Auto Insurer Files for Damages Against Gillespie, Department

FGS Insurance Agency Inc., a controversial marketer of high-risk auto insurance policies, said Thursday that it has filed a damage claim against the state Department of Insurance, Commissioner Roxani M. Gillespie and four other agency officials.

The Insurance Department has been trying to cancel FGS’ license to market auto insurance in California, charging that the Irvine-based company has defrauded customers.

The company has denied the allegations, maintaining that the department has a vendetta against FGS because it once was owned by Coastal Insurance, a marketer of high-risk policies that was ordered liquidated last year.

In the claim, FGS says it was damaged because the department has set up a toll-free hot line and tells clients the company provides inferior service and will have its license revoked.

In addition, FGS claims that department investigators have entered its premises without permission and have threatened to seek revocation of the licenses of FGS employees who request legal advice during interviews.

The claim, submitted to the Insurance Department, is an administrative prelude to the expected filing of a $40-million civil suit by FGS against the department, said company President Alan Greenberg. A damage claim must be filed and acted on by the state before a civil suit for damages can be instituted.

Insurance Department officials said they would not comment until they had seen the claim.