Relief for Quake Victims

The shaking lasted less than a minute. The aftershocks eventually grew fainter and less frequent. But for thousands of San Fernando Valley residents, the nightmare of the Northridge earthquake has dragged on for more than six maddening years.

Every one of those people, we suspect, would prefer to put the whole episode behind them and get on with their lives--but not until they receive fair settlement of legitimate claims that have remained unpaid due to insurance company foot-dragging and a political scandal.

A new state law should help end that unconscionable bureaucratic limbo.

SB 1899, signed by Gov. Gray Davis last weekend, allows most earthquake insurance policyholders to submit claims until Jan. 1, 2002, even if they had previously missed their filing deadline. To be eligible, however, policyholders must have contacted their insurer about the damage before Jan. 1 of this year. The law does not apply to those who won court judgments or whose attorneys have signed settlement agreements in connection with the earthquake.

That will help claimants who didn’t discover hidden damage and submit a claim until more than a year after the Jan. 17, 1994, earthquake. In some cases, it took several years for quake effects to show up. In others, insurance adjusters told customers they hadn’t suffered enough damage to exceed their deductible. Subsequent claims were rejected as too late.

To be eligible to file a revised claim, policyholders must already have submitted a claim that was denied because it was not filed in a timely manner. Thousands of claims were denied for missing the deadline.

“This law helps those who were victims of a very strict interpretation of the rules,” Assemblyman Jack Scott (D-Altadena) told The Times. “It balances the scales.”

The law grew out of Times reporting that detailed secret settlements negotiated by former Insurance Commissioner Chuck Quackenbush with insurers, based on studies of insurance companies’ claims-handling practices. Quackenbush used some of the $19 million he collected from the insurers to advance his ambitions for higher office. After those abuses were revealed by The Times and further investigated in hearings before the Assembly Insurance Committee, Quackenbush resigned in July under threat of impeachment.

It was during those committee hearings that legislators began to comprehend just how unfairly many of the Northridge earthquake claims had been handled.

But although the investigation forced Quackenbush out of office, it did little to ensure that similar abuses could not happen in the future. Without structural reform to the insurance commissioner’s office, future commissioners might still be able to use the department’s clout to serve their own purposes.

Left for future legislatures to address is how to reduce the influence of insurance companies’ campaign contributions to commissioner candidates and how to tighten up operations at the commissioner’s office. Those issues demand serious attention in the next session.

For the Valley’s earthquake victims, however, the new law offers welcome relief--and hope for an end to the frustrating financial aftershocks.

* A state Insurance Commission spokesman said policyholders could call the state Department of Insurance’s local consumer service hotline at (213) 897-8921 with questions related to filing revised claims.