Who's Got the Rebate? : You may want it, but insurance companies still have it

There has been so much stalling by the insurance industry on Proposition 103 that any progress is noteworthy. A recent announcement by Insurance Commissioner John Garamendi merits special attention--and a little proactive effort--by consumers.

Last week the state Department of Insurance--for the first time since the state Supreme Court upheld, with one change, the controversial initiative passed by voters in 1988--made public some very important numbers. Now, with a little scratch paper or a calculator, customers of the state's 14 biggest insurance companies (in sales) can figure out the rate rebates they may be entitled to under one of 103's major provisions.

As originally drafted, Proposition 103 mandated a 20% rollback in the rates that insurance companies charge Californians for auto insurance and other forms of property and casualty coverage. Although it upheld the refund provision, the state Supreme Court ruled that the 20% figure was too rigid and could harm some insurers financially. It ordered the insurance commissioner to calculate refunds on a company-by-company basis, allowing each insurer a "fair rate of return" on the cost of doing business.

One reason insurance customers have yet to see their Proposition 103 refunds is because it has taken so long to calculate a fair rate of return for the literally hundreds of insurers licensed to operate in California. Calculations are still being done for many small firms. But the 14 companies singled out by Garamendi control 46% of the property and casualty market in the state. All are listed in the accompanying table. The percentage figure is Garamendi's estimate of their fair rate of return.

It must be emphasized that every company on the list disputes the insurance commissioner's calculations. They will challenge Garamendi's numbers in court, so don't expect any rebate check or credit on your insurance bill any time soon.

But in the meantime, here's how to figure what you may have coming after paying so much for insurance--especially for auto coverage--for so long:

Garamendi ordered insurers to base rebates on what their customers paid for insurance the year after Proposition 103 was enacted. So gather your insurance receipts, or canceled checks written for insurance from November, 1988, to November, 1989. Add them up. Multiply that amount by the percentage figure in the table. The resulting figure is the insurance relief you would be entitled to.

Garamendi estimates that the rebates the 14 companies will have to pay out will average about $100 per customer. That's not much, particularly given the skyrocketing cost of auto insurance in this state. That increase is more evidence of the need for insurance reform that goes beyond the start made by Proposition 103--especially the need for a no-fault system to reduce the number of costly lawsuits that result from accidents, even minor ones.

In the meantime, won't it be satisfying to take the figure you came up with and write your insurance company just to let it know that you know what you would be owed? Enough calls and letters just might provide the consumer pressure needed to get at least some insurance companies off the dime on Proposition 103.

Your Refund Formula

Here is the percentage of your 1988-89 premium the state says you are owed: Company: Premium Percent State Farm: 7.7% Allstate: 13.1 CSAA: 12.5 Auto Club of So. Calif: 15.1 20th Century: 16.6 Aetna: 25.2 Mercury: 13.7 USSA: 24.7 Cigna: 10.1 Nationwide: 18.0 Safeco: 32.2 Transamerica: 13.2 Progressive: 24.3 Geico: 39.4 Average: 14.3%

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