Garamendi Ranks Insurers Based on Valid Complaints

In the first such report in five years, Insurance Commissioner John Garamendi released statistics Tuesday ranking the state’s top 50 insurance companies based on the number of justified consumer complaints filed against them last year.

Saying his purpose was “to name names and give scores,” Garamendi said the lists--ranking homeowner and auto insurers separately--reveal “the good, the bad and the ugly” companies as far as complaints are concerned.

He lauded USAA Insurance, American Economy and Liberty Mutual as the “good” for having the fewest auto insurance complaints, but said Farmers Insurance Group ranked as “bad,” and the comparatively small Stonewall Insurance Co. deserved the term “ugly.”

Of the Farmers companies Garamendi said: “While they advertise that ‘America depends on Farmers,’ too often Farmers’ customers must depend upon the Department of Insurance to get their claims paid and their rates reduced.”

The commissioner, speaking at a news conference in Los Angeles, said that of the top 10 auto insurance sellers in California, which together serve 69.3% of the market, the two Farmers Insurance Group companies’ rate of justified complaints was 64.7% higher than the weighted average of the other eight largest companies.

The two Farmers companies are fourth largest Farmers Insurance Exchange and seventh largest Mid-Century Insurance, together comprising 13.7% of the market.

Farmers spokesmen reacted bitterly Tuesday to Garamendi’s remarks, calling the survey misleading and of little value to California’s insurance consumers.

“We are incensed,” said spokesman Jeffrey Beyer. “This is a mean-spirited, unfathomable slice at Farmers. The rhetoric of the insurance commissioner is simply not substantiated by the statistics he has put out. Actually, we are about in the middle of the group. He is being unfair and arbitrary in singling us out.”

Another Farmers spokesman, John Millen, questioned why Garamendi so harshly criticized Farmers when other large sellers, including Mercury, Safeco and Nationwide, had a higher rate of complaints. Millen also observed: “He doesn’t break out the complaints. These are not necessarily complaints from our customers. These could be trial lawyers angry that we’re not ready to settle with them, or other third-party complainants. With such a small sample, a large number of these complaints could have been prompted by a disgruntled agent we had some time ago.”

Garamendi spokeswoman Elena Stern, responding later in the day for the commissioner, said the statistics would have to speak for themselves, adding that Garamendi decided Farmers deserved special comment because of its size.

As for Stonewall, Garamendi said that although it ranked 35th in auto insurance sales, it had the “highest ratio of justified complaints, more than four times the survey average.”

Stonewall’s director of claims, William Dibble, said he was “flabbergasted” at the report, suggesting, like Millen, that the nature of the complaints should have been explained.

At USAA, a spokesman expressed pleasure at the report, which showed that company with the fewest complaints. “We generally do well in states that do surveys on this,” said John Walmsley. “Being a member-owned organization largely of military officers and their dependents, our goal is to provide the best service.”

Continuing what was viewed as an unprecedented attack on a single company, Garamendi added that he was “sorry to say that the bad news for Farmers on auto insurance only gets worse when we turn to homeowners insurance.”

“Farmers Insurance Exchange--as the 19th-largest insurer--ranks as the worst company, with a complaint ratio five times higher than the survey average,” he said. He also noted that Fire Insurance Exchange, a Farmers group company that sells a far larger amount of homeowners insurance, ranks 19th best in the homeowners category.

Farmers spokesmen said it was “terribly unfair” for Garamendi to single out for such negative comment a Farmers company that does such a small share of the total homeowners insurance business.

The commissioner also noted that no justified complaints were received in 1990 against two sellers of homeowners coverage, Vigilant Insurance and USAA Casualty Insurance, which were therefore ranked the best.

Garamendi defined a justified complaint as one involving a violation of state insurance laws or a situation in which a consumer could not get a response from an insurer to questions or concerns and was forced to contact the Insurance Department for help.

Although in raw numbers there appeared to be relatively few justified complaints against even those companies with the highest ratios, the commissioner said he believes the department received complaints only as “the last resort for the most persistent customers.”

“For every complaint filed with the department and found to be justified, I believe there are probably scores more instances where . . . policy holders threw up their hands in frustration, believing the extra $100 or $200 wasn’t worth the grief,” Garamendi said.

Altogether, the commissioner said, the Insurance Department handled 6,783 justified complaints in 1990 in personal lines of auto insurance and 1,355 justified complaints for homeowners insurance.

