Anger at Quake Insurers Spills Out at Hearing

Angry homeowners who say they were shortchanged by their insurance companies after the Northridge earthquake aired their grievances Wednesday before the state Senate Insurance Committee.

About 250 people, many of them elderly, attended the hearing in the gymnasium of Granada Hills High, near the epicenter of the 1994 quake. Many directed their attacks at state Insurance Commissioner Chuck Quackenbush, saying he had failed in his role as a consumer watchdog.

“We are old. We have suffered for six years,” said Bernard Gorstein, 78. “Everybody here is looking for justice.”

Like many other quake victims, Gorstein said, he had been strong-armed into a premature settlement by his insurance company after the quake, before the full extent of the damage to his Northridge home was known.

Wanda Raynard, 75, said it had taken more than four years for her to settle the damage claim on her Northridge home with her insurance company and she would like to see Quackenbush punished.

Even so, punishment “will never make up for the pain and suffering and financial loss that this one man has caused so many people,” Raynard said.

The Senate committee’s hearing followed stories in The Times detailing secret agreements by the Insurance Department that allowed insurers to avoid hundreds of millions of dollars in potential fines by making $12.8 million in contributions to foundations controlled by Quackenbush associates.

Earlier Wednesday, Quackenbush held a news conference in downtown Los Angeles, again defending his record and brushing off calls for his resignation.

“There is no evidence that I can find that anything was done that did anything but benefit consumers,” Quackenbush said.

He said that his department has helped earthquake victims recover “an additional $78 million” through mediation and intervention efforts with insurance companies.

“There’s no possible justification, with the success we’ve had, for any type of a resignation,” he told reporters.

At a previous news conference, Quackenbush said he has enforced $56 million in sanctions against insurance companies since taking office and helped mediate more than 700 agreements between quake victims and their insurers.

The hearing in Granada Hills was held to help the Senate committee assess the performance of insurers after the quake, according to Sen. Jackie Speier (D-Daly City), who heads the panel.

The Insurance Department conducted a confidential survey of how at least three companies--Allstate, State Farm and 21st Century--handled quake claims, finding numerous examples of companies’ low-balling policyholders.

The Insurance Department used its own legal team’s findings of mishandled claims as leverage in getting the companies to make the foundation contributions, but has refused to make the surveys public.

Said Speier: “Since the [department] will not make the market conduct surveys available to the committee, I felt the way to do it was to come down and make our own market conduct study.”

Before Wednesday’s hearing, Speier visited the Reseda home of Mary Conkey, 82, who has had a running dispute with 21st Century Insurance Group (formerly 20th Century) over the handling of her claim.

“It’s an absolutely classic case of bad faith on the part of the insurer,” Speier said in a telephone interview from the house.

Conkey’s son-in-law, Pat Greaney of Diamond Bar, said Conkey should have received $40,000 from 21st Century to correct damage to her home. But she got only $2,200 because the initial damage estimate by a company adjuster missed the full extent of the damage.

When more damage was discovered later, the company told her it was too late to file a supplemental claim, he said.

Greaney said his family’s first mistake was believing the insurance company. “Our second mistake,” he said, “was believing the insurance commissioner was there to help us deal with our insurance company.”

At least two insurance company executives attended--Ric Hill of 21st Century and Ken Cooley of State Farm. While not responding to specific cases, both defended their companies in interviews. Hill said he attended the meeting in part to hear complaints from policyholders.

Speir acknowledged that her committee has no regulatory authority over insurance companies, but said she would follow through with them and demand answers for the issues brought up Wednesday night.

And what if the companies don’t respond?

“Let me put it this way,” she said before the hearing. “The Northridge Earthquake is going to look like a weak temblor compared to what these insurance companies are going to witness from me and others.”

At one point during the hearing, a homeowner described a problem with Farmers Insurance.

“Is there a Farmer’s Insurance representative in the audience,” Speier asked?

No one raised a hand. However, several lawyers representing homeowners pointed to another attorney who they said was counsel to Farmers.

When approached for comment, the man said “no comment” and quickly left the room.

Along with Speier, one other Insurance Committee member attended the hearing--Sen. Nell Soto (D-Ontario).

State. Sens. Richard Alarcon (D-Sylmar) and Tom Hayden (D-Los Angeles), whose districts suffered heavy quake damage, were also there.