus of the Proposition 103 campaign--while another firm had already reduced its rates for personal automobile liability insurance before Proposition 103 took effect.

All eight companies combined have only a tiny fraction of the California market. The companies are: American Security Insurance Co., Chiyoda Fire & Marine Casualty, Jefferson Insurance Co. of New York, Ohio Farmers, Standard Guaranty Insurance, Transamerica Specialty, Westfield Insurance and Amex Assurance Co.

Milo Pearson of the California Department of Insurance said any premiums that customers of those companies paid in excess of the new, low rates after the date Proposition 103 took effect--Nov. 8, 1988--will be refunded with interest.

But Rosenfield estimated that these companies have written less than 10% of the auto liability insurance in the state. Pearson was not that specific, although he acknowledged the companies handle a “relatively small” number of such policies.

Commercial Rates

In addition to the companies that voluntarily met the rollback requirement for personal auto liability insurance, 46 firms have cut their commercial auto liability rates, the premiums charged businesses to insure company-owned cars. Eight others had already made such cuts before Proposition 103 took effect.

The major operators in California’s multibillion-dollar personal automobile insurance race--State Farm, Farmers, Allstate, Automobile Assn. of Southern California and the California State Automobile Assn.--all are appealing the requirement that they cut their rates to 20% below levels of November, 1987.

They are among the 445 property and casualty insurance firms that Gillespie said are seeking to exempt about 4,000 different lines of insurance from the rate-reduction requirements. Proposition 103 permits companies to seek an exemption if a rollback threatens to put them out of business.

Gillespie has promised to review all of those exemption requests by the end of September, then hold public hearings on the applications and decide by the end of November whether to accept or reject them.

“For the vast majority of California consumers . . . their rollbacks are in the hands of Roxani Gillespie,” Rosenfield said. “If the commissioner doesn’t lay out some ground rules--asking the companies to open their books and be more forthright about their costs--the rollbacks for most people will be in jeopardy.”

The greatest beneficiary of the rollbacks so far are companies that buy commercial inland marine insurance. Figures show that rates for 99 lines of that kind of insurance have been rolled back voluntarily so far. Commercial fire insurance is next, with rate reductions in 76 types of policies, followed by commercial aircraft insurance, which saw 59 reductions.

For personal insurance, the greatest number of voluntary reductions--in 49 different lines--was made in personal inland marine insurance. Personal fire insurance was next, with the rates for 43 lines being reduced.

Proposition 103 requires reductions in the rates charged for auto, property and liability insurance. In addition, insurance companies that appeal the 20% rollback are prohibited from raising current rates before November unless they can show they are in desperate financial need.

The initiative also calls for more stringent state regulation of the insurance industry.