He said that more than $4.4 million was recovered for consumers from auto insurers as a result of department inquiries; another $4 million was recovered for homeowner policy customers.

In 1990, the Insurance Department was under the control of Commissioner Roxani Gillespie, an appointee of then-Gov. George Deukmejian. Garamendi took over as the state’s first elected insurance commissioner in January.

Garamendi said consumers may file complaints against insurers by calling the department’s toll-free hot line at 1-800-927-HELP or by writing to the California Department of Insurance, Consumer Services Division, 3450 Wilshire Blvd., Los Angeles, CA 90010.

The commissioner said comparative statistics for health and life insurance will be issued today.

Complaints Against Insurers

Insurance Commissioner John Garamendi has made public these comparative listings of justified complaints received by the state Department of Insurance in 1990 against the top 50 California sellers of personal lines of auto and homeowners insurance. Companies highest on these lists, with the smallest ratios, had the fewest complaints for each million dollars of premiums collected. Those lowest on the lists had, comparatively, the highest number of complaints for the premiums collected. The 50 companies listed on the respective charts do 89.4% of the auto insurance business in the state and 88% of the homeowners insurance business. Parent companies are in parenthesis. 50 LARGEST PERSONAL AUTOMOBILE INSURERS

1990 1990 1989 Complaints No. of Premium per $1 Million Justified Volume Company in Premiums Complaints (in Millions $) 1 United Services .081 21 258.338 Auto. Assc. 2 American Economy .087 3 34.325 Ins. 3 Liberty Mutual .088 7 79.146 Fire Ins. 4 Amica Mutual Ins. .143 4 27.795 5 Fireman’s Fund .152 10 65.788 of Texas 6 SAFECO Ins. .167 6 35.924 of Illinois 7 State Farm .169 325 1,921.738 Mutual Auto. 8 State Farm Fire .202 55 271.831 & Casualty 9 Progressive .210 12 56.916 Specialty Ins. 10 Inter-Ins. Exchange (AAA of Southern Calif.) .230 177 768.08 11 Mid-Century Ins. (Farmers Ins. Group) .234 110 469.955 12 Auto.Ins. of Hartford, Conn. (AETNA Life & Casualty) .238 7 29.325 13 20th Century Ins. .242 147 606.762 14 Calif. State Auto Assc. (AAA of Northern California) .253 302 1,190.091 15 Continental Ins. (Continental Group) .319 10 31.254 16 Allstate Ins. .319 381 1,191.172 17 Allstate Indemnity .324 36 1,11.032 18 Calif. Casualty Indemnity Exchange .329 22 66.667 19 Transamerica Ins. Co. .339 15 44.234 20 West American Ins. (Ohio Casualty Group) .360 28 77.61 21 United Pacific Ins. .376 11 29.215 22 USAA Casualty Ins. .395 43 108.744 23 Gov’t Employees .407 49 120.272 Ins. Co. 24 Colonial Penn .409 16 39.064 Franklin Ins. 25 California .415 11 26.472 Casualty & Fire 26 Continental Casualty (CNA Ins. Group) .417 11 26.346 27 National General Ins.* (Crum & Forster) .417 30 71.816 28 Calfarm Ins. .420 20 47.6 29 All West Ins. Co.* (Crum & Forster) .426 28 65.618 30 Foremost Ins. .454 14 30.834 Co. Mich.* 31 Farmers Ins. Exchange (Farmers Ins. Group) .459 521 1,133.179 32 Mercury Casualty .501 144 287.026 33 California .564 32 56.71 Casualty Ins. 34 Mercury Ins. .589 77 130.697 35 Prudential .653 30 45.893 Property & Cas. 36 Hartford .667 62 92.922 Underwriters Ins. 37 AETNA Casualty .668 57 85.294 & Surety 38 Financial Indemnity Co. (Teledyne Group) .690 45 65.197 39 SAFECO Ins. .748 85 113.567 of America 40 Wawanesa .799 29 36.269 Mutual Ins. 41 J.C. Penney .806 31 38.418 Casualty* 42 Allegiance Ins. (Cigna Group) .883 27 30.543 43 Nationwide Mutual .899 25 27.778 Fire Ins. 44 Colonial Penn Ins. .903 59 65.304 45 Progressive .933 107 114.641 Casualty 46 Nationwide 1.001 59 58.925 Mutual Ins. 47 Topa Ins. 1.207 34 28.16 48 Viking Ins. of Wisconsin* (Crum & Forster) 1.273 55 43.197 49 Thriftco Ins.** 1.364 68 49.852 50 Stonewall Ins. 1.452 60 41.304

