Garamendi: Insurers Can Pay Claims

State Insurance Commissioner John Garamendi said Thursday that the insurance industry is economically sound and financially able to handle claims from riot-torn businesses and homeowners in Los Angeles.

“The insurance industry is generally healthy and profitable,” Garamendi said after delivering his keynote address at the annual convention of the Professional Insurance Agents of California and Nevada. “We will be able to meet all these disasters,” including the recent earthquakes and flooding.

Garamendi hastened to add that the problems with delayed claim checks for property losses in the Oakland fire would not happen in South Los Angeles.

Garamendi said steps would be taken to ensure that checks would be issued early to claimants in Los Angeles. He added that there are a series of programs being developed that will bring new businesses into the community. He did not say what the programs were but described the task as “an enormous challenge.”

“We don’t want a repeat of what happened in Oakland, “ he said. “We know that there is redlining, but the claim payments will be modified and adequate insurance will have to be made available.”

Garamendi said he met recently with 10 industry officials who promised that they would begin paying claim checks and invest in the ravaged areas of Compton and South Los Angeles.

About 300 insurance agents attended the noon speech held at the California Ballroom at the Anaheim Hilton and Towers.

During the keynote address, Garamendi touched briefly on the state’s workers’ compensation program, calling it “a mess.”

“The process is not working for those it was intended,” he said.

Garamendi said his office is making an attempt to change the process but did not explain how.

The insurance commissioner also spoke about Proposition 103, which was approved by voters in 1988 and promised policy owners a 20% rollback in automobile and homeowner rates. The California Supreme Court upheld the measure, but ruled that insurance companies cannot be refused a fair rate of return. Garamendi has said 10% is a fair rate.