Garamendi Vows to Review Complaints of Excessive Auto Insurance Rate Hikes

Expressing concern over some consumer complaints about extremely large auto insurance rate increases, Insurance Commissioner John Garamendi vowed Tuesday to review them and order “a new wave of rollbacks” if they prove excessive.

But, Garamendi cautioned, he will not be ready for such a review until he promulgates new rate regulations later in the spring. “We have no standards in place today to measure the size of present rate increases,” he acknowledged.

Garamendi told a Los Angeles news conference he suspects either that former Commissioner Roxani Gillespie last December understated the rate increases she had authorized companies to take, or that some companies have taken more than the increases permitted them.

When Gillespie announced general increases for scores of companies and changes in methods of allocating rates among customers by other companies, she said that drivers who had records of at-fault accidents or more than one minor citation in previous years would get increases of up to 40%.

But Garamendi said the complaints reaching his department indicate that in many cases increases are well over 40% and involve good drivers as well as poor ones.

A Garamendi deputy, Tom Epstein, said some people have told the Insurance Department hot lines that they have received 80% increases in their auto insurance bills despite clean driving records.

Representatives of several major sellers have said in recent days that all the increases they levied were authorized by Gillespie. But Garamendi said he felt “much of the information from the companies that Gillespie used to calculate rates was inaccurate.”

Gillespie could not be reached for comment. On Jan. 24, addressing an insurance brokers luncheon in Century City after leaving office, she expressed satisfaction about setting new price regulations and authorizing rate increases, thus lifting a price freeze she had imposed in 1989.

“So the freeze was lifted,” Gillespie said at the luncheon. “Guess what happened then? The stocks of the California insurance companies went up. At that point I took a bottle of champagne to my mom and I said, ‘Hey Mom, guess what? It’s all done!’ ”

However, within a day of taking office, Garamendi scrapped Gillespie’s regulations and has since set about drafting his own. He said he thought Gillespie had given “a Christmas present” to the companies.

On Tuesday, Los Angeles Superior Court Judge Dzintra Janavs, following through on statements she made on the bench last week, issued a formal opinion supporting Garamendi’s right to set his own regulations on rollbacks of 1989 premiums and future rates. She thereby turned down a lawsuit by 82 auto insurers who had asked for a preliminary injunction to stop him from acting.

Janavs cautioned in her opinion, however, that the insurers had a right to challenge Garamendi’s expedited hearings on the new regulations if they believed they were denied due process. Garamendi has said he will take only weeks to hear testimony on the proposed regulations, while Gillespie heard testimony for months.

The commissioner named no companies against which complaints had been made about high rate increases, nor did he discuss geographic areas where the complaints might be concentrated.

Complaints made to The Times in recent weeks, however, have been largely from suburban areas in the San Gabriel Valley, northern Orange County, and, occasionally, the Westside of Los Angeles.