|Thursday, September 16, 1993
State Criticizes Auto Insurers on Pricing Tactics;
Consumers: Garamendi says 'undercover' survey shows
uneven quotes, illegal tie-ins. Industry attacks study as
By: THOMAS S. MULLIGAN
TIMES STAFF WRITER
Can consumers get a reliable price quotation from an auto
over the telephone?
Not likely, says the California Insurance Department.
In an "undercover" phone survey of insurance
agents representing the
state's 20 largest carriers, department employees posing
as consumers got
prices that varied widely from the official company rates
filed with the
The insurance industry quickly attacked the survey as
Of 396 quotes obtained by surveyors, only 75 were within
$10 of the
official price, Insurance Commissioner John Garamendi
said at a news
conference Wednesday. On average, quotes were 7% to 15%
Quotes were also hard to obtain, Garamendi said, with
of the agents contacted declining to offer prices over
Garamendi said he suspected that by refusing to quote
were trying to get around the "take-all-comers"
provisions of Proposition
103. The 1988 voter initiative requires carriers to sell
insurance to any
driver with a good record.
In criticizing the survey, a spokesman for Farmers
noted that the sample sizes--for example, 48 Farmers
agents contacted out
of 5,000 statewide--were too small to draw any valid
For only three companies--Allstate, Farmers and State
surveyors obtain more than 20 quotes. One company that
for its accuracy--Amica Mutual--provided only three
Also, many of the agents surveyed were independent and
not employed by
the insurers directly. Consumers should expect different
independent agents because they are competing against one
business, said James A. Snyder, president of the Personal
Federation of California, a trade group.
Insurance Department spokeswoman Elena Stern acknowledged
was no effort to make the survey statistically valid.
choosing agents scientifically to ensure a representative
surveyors simply used listings in phone books and
"Our goal was to go through what consumers go
through," she said.
The survey involved up to 15 staff people making calls
three-week period, she said. They posed as consumers
trying to get
minimum coverage for a 1984 Chevrolet Celebrity being
driven 10,000 miles
a year by a 35-year-old person with one traffic ticket.
addresses in Westwood and Compton as well as in East
Oakland and the
Oakland suburb of Alameda. Otherwise, all the information
One of the findings turned up in the survey was that some
refused to sell auto insurance unless the consumer also
agreed to buy a
Garamendi said such tie-ins are illegal.
He scheduled public hearings for next month to
investigate further and
said he might subpoena agents to testify.
Descriptors: INSURANCE INDUSTRY -- CALIFORNIA; AUTOMOBILE
INSURANCE; CONSUMER PROTECTION; PRICES
Copyright (c) 1993 Times Mirror Company