The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.
|Thursday, June 8, 1995
State OKs Farmers' Plan to Raise Quake Insurance Prices; Underwriting: Quackenbush allows 138% average increase, exceeding recommendation.;
By: THOMAS S. MULLIGAN
TIMES STAFF WRITER
After extended administrative hearings, Insurance Commissioner Chuck Quackenbush approved a controversial new earthquake insurance plan for Farmers Insurance Group, under which the state's third-largest insurer will increase rates by an average of 138% and impose higher deductibles and co-payments on most customers.
The plan also allows consumers to opt for a new kind of bare-bones earthquake insurance policy providing limited coverage at a lower price than the traditional policy.
For example, the annual earthquake premium for a Los Angeles home insured for $200,000 would be $528 under a traditional policy but only $240 under the new "basic" policy, which imposes coverage limits of $5,000 for contents, $2,500 for alternative living expenses while a damaged home is being repaired and $2,000 for exterior structures such as
swimming pools or walls.
Gina Calabrese, staff attorney for the Proposition 103 Enforcement Project, a consumer group in West Los Angeles, criticized the rate hike as "a back-room deal" between Quackenbush and Farmers.
Quackenbush signed the approval order last Friday, partially overruling an administrative law judge who had recommended a 121% rate hike.
Farmers, like other major insurers, has virtually stopped writing new homeowners insurance in California, fearing additional exposure to earthquake losses. State law requires companies that sell homeowners insurance to also offer earthquake insurance.
After losses estimated at $1.7 billion from the Northridge earthquake, Farmers' financial strength ratings were downgraded by major ratings agencies.
Quackenbush's approval of the new rate plan would enable Farmers to begin "a selective return to writing new homeowners business in California on a limited basis," the company said in a statement Wednesday. But it did not say when, and a spokesman declined to go beyond the statement.
---- START OF CORRECTION ----
For the Record
Los Angeles Times Tuesday June 13, 1995
Home Edition Business Part D Page 2 Financial Desk
2 inches; 46 words
Type of Material: Correction
Earthquake insurance rates--Farmers Insurance Group said it
supplied incorrect information in a story last Thursday about the
company's new earthquake insurance plan. Its new "basic" earthquake
insurance policy actually provides a maximum of $2,000 coverage for
personal property and $1,000 for exterior structures.
---- END CORRECTION TEXT ----
Descriptors: CALIFORNIA STATE INSURANCE COMMISSIONER; FARMERS
INSURANCE GROUP; EARTHQUAKE INSURANCE; INSURANCE RATES;
Copyright (c) 1995 Times Mirror Company
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