State Goes After FGS’ License for Alleged Abuses

The state Department of Insurance said Wednesday it is seeking to revoke the license of FGS Insurance Agency, one of California’s largest and best-known automobile insurance brokers, because of alleged widespread consumer abuse at the Irvine company.

In an administrative action, state officials alleged that FGS violated numerous regulations including selling policies issued by a company not licensed to do business in California and failing to disclose interest rates on financed policies that ranged from 21% to 41%.

Chief investigator Dennis Ward said the Insurance Department has received more than 250 complaints against FGS within the last year complaining about poor and improper service, including misquoted premiums and failure to provide coverage as requested.

FGS writes about 10,000 new policies a month and is known for its frequent television and radio advertisements, which promise low down payments and low monthly installments.

The state’s accusation is the latest in a string of complaints it has filed against FGS owner Sidney M. Field, who was prohibited from selling insurance in California in 1987.

“He is not the kind of person we feel should be in control of an agency,” Ward said.

Field’s attorney, Milford Dahl Jr., denied the accusations Wednesday. “Basically the charges are without legal or factual merit,” he said.

The state claims that Field hid his ownership of FGS by having the company’s license issued in someone else’s name.

“Trickery on the part of Sid Field meant regulators were not told as required by law who owned or controlled the agency,” Ward said.

But Dahl lashed out at state officials and questioned the motivation behind their pursuit of FGS, which was once a subsidiary of the now-defunct Coastal Insurance Co. Coastal collapsed in February, 1989, in part because of problems at FGS. The Van Nuys-based company’s failure will result in a more than $60-million surcharge on all California auto insurance policies.

The charges “are made by the department which is under real heat from the legislative people because of the problem with Coastal Insurance going out of business,” Dahl said. “They are trying to use FGS as a whipping boy.”

But the state claims FGS routinely cheated customers.

For instance, the state says nearly 100% of FGS policies last year were written through the California Automobile Assigned Risk Plan, which charges the same premiums regardless of which company writes the policy.

FGS, however, used a finance company which charged higher-than-normal fees. The use of that company is not in itself illegal but FGS allegedly failed to tell customers they had a cheaper option, which would be a violation.

The complaints from customers claim FGS misquoted premiums, failed to provide the right kind of coverage and refused to make timely deposit refunds on canceled policies.

Theodore Crow is one of the people who complained.

“I needed insurance and FGS had the lowest quote,” said the Anaheim resident.

He claims in a complaint with the state that FGS quoted him a price for a policy on his 1988 Camaro of $1,256.86, which he thought sounded reasonable. Crow gave the company a $300 deposit.

“Three weeks later, I received a letter in the mail that they had jacked up my rates another $276,” said Crow. “I could have bought a lot of insurance at lower prices than that. I canceled and I have yet to receive my deposit back from them.” He says he dropped the company Sept. 19.

Dahl said he was unfamiliar with Crow’s complaint but that in some cases rates are increased because FGS discovers applicants have lied about their driving records.

FGS can contest the state’s action to revoke its license in an administrative hearing.