Survival Insurance Faces Loss of License

The state Department of Insurance is seeking to revoke the license of Survival Insurance Inc., one of the largest auto insurance brokerages in California, for alleged price-gouging and threats against customers.

Insurance Commissioner Chuck Quackenbush said his department has found hundreds of violations and logged more than 700 complaints against the Los Angeles-based company since 1997.

“The violations that we found were so massive, so systematic, that we decided we had to pull their license,” Quackenbush said in an interview.

Survival had no comment Thursday on the department’s action.

The company, which specializes in selling insurance to people with bad driving records, has 30 days to respond to the accusations, which were filed with the state Tuesday.

Quackenbush said Survival allegedly lured customers with its extensive television and radio ad campaigns, in which the company guaranteed it would find them the lowest rates.

For those customers who found lower rates elsewhere after signing with Survival, the brokerage refused to match the price or give a refund, Quackenbush said.

Unlike auto insurers such as AAA and State Farm, Survival does not underwrite policies but acts as an agent to help high-risk customers find what the company says are the lowest possible rates.

Quackenbush said that not only did some Survival customers not get the lowest rates, but some said they were charged exorbitant fees and were verbally harassed when they complained. In some cases, the state alleges, employees of Survival’s collection department threatened customers that their credit reports could be adversely affected.

Quackenbush said in some instances, threats of physical harm were also made. “They would say something like, ‘Call my supervisor again and I’m coming after you,’ ” he said.

In addition to guaranteeing the lowest prices, Survival allegedly charged each customer a different broker fee based on how much money it believed each person had to spend, Quackenbush said.

“The broker fee would float,” he said. “One guy could be charged $100 and the next person could get a $1,000 fee.”

In one case, which Quackenbush said was uncommon, Survival charged a $1,000 broker fee for a policy with a premium of only $260.

If Survival decides not to respond to the department’s filing, its license will be automatically revoked. If it responds, a hearing will be scheduled by the state Office of Administrative Hearings.

Department officials would then have to show why Survival should lose its license, which Quackenbush vowed to do in “excruciating detail.”

“I don’t think there is any defense for this type of behavior,” he said.

The move by the state is the second action taken against Survival’s chief executive, Richard J. Acunto. In 1996, Acunto was accused of placing policies without a proper license, Quackenbush said. He was fined $10,000 and forced to pay the department’s $55,000 bill for the investigation.

Survival, which says it has 650 employees and signs an estimated 3,000 policies a week, is a regular advertiser on the Howard Stern radio show, among other radio and TV programs. Founded by Acunto in 1983, the company has 21 sales offices statewide.

Quackenbush said no Survival customers will be affected by his office’s action, but the Department of Insurance has set up a hotline for consumers with questions, at (800) 927-HELP.