State Insurance Commissioner John Garamendi on Friday directed 20th Century Insurance to immediately issue $101.8 million in long-disputed Proposition 103 refunds, but the company said it will appeal the order to the courts.
An appeal by 20th Century seemed destined to prolong the 3 1/2-year-long legal war over Proposition 103 rollbacks and means, once again, that rebate checks will not arrive in customers' mailboxes anytime soon.
The order represented the first such directive issued under regulations Garamendi had implemented over fierce industry opposition. He estimated that rebates would average $157 for each of the company's 650,000 car and homeowner insurance policyholders. Most reside in Southern California.
"The party's over. It's time to pay up," Garamendi said.
"You have tried every trick in the lawbook. . . . You have lost at every turn," he said of 20th Century, the sixth-largest automobile insurer in the state.
Garamendi issued the rebate order on the recommendation of a state administrative law judge, who presided over a rate hearing authorized by Proposition 103. Last year, the Automobile Club of Southern California broke industry ranks, waived a hearing and paid its customers $104 million in rebates.
The state Department of Insurance estimated that in excess of $1.4 billion still is owed policyholders under the refund provisions of Proposition 103.
Approved by the voters in 1988, Proposition 103 promised a 20% rollback in automobile and homeowner rates. The state Supreme Court upheld the measure but ruled insurance companies cannot be refused a fair rate of return. Garamendi said he has determined that a fair rate of return is 10%.
In announcing the appeal, James O. Curley, president and chief operating officer of Woodland Hills-based 20th Century, charged that Garamendi's standards were "unfair, unreasonable and inconsistent" with the terms of Proposition 103 itself.
20th Century's rates are among the lowest for car and homeowner policies offered by major insurers in California. It is regarded within the industry as a generally economical and efficient operator.
Curley expressed "dismay" that Garamendi's order required 20th Century to "refund proportionally larger rollbacks than less efficient companies with higher prices." He charged that from the start, the results of the hearing were "predetermined."
Garamendi said his order to 20th Century represented a 12.2% rollback for customers. He originally sought a total rebate of $106 million from the company, but Administrative Law Judge Elizabeth LaPorte reduced the sum by $5 million.
Ed Howard, an attorney for Voter Revolt, which sponsored Proposition 103, complained that the refund "should have been quite a bit higher." If 20th Century returned to court to fight the rebate order, "they'll risk looking like a renegade company (that believes) the law doesn't apply to them as it does to everyone else," he added.
Garamendi, a prospective Democratic contender for governor, estimated the insurance industry had spent more than $100 million on lawyers to fight Proposition 103. "Insurance companies should abandon this futile and destructive legal war," he said.