UCAN Report Says Auto Insurance Firms Unscrupulous, Overpriced : Survey: The consumer group accuses some companies of ‘bait- and-switch’ tactics, and says the various policy offerings only confuse the average customer.

Based on its survey of rates offered by auto insurance companies, a consumer protection group said Monday that insurance carriers in San Diego subject their customers to unscrupulous sales practices and rates that are too high.

The study, conducted by the Utility Consumers Action Network, also found that companies do not offer coverages that can be easily compared to each other.

The vastly disparate offerings and rates serve to confuse the average customer, said Michael Shames, executive director of UCAN.

The group also claimed that some of the eight companies surveyed were practicing “bait-and-switch” sales techniques, in which insurance agents quote a lower rate to engage a customer and later impose a substantially higher rate.

The UCAN study concludes that, during the three years since the state insurance reform initiative, Proposition 103, went into effect, the cost of insurance has risen to levels similar to that of a monthly car payment.

The report also says that several companies are not providing the minimum insurance coverage mandated by Proposition 103 and are in violation of state law. It blames the California Department of Insurance for poor enforcement of reforms set out by the insurance initiative.

Among UCAN’s recommendations was that the state establish “benchmark” or uniform coverage terms and levels, and that all companies be required to carry them. Such a requirement would make comparison shopping easier, the report says.

Officials at the insurance department generally agreed with the report’s findings and said action is already being taken on many of the problems addressed in the survey.

“We think the UCAN report was very well done, and it does identify serious problems with insurance selling practices,” said Tom Epstein, deputy commissioner for consumer protection at the insurance department. “The report rightly suggests better enforcing of the state guidelines. We have been looking into the problems.”

Epstein said the department also conducted a rate survey of the state’s largest companies and will be releasing the results in about two weeks.

A spokesman for an insurance lobbying group that represents three of the companies surveyed by UCAN said he had not seen the results of the study, but disputed any assertions about unscrupulous practices.

“I just don’t know where they are coming from,” said David Fountain, director of communication for the Personal Insurance Federation of California, which represents 37% of the state’s auto insurers.

“Obviously, setting rates is not an exact science. If you put in the same information, some agents are going to interpret the information liberally, some conservatively,” he said. “In calculating rates, it’s all going to come up differently. . . . Insurance companies are human, too, you know, and there are going to be mistakes.”

Fountain criticized UCAN for not apprising the insurance industry of the survey results before announcing them at a news conference Tuesday morning.

“It’s interesting this became a media event before they tried to contact the insurance companies that are affected,” Fountain said.

The survey group included insurance carriers using exclusive agents and independents who write policies for several companies. The eight carriers--Farmers, State Farm, 20th Century, Mercury, USAA, GEICO, Progressive and AMICA--included small, medium and large companies. Together they account for about 70% of the auto insurance policies written in California.

In inquiring about specific rates, UCAN created three “family profiles.” Different ages, addresses, number of drivers in the family, number of cars and driving records were established.

Each “family” called all of the companies, and sometimes different agents in the same company were called to determine if there were inconsistencies in quoted rates within a single company.

There were, according to the study.

No two agents gave exactly the same quotes, it found. In one instance, with Farmers, an agent gave a quote $640 higher than another agent, for the same coverage, in the same ZIP code, for the same risk.

“Our surveyors were nonplussed,” the report says.

One of the profile “families,” Scott and Jenny Jordan, ages 47 and 50, and their son Johnny, 17, who live in Encinitas, drive a 1986 Ford LTD and a 1988 Toyota Corolla FX. They were quoted $1,663 for six months of minimum coverage by Farmers. An agent at USAA quoted the same family $963.

A spokesman for Farmers Insurance Co., which UCAN identified as being among the most expensive carriers, said he had not seen the report but questioned UCAN’s assertions as they were related by a reporter.

“I find it puzzling that they would find a wide difference between the rates we offer and the other companies’,” Farmers spokesman John Millen said. “Our rates are very competitive.”