Garamendi Cites Errors in Insurance Database
State Insurance Commissioner John Garamendi said Monday that his own consumer services division chief was turned down five times for homeowners insurance because of several erroneous items appearing on a national computer database on the past claims record of the home he wanted to buy.
Garamendi made the disclosure while advocating a policy that restricts insurers in California in their use of information found on this and another database to deny people coverage. Insurers have gone to court to contest the policy, saying that the databases are useful tools in determining who should be insured.
Tony Cignarale, the state official, finally obtained insurance from Allstate, which had insured the Palm Springs property for 10 years and knew the records submitted by CLUE, the Comprehensive Loss Underwriting Exchange, were wrong.
But five other insurance companies that Cignarale approached refused to sell him any insurance pending correction of the CLUE report, Garamendi said at a news conference. He cited this as yet another example of the thousands of complaints he has received from consumers who reported being blacklisted due to CLUE reports.
In the Cignarale case about 30 days ago, Garamendi said, the CLUE report showed five prior claims. Two involved a different property owned by the past owner of the home Cignarale had purchased.
Two others reflected inquiries about making claims. Such inquiries are not supposed to show up in the database, according to California law.
The fifth claim had been made four years before, and thus not within the time period that is supposed to be pertinent, Garamendi said. In addition, he said, it had been fully remedied and had no bearing on future risks.
James Lee, marketing director for CLUE, said it was not his company that was responsible for such errors, but the insurance company that had submitted incorrect data. He did not name the company.
Lee invited Cignarale to contact CLUE and said the company would be eager to correct anything that was false.
In Sacramento, Sam Sorich, president of the Assn. of California Insurance Cos., released a recent letter from CLUE that cautioned companies not to report inquiries about making claims, but only to report claims that had been made and either paid or rejected.
The use of records from CLUE and another nationwide database, “A-Plus,” have been used by many companies to reject sales of homeowners insurance, even to those who have not made a claim themselves but have purchased a home for which past claims have been made.
Last month, Garamendi issued an emergency regulation restricting the use of such data, and the insurance industry has challenged it in court.
Two weeks ago, a Sacramento Superior Court judge refused to stay the regulation pending a full court hearing.
That decision has now been appealed and a hearing before the California Court of Appeal on the regulation is set for Aug. 22.
Three Los Angeles-area homeowners also appeared at Garamendi’s news conference Monday to say they had either been turned down for insurance or charged prohibitive rates based on CLUE information.
One of these, Jacky Roig of Pacific Palisades, said she had been rejected because of filing a $369 claim on a purse that had been stolen in Montreal.
Garamendi said: “I don’t understand what a lost purse in Montreal has to do with a house in California. But this is an example of the ‘use it and lose it’ rule set up in the industry. I intend to put a stop to it in California.”
