|Sunday, November 21, 1993
Orange County Edition
Insurers Under Intense Pressure to Resolve New Fire
Claims; Coverage: One survey says 48% of homeowner cases
remain unsettled in Oakland. Watchdog groups say
companies will have to do better in Laguna, other areas.
By: LESLIE BERKMAN
TIMES STAFF WRITER
Smoke was still in the air when the first insurance
to help customers burned out of their homes by last
month's Laguna Beach
Within days, meetings were being held to explain to
the claims process works and to hand out insurance checks
to cover living
The quick response from insurance representatives was
meant to put
customers at ease, said Jeanine Raquet, regional
underwriting manager for
Allstate Insurance Co. "We are there for them."
Clearly, the insurance companies, which so far have
received more than
$435 million in claims from the Laguna blaze, are under
to show they can do a fair and competent job.
Their treatment of victims of the latest Southern
firestorms will be closely scrutinized by government
consumer advocates who were appalled by the flood of
policyholders after the Oakland hills fire two years ago
more than 3,000 homes.
Allegations of marketing misrepresentations and abuses
claims handling in Oakland prompted the California
Insurance to levy a $1-million penalty--the largest in
And results of a recent random survey by the consumer
Policyholders United, which show that 48% of homeowner
remain unsettled in Oakland, has given the entire
insurance industry a
public relations black eye. In contrast, the major
involved reported to the state that all but about 4% of
the claims had
The Oakland Hills fiasco spurred Sen. Art Torres (D-Los
chairman of the state Senate Insurance Committee, to hold
investigational hearing last month and to promise
Already, legislation sponsored by state Sen. Nicholas C.
(D-Oakland) has been enacted that requires insurance
companies to provide
more thorough explanation of available homeowner coverage
are purchased or renewed.
Meanwhile, Torres, State Insurance Commissioner John
United Policyholders have vowed to monitor the Southern
situation closely to determine whether the insurance
"We believe there ought to be a higher sense of
policyholders as a direct result of the Oakland fire, and
there will be. But in all honesty, with insurance
companies you never
know what to expect," said Elena Stern, press
secretary to Garamendi.
Stern said Garamendi has met personally with the chief
most of the insurance companies involved in the Southern
"to give his demands on how they will respond."
While Laguna Beach fire victims so far seem satisfied
response of their insurance companies, those familiar
with the Oakland
Hills situation say it is still much "too early to
tell" how the
companies ultimately will perform.
"After the fires, no one was really worried about
much everyone felt they were fully covered," said
administrative assistant to Petris.
"But later they found out their policies were
lacking," she said,
often as a result of low-balling by insurance agents who
underestimated the actual cost of home replacement in the
sell policies with lower premiums.
But there are indications that the insurance companies
least a few lessons in Oakland that will benefit owners
of the more than
366 homes destroyed in Laguna Beach, Emerald Bay and El
Park. Already some of the burned area's leading insurance
including Farmers Insurance Group and State Farm
Insurance Group, have
said that in some instances in which policyholders are
their home contents, coverage will be raised above the
of the many concessions that insurance companies
ultimately made in
Also, State Farm and Farmers, after learning in Oakland
delays in rebuilding homes after a large catastrophe,
have agreed to
extend the time limit for reimbursing families for
expenses from one year to two.
Some insurers are also tackling the problem that even the
homeowners policies often lack coverage to meet upgraded
codes for hillside construction. This became a major
issue in the Oakland
catastrophe, which produced about $1.7 billion in claims.
Jeff Beyer, Farmers' vice resident of public relations,
company plans to soon file an application with the state
to add coverage
for code upgrades to all of its homeowner property
Beyer said Farmers' customers who lost their houses in
the hills of
Laguna Beach will be "dealt with individually"
on the code issue. In some
cases where code upgrade coverage was not purchased, he
said, "we will
provide an opportunity for them to retroactively purchase
it" at the
original, pre-fire cost.
Robert Blodgett, a State Farm spokesman, said the company
received state approval to add 10% to the face value of
toward the cost of rebuilding homes to comply with new
codes. The added
coverage is being provided at no additional premium cost,
the state Department of Insurance.
Moreover, he said, the extra coverage will apply to fire
customers in Laguna Beach as well as those in Pasadena,
Calabasas and Riverside.
Fortuitously, all the fires broke out after Oct. 26, the
date that the
company filed with the state Department of Insurance to
policies. Therefore the upgraded coverage became
effective for fire
Raquet said Allstate, however, will not make concessions
upgrades. "If somebody's contract does not have
building code upgrade
coverage, we would stand by the contract," she said.
But Raquet said Allstate also "learned a lot from
particularly about the importance of assigning claims
adjusters on a
permanent basis to fire victims.
When adjusters were rotated in Oakland, she said, it
fire victims who felt that each time they received a new
they "were starting all over again."
Raquet also said Allstate representatives rushed to
Laguna Beach to
seek out policyholders, while in Oakland they waited for
victims to file
claims. "We are trying to be out there and proactive
and just make the
process as easy as possible for our customers," she
Patty Lombard, executive director of the Western
Service, an insurance trade association, said group
insurers are holding with their customers in Laguna Beach
industry recognition that in Oakland the claims process
was not explained
well to policyholders.
"They thought the insurance adjuster would come and
give them a check
and life would be perfect," she said.
For the first time, she said, insurance industry
available in Laguna Beach to answer questions at federal
assistance application centers. Also, she said, the
Information Service plans to send a representative to all
meetings of fire victims.
Sen. Torres said he is impressed by the improvements he
has seen in
the industry's response in Southern California.
"Their record is better
so far," he said. "They showed up faster and
are more aware of the issues
they need to confront, such as code upgrades, and that is
But outreach efforts by insurance companies are greeted
skepticism by Ina De Long, founder and president of
which says it represents several hundred California
"I think it is public relations to say we are here
for you and you
don't need outside help," said De Long, a former
disaster supervisor for
United Policyholders is striving to link Oakland fire
those in Laguna Beach who could benefit from their
on insurance issues.
It is important for people insured by the same companies,
said, to meet and compare notes to ensure that they all
receive the best
She said she hopes that Laguna Beach fire victims will
than their counterparts in Oakland. "It is too early
to tell," she said,
"but the industry needs to be aware that everybody
is looking over their
shoulder, and I am the first one there on my
Descriptors: BRUSH FIRES -- ORANGE COUNTY; HOMEOWNERS
INSURANCE; FIRE INSURANCE; INSURANCE INDUSTRY --
CALIFORNIA; DISASTER VICTIMS
Copyright (c) 1993 Times Mirror