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.
|Friday, April 2, 1993
2 Insurance Firms Accused of 'Redlining'; Reforms: Farmers and State Farm 'do not serve the low-income and minority areas of Los Angeles,' Commissioner John Garamendi tells a House
By: ROBERT A. ROSENBLATT (TIMES STAFF WRITER)
State Farm, with 19.7% of statewide sales, had less than 4% of the market in the general areas of South-Central Los Angeles, East Los Angeles and Hollywood, according to Garamendi's office. Farmers Insurance Group, accounting for 10.6% of sales in California, had less than 2% of sales in the same ZIP codes.
The companies strongly denied Garamendi's accusation. If Garamendi "weren't . . . all but declaring for governor, he would honestly address the fact that until we can control the factors that are raising the cost of insurance, we won't see a lot more policies sold to low-income families," said John Millen, director of media relations for Farmers Insurance in Los Angeles, the biggest California-based home and auto insurer.
"You can have an agent on every doorstep, but if people can't afford an insurance
policy they aren't going to buy it," he said. Garamendi is "acting like there's
some sort of conspiracy, but we're a business. If we
"The problem is affordability, not availability," said Bill Sirola, a
spokesman for State Farm, based in Bloomington, Ill. "As presently designed by the
Legislature, the auto insurance policy is unaffordable to a great many people in
California, not just urban areas but in rural areas," he said. "There is not one
area in the state where we are not selling policies," Sirola said. Neighborhood and
race "have no bearing, they are
"We should not become too caught up in whether underserved markets are occurring deliberately or whether they have somehow occurred, because the adverse impact on the public remains," said Allene Evans, a member of the Texas Board of Insurance. "And, ultimately, if the market does not serve the needs of consumers, it will eventually wither and die."
In other matters, Garamendi endorsed a bill being considered by the subcommittee that would provide federal regulation of foreign insurers operating in this country. There are $20 million to $30 million in unpaid claims by property owners whose businesses were destroyed or damaged in last year's riots, but who were insured by "scam" foreign firms, he said. "When these businesses went to collect in the wake of last spring's disturbances, many were wiped out when they found their policies to be worthless," he said.
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