Insurance’s Role in Rebuilding L.A.

The vital role of the insurance industry in rebuilding Los Angeles was shamelessly distorted by the California Department of Insurance’s admittedly unscientific survey of riot-related insurance claims (“About Half of Riot Victims Uninsured, Survey Shows,” June 26). The facts are these: Insurance companies are paying out an estimated $775 million to rebuild commercial property in the South-Central area of Los Angeles. The estimate of insurance damage was assembled by surveying more than 50 companies, representing over 85% of the commercial insurance market in California. Property Claim Services, the organization that produced the estimate, has been the leading authority on insured loss estimates since 1949. Insurance companies stand to gain nothing by blatantly lying about this issue.

Further, the Insurance Department says insurance isn’t available. Not only is that not true, but if it were, it’s within the department’s charge to correct that situation. The simple fact is that there is substantially more insurance protection for the community than after the Watts riots in 1965 due in part to the establishment of the California FAIR plan in 1968 and in part due to the highly competitive commercial insurance marketplace. The purpose of the FAIR plan is to make property insurance available wherever the high risk of fire or other conditions may make insurance difficult to obtain in the regular market. The average premium for a commercial policy in South-Central Los Angeles for $170,000 in coverage is $842 through the FAIR plan.

The California FAIR plan has steadily shrunk in size since 1987 as plan policyholders left the pools because they were able to obtain coverage from individual insurers. By 1990, FAIR plan premiums accounted for just 1.7% of property insurance premiums in the state.

We need our first elected insurance commissioner to assert as much effort into the healing and rebuilding of our community as he expands promoting his career and criticizing the source of the single largest infusion of capital directed to the rebuilding of Los Angeles.

PATRICIA LOMBARD

Executive Director

Western Insurance Information Service

Los Angeles