Blacks, Latinos Give Personal Accounts of Insurance Sales Bias : Regulation: Garamendi tells hearing that discrimination will be stopped. He is seeking ways to force companies to sell in minority areas.

Explicit testimony charging that insurance companies discriminate against blacks and Latinos was given Monday at a hearing called by Insurance Commissioner John Garamendi to explore ways of forcing the companies to sell in minority areas.

A Compton city councilwoman, Patricia Moore, who is black, told the hearing she had been forced to lie about her place of residence to obtain auto coverage at an acceptable price. Moore, who told her agent she lived in Walnut, said she would not have been accepted even then had she acknowledged that her 21-year-old son lived with her.

A little later, Michael Shames of the Utility Consumers Action Network testified that with the advent of telephone services allowing companies to identify where their calls are coming from, the gambit used by Moore would become impossible.

At the hearing, in which industry spokesmen called for easing discrimination by reducing claims costs, a black Oakland businesswoman, Selwyn Whitehead, told Garamendi of her attempts to buy commercial insurance in 1987. Companies knowing she was calling from a minority-owned business quoted her prices of $8,000 to $10,000, she said. But when she pretended she was the secretary to a white man, the price came down to $1,200, Whitehead said.

Ben Benavidez of Fresno, a former insurance agent who is president of the Mexican-American Political Assn., said that in his experience many companies refuse to hire Latino agents. Lourdes Garcia of Hawthorne told of being dismissed as an agent by Ohio Casualty “because the supervisor told me I sold to too many Hispanics.”

Later, a Simi Valley insurance agent, Barbara Jakubanis, who is Anglo, testified that discrimination by the companies extends beyond minority redlining. She said companies also try to get around a provision of Proposition 103 that they sell new policies to all good drivers who apply.

Jakubanis said one company, which she would not name, withdrew her authorization to sell its policies, telling her she was too willing to sell. She said many companies keep their agents on restricted sales quotas, in violation of the law, to discourage too much new business.

Garamendi, the state’s first elected insurance commissioner, declared that fair selling of insurance to all groups is “critical” and he vowed, “Discriminatory sale of insurance is wrong and will not be allowed to continue.”

But Garamendi indicated he was skeptical about a proposed regulation that would reward insurers who serve minority areas with an annual rate of return on their business up to 35% higher than the return allowed other companies, and punish companies that redlined by reducing their return.

Garamendi said he felt the companies should not be rewarded for simply doing the right thing, and he suggested that allotting non-discriminatory companies higher expense credits in calculating their rates of return might accomplish the same thing.

Some insurance company witnesses who testified contended that companies would cease doing business in the state if they were forced to sell equally in all areas, including urban neighborhoods where the cost of claims is purportedly the highest.

Richard E. Stewart, a former New York state insurance superintendent, told the hearing that in his view California’s best alternatives are to lower claims costs dramatically by enacting no-fault insurance or to drop legal requirements that all drivers buy insurance.

Attempts to induce companies to sell to all on an equal basis, otherwise, “are just another instance of trying to use patchwork and coercion to get a sick system to behave against its very nature,” he said.