No Shilly-Shallying --Mail the Rebates : Some insurance companies don’t give up easily
“No more excuses. No more delays. Let’s get it done.” With these words, California Insurance Commissioner Chuck Quackenbush apparently will get on with the business of negotiating rebates for auto insurance policyholders. He has no excuse for any delays now that the U.S. Supreme Court has clarified once and for all the commissioner’s authority to implement the 1988 insurance rate-cutting initiative known as Proposition 103.
Quackenbush’s handling of the rebate process warrants close tracking. His first and foremost responsibility must be to California consumers. But some of his actions during his first few weeks as commissioner have appeared to put the interests of his insurance industry benefactors ahead of his wider constituency. (He received $2.3 million from insurance industry sources during his 1994 campaign for the post.)
Quackenbush has been roundly criticized for a recent settlement with 20th Century Insurance Co., originally the lead plaintiff in the legal challenge to Proposition 103. Under that settlement, 20th Century, hard-hit by Northridge earthquake claims, would pay as little as $46 million of the $120 million in rebates and interest ordered in 1991 by Quackenbush’s predecessor, John Garamendi. The company withdrew from the lawsuit after the settlement was reached.
On Tuesday, the U.S. Supreme Court rejected the insurance industry’s challenge to California regulations implementing 103. That leaves in place last August’s unanimous California Supreme Court decision that upheld Garamendi’s rules for enforcing the proposition.
The industry mounted a long and expensive legal challenge to the reforms of 103 beginning one day after voters approved it. The initiative called for auto, homeowner and commercial property insurers to roll back their rates by 20% from 1988 levels and refund one year’s “excess premiums” to consumers. About 35 companies have voluntarily paid more than $800 million in rebates to 7 million customers, but among the holdouts are two of the state’s three largest insurers: State Farm Mutual Automobile Insurance Co. and Farmers Insurance Group.
So now, after a six-year wait, California auto policyholders will receive rebates of more than $2 billion, or about $200 a piece, for premiums paid in 1988 and 1989. Quackenbush has called on insurers to meet with his staff, settle on the amount of rebates they owe and send out checks.
Voters approved Proposition 103 out of frustration over soaring insurance premiums. Legal wrangling between consumer groups and insurers is likely to continue, but meanwhile Quackenbush must operate in good faith to protect consumer interests.