Company Rank by Company Sales 1 United Services 10 Auto. Assc. 2 American Economy 40 Ins. 3 Liberty Mutual 19 Fire Ins. 4 Amica Mutual Ins. 48 5 Fireman’s Fund 26 of Texas 6 SAFECO Ins. 39 of Illinois 7 State Farm 1 Mutual Auto. 8 State Farm Fire 9 & Casualty 9 Progressive 29 Specialty Ins. 10 Inter-Ins. Exchange (AAA of Southern Calif.) 5 11 Mid-Century Ins. (Farmers Ins. Group) 7 12 Auto.Ins. of Hartford, Conn. (AETNA Life & Casualty) 45 13 20th Century Ins. 6 14 Calif. State Auto Assc. (AAA of Northern California) 3 15 Continental Ins. (Continental Group) 41 16 Allstate Ins. 2 17 Allstate Indemnity 15 18 Calif. Casualty Indemnity Exchange 22 19 Transamerica Ins. Co. 33 20 West American Ins. (Ohio Casualty Group) 20 21 United Pacific Ins. 44 22 USAA Casualty Ins. 16 23 Gov’t Employees 12 Ins. Co. 24 Colonial Penn 37 Franklin Ins. 25 California 50 Casualty & Fire 26 Continental Casualty (CNA Ins. Group) 49 27 National General Ins.* (Crum & Forster) 21 28 Calfarm Ins. 31 29 All West Ins. Co.* (Crum & Forster) 25 30 Foremost Ins. 43 Co. Mich.* 31 Farmers Ins. Exchange (Farmers Ins. Group) 4 32 Mercury Casualty 8 33 California 28 Casualty Ins. 34 Mercury Ins. 11 35 Prudential 32 Property & Cas. 36 Hartford 17 Underwriters Ins. 37 AETNA Casualty 18 & Surety 38 Financial Indemnity Co. (Teledyne Group) 24 39 SAFECO Ins. 14 of America 40 Wawanesa 38 Mutual Ins. 41 J.C. Penney 36 Casualty* 42 Allegiance Ins. (Cigna Group) 42 43 Nationwide Mutual 47 Fire Ins. 44 Colonial Penn Ins. 23 45 Progressive 13 Casualty 46 Nationwide 27 Mutual Ins. 47 Topa Ins. 46 48 Viking Ins. of Wisconsin* (Crum & Forster) 34 49 Thriftco Ins.** 30 50 Stonewall Ins. 35

* No longer providing coverage in California.** Liquidated.

50 LARGEST HOMEOWNERS INSURERS

(Includes all personal property lines, for example: homeowners, renters, condominium units, earthquake and fire coverages.)

