Relaxed Rules Against Redlining Proposed : Insurance: Quackenbush plan would allow underwriters to develop individual strategies to serve poor neighborhoods.

California Insurance Commissioner Chuck Quackenbush on Friday proposed rules to relax existing regulations aganist insurance redlining and substitute a program under which insurers would develop individual plans to improve their performance in low-income neighborhoods, particularly in the inner cities.

The company plans, if approved by the commissioner, would exempt insurers from current rules--adopted by former Insurance Commissioner John Garamendi--that require the companies to supply exhaustive, ZIP Code-indexed information about their sales efforts and the racial makeup of their customers in “underserved” areas.

“These changes will allow insurers to quickly and creatively increase their presence in underserved communities while avoiding both the high cost and possible delays caused by submitting statistical report after statistical report,” Quackenbush said in a statement Friday.

Quackenbush was slated to unveil his proposal at a conference on minority economic development at the Biltmore Hotel in Downtown Los Angeles Friday afternoon, but when the program ran late, he left the hotel without delivering the speech, citing another engagement in Sacramento.

His departure ruffled feathers among the conference attendees. “Five years ago, no commissioner would have dared walk out of a room like this one,” Assemblywoman Marguerite Archie-Hudson (D-Los Angeles) told the audience.

Nevertheless, Quackenbush’s initiative was cautiously welcomed by Robert Gnaizda, policy director of the San Francisco-based Greenlining Institute, a public policy group that combats economic discrimination and was sponsor of Friday’s conference.

“If companies show real creativity and leadership, you can sometimes get better programs” than with strict regulatory prescriptions, Gnaizda said, although he stopped short of endorsing the proposal until he sees the details.

He said he was pleased that Quackenbush’s proposal contained a provision granting consumers or other interested parties the right to ask for a hearing on an insurer’s marketing plan if they consider it inadequate.

But that provision may spark insurance industry opposition.

Roger B. Tompkins, a vice president for State Farm Mutual Automobile Insurance Co., the largest property insurer in California and the nation, said he had not seen any details of the proposal but worried about protracted hearings in which the company could get pilloried over issues that have nothing to do with the specific marketing plan.

“If this means handing some groups a hammer to hit us over the head with, we’re not interested,” he said.

Tompkins said that under a voluntary urban marketing initiative that State Farm established last March, it sold 911 new policies, representing $250 million worth of personal property insurance in 40 designated ZIP Codes of Los Angeles and Compton.

He said it makes more sense to let companies develop such plans for future sales than to force them to provide reams of statistics that reflect what they’ve done in the past.

Quackenbush said his plan would increase urban consumers’ access to insurance while cutting regulatory red tape.

“Over time, the information collected by the current regulations could possibly result in changes to insurers’ business practices,” Quackenbush said. “But I want to see results now rather than later.”

Quackenbush’s proposal is subject to public hearings this fall and, if implemented, will probably be in place by the first of next year, a spokesman said.