1990 1990 1989 Complaints No. of Premium per $1 Million Justified Volume Company in Premiums Complaints (in Millions $) 1 USAA Cas. Ins. 0 0 8.435 2 Vigilant Ins. Co. 0 0 8.83 3 Assoc. Indemnity Corp. (Fireman’s Fund Group) .021 1 45.691 4 Century-National .050 1 19.668 Ins. 5 Inter-Insurance Exchange (AAA of Southern Calif.) .060 1 16.51 6 United Services Auto. Assc. .062 3 48.381 7 American Economy .071 1 14.034 Ins. 8 Federal Ins. Co.* .103 5 48.369 9 Home Indemnity .107 1 9.261 10 West American Ins. (Ohio Casualty Group) .118 3 25.341 11 State Farm Fire .119 52 435.374 & Cas. 12 California Cas. .122 1 8.148 & Fire 13 Liberty Mutual .126 2 15.783 Fire Ins. 14 State Farm .127 3 23.611 General Ins. 15 AETNA Casualty .150 5 33.25 & Surety 16 Travelers .156 3 19.203 Indemnity (R.I)* 17 Ins. of North America (Cigna Group) .157 2 12.694 18Calfarm Ins. .159 6 37.666 19 Fire Ins. Exchange (Farmers Ins. Group) .162 42 258.575 20 Continental Ins. (Continental Group) .168 3 17.807 21 United Pacific Ins. .170 2 11.715 22 Hartford .210 2 9.497 Casualty Ins. 23 Transamerica .231 6 25.876 Ins. Co. 24 California .232 5 21.483 Capital Ins. 25 SAFECO Ins. .233 14 59.837 of America 26 Northern Ins. Co. of New York (Zurich-American) .243 2 8.207 27 California .247 4 16.184 Casualty Ins. 28 North River Ins. Co.* (Crum & Forster) .296 3 10.131 29 Allstate Ins. .319 120 375.05 30 Standard Fire Ins. (AETNA Life & Casualty) .337 3 8.897 31 Allstate Indemnity .344 3 8.696 32 Oregon Mutual Ins. .348 3 8.604 33 20th Century Ins. .359 14 38.94 34 All West Ins. Co.* (Crum & Forster) .366 6 16.349 35 Unigard .378 4 10.574 Security Ins. 36 Civil Service .416 7 16.795 Employees Ins. 37 Western .428 5 11.667 Mutual Ins. 38 California State Auto. Assc. (AAA of Northern Calif.) .430 38 88.214 39 Metropol. Prop. .433 4 9.225 & Liability* 40 Blue Ridge Ins. (Republic Financial Serv.) .449 12 26.693 41 Hartford .474 7 14.76 Underwriters Ins. 42 Farmers Home Mutual .506 4 7.904 43 Prudential Prop. & Casualty .538 14 25.998 44 Residence .540 5 9.253 Mutual Ins. 45 Fireman’s Fund Ins. (Fireman’s Fund Group) .555 14 25.221 46 Vanguard Ins. (Republic Financial Service) .591 6 10.152 47 Sequoia Ins. .709 6 8.455 48 Colonial Penn Ins. 1.021 9 8.807 49 Republic Ins. (Republic Financial Service) 1.038 14 13.482 50 Farmers Ins. Exchange (Farmers Ins. Group) 1.332 28 21.02

Company Rank by Company Sales 1 USAA Cas. Ins. 47 2 Vigilant Ins. Co. 44 3 Assoc. Indemnity Corp. (Fireman’s Fund Group) 8 4 Century-National 20 Ins. 5 Inter-Insurance Exchange (AAA of Southern Calif.) 25 6 United Services Auto. Assc. 7 7 American Economy 29 Ins. 8 Federal Ins. Co.* 6 9 Home Indemnity 40 10 West American Ins. (Ohio Casualty Group) 15 11 State Farm Fire 1 & Cas. 12 California Cas. 49 & Fire 13 Liberty Mutual 27 Fire Ins. 14 State Farm 17 General Ins. 15 AETNA Casualty 11 & Surety 16 Travelers 21 Indemnity (R.I)* 17 Ins. of North America (Cigna Group) 31 18Calfarm Ins. 10 19 Fire Ins. Exchange (Farmers Ins. Group) 3 20 Continental Ins. (Continental Group) 22 21 United Pacific Ins. 32 22 Hartford 37 Casualty Ins. 23 Transamerica 14 Ins. Co. 24 California 18 Capital Ins. 25 SAFECO Ins. 5 of America 26 Northern Ins. Co. of New York (Zurich-American) 48 27 California 26 Casualty Ins. 28 North River Ins. Co.* (Crum & Forster) 36 29 Allstate Ins. 2 30 Standard Fire Ins. (AETNA Life & Casualty) 43 31 Allstate Indemnity 42 32 Oregon Mutual Ins. 46 33 20th Century Ins. 9 34 All West Ins. Co.* (Crum & Forster) 24 35 Unigard 34 Security Ins. 36 Civil Service 23 Employees Ins. 37 Western 33 Mutual Ins. 38 California State Auto. Assc. (AAA of Northern Calif.) 4 39 Metropol. Prop. 39 & Liability* 40 Blue Ridge Ins. (Republic Financial Serv.) 12 41 Hartford 28 Underwriters Ins. 42 Farmers Home Mutual 50 43 Prudential Prop. & Casualty 13 44 Residence 38 Mutual Ins. 45 Fireman’s Fund Ins. (Fireman’s Fund Group) 16 46 Vanguard Ins. (Republic Financial Service) 35 47 Sequoia Ins. 45 48 Colonial Penn Ins. 41 49 Republic Ins. (Republic Financial Service) 30 50 Farmers Ins. Exchange (Farmers Ins. Group) 19

* No longer providing coverage in California.

SOURCE: Statistical Analysis Bureau, California Department of Insurance.