Garamendi Ranks Insurers Based on Valid Complaints

By: KENNETH REICH
TIMES STAFF WRITER



In the first such report in five years, Insurance Commissioner John
Garamendi released statistics Tuesday ranking the state's top 50
insurance companies based on the number of justified consumer complaints
filed against them last year.

Saying his purpose was "to name names and give scores," Garamendi said
the lists--ranking homeowner and auto insurers separately--reveal "the
good, the bad and the ugly" companies as far as complaints are concerned.

He lauded USAA Insurance, American Economy and Liberty Mutual as the
"good" for having the fewest auto insurance complaints, but said Farmers
Insurance Group ranked as "bad," and the comparatively small Stonewall
Insurance Co. deserved the term "ugly."

Of the Farmers companies Garamendi said: "While they advertise that
'America depends on Farmers,' too often Farmers' customers must depend
upon the Department of Insurance to get their claims paid and their rates
reduced."
The commissioner, speaking at a news conference in Los Angeles, said
that of the top 10 auto insurance sellers in California, which together
serve 69.3% of the market, the two Farmers Insurance Group companies'
rate of justified complaints was 64.7% higher than the weighted average
of the other eight largest companies.
The two Farmers companies are fourth largest Farmers Insurance
Exchange and seventh largest Mid-Century Insurance, together comprising
13.7% of the market.
Farmers spokesmen reacted bitterly Tuesday to Garamendi's remarks,
calling the survey misleading and of little value to California's
insurance consumers.
"We are incensed," said spokesman Jeffrey Beyer. "This is a
mean-spirited, unfathomable slice at Farmers. The rhetoric of the
insurance commissioner is simply not substantiated by the statistics he
has put out. Actually, we are about in the middle of the group. He is
being unfair and arbitrary in singling us out."
Another Farmers spokesman, John Millen, questioned why Garamendi so
harshly criticized Farmers when other large sellers, including Mercury,
Safeco and Nationwide, had a higher rate of complaints. Millen also
observed: "He doesn't break out the complaints. These are not necessarily
complaints from our customers. These could be trial lawyers angry that
we're not ready to settle with them, or other third-party complainants.
With such a small sample, a large number of these complaints could have
been prompted by a disgruntled agent we had some time ago."
Garamendi spokeswoman Elena Stern, responding later in the day for the
commissioner, said the statistics would have to speak for themselves,
adding that Garamendi decided Farmers deserved special comment because of
its size.
As for Stonewall, Garamendi said that although it ranked 35th in auto
insurance sales, it had the "highest ratio of justified complaints, more
than four times the survey average."
Stonewall's director of claims, William Dibble, said he was
"flabbergasted" at the report, suggesting, like Millen, that the nature
of the complaints should have been explained.
At USAA, a spokesman expressed pleasure at the report, which showed
that company with the fewest complaints. "We generally do well in states
that do surveys on this," said John Walmsley. "Being a member-owned
organization largely of military officers and their dependents, our goal
is to provide the best service."
Continuing what was viewed as an unprecedented attack on a single
company, Garamendi added that he was "sorry to say that the bad news for
Farmers on auto insurance only gets worse when we turn to homeowners
insurance."
"Farmers Insurance Exchange--as the 19th-largest insurer--ranks as the
worst company, with a complaint ratio five times higher than the survey
average," he said. He also noted that Fire Insurance Exchange, a Farmers
group company that sells a far larger amount of homeowners insurance,
ranks 19th best in the homeowners category.
Farmers spokesmen said it was "terribly unfair" for Garamendi to
single out for such negative comment a Farmers company that does such a
small share of the total homeowners insurance business.
The commissioner also noted that no justified complaints were received
in 1990 against two sellers of homeowners coverage, Vigilant Insurance
and USAA Casualty Insurance, which were therefore ranked the best.
Garamendi defined a justified complaint as one involving a violation
of state insurance laws or a situation in which a consumer could not get
a response from an insurer to questions or concerns and was forced to
contact the Insurance Department for help.
Although in raw numbers there appeared to be relatively few justified
complaints against even those companies with the highest ratios, the
commissioner said he believes the department received complaints only as
"the last resort for the most persistent customers."
"For every complaint filed with the department and found to be
justified, I believe there are probably scores more instances where . . .
policy holders threw up their hands in frustration, believing the extra
$100 or $200 wasn't worth the grief," Garamendi said.
Altogether, the commissioner said, the Insurance Department handled
6,783 justified complaints in 1990 in personal lines of auto insurance
and 1,355 justified complaints for homeowners insurance.
He said that more than $4.4 million was recovered for consumers from
auto insurers as a result of department inquiries; another $4 million was
recovered for homeowner policy customers.
In 1990, the Insurance Department was under the control of
Commissioner Roxani Gillespie, an appointee of then-Gov. George
Deukmejian. Garamendi took over as the state's first elected insurance
commissioner in January.
Garamendi said consumers may file complaints against insurers by
calling the department's toll-free hot line at 1-800-927-HELP or by
writing to the California Department of Insurance, Consumer Services
Division, 3450 Wilshire Blvd., Los Angeles, CA 90010.
The commissioner said comparative statistics for health and life
insurance will be issued today.
Complaints Against Insurers
Insurance Commissioner John Garamendi has made public these
comparative listings of justified complaints received by the state
Department of Insurance in 1990 against the top 50 California sellers of
personal lines of auto and homeowners insurance. Companies highest on
these lists, with the smallest ratios, had the fewest complaints for each
million dollars of premiums collected. Those lowest on the lists had,
comparatively, the highest number of complaints for the premiums
collected. The 50 companies listed on the respective charts do 89.4% of
the auto insurance business in the state and 88% of the homeowners
insurance business. Parent companies are in parenthesis.
50 LARGEST PERSONAL AUTOMOBILE INSURERS
1990 1990 1989
Complaints No. of Premium
per $1 Million Justified Volume
Company in Premiums Complaints (in Millions $)
1 United Services .081 21 258.338
Auto. Assc.
2 American Economy .087 3 34.325
Ins.
3 Liberty Mutual .088 7 79.146
Fire Ins.
4 Amica Mutual Ins. .143 4 27.795
5 Fireman's Fund .152 10 65.788
of Texas
6 SAFECO Ins. .167 6 35.924
of Illinois
7 State Farm .169 325 1,921.738
Mutual Auto.
8 State Farm Fire .202 55 271.831
& Casualty
9 Progressive .210 12 56.916
Specialty Ins.
10 Inter-Ins. Exchange
(AAA of
Southern Calif.) .230 177 768.08
11 Mid-Century Ins.
(Farmers Ins. Group) .234 110 469.955
12 Auto.Ins. of
Hartford, Conn.
(AETNA Life
& Casualty) .238 7 29.325
13 20th Century Ins. .242 147 606.762
14 Calif. State
Auto Assc.
(AAA of
Northern California) .253 302 1,190.091
15 Continental Ins.
(Continental Group) .319 10 31.254
16 Allstate Ins. .319 381 1,191.172
17 Allstate Indemnity .324 36 1,11.032
18 Calif. Casualty
Indemnity Exchange .329 22 66.667
19 Transamerica Ins. Co. .339 15 44.234
20 West American Ins.
(Ohio Casualty Group) .360 28 77.61
21 United Pacific Ins. .376 11 29.215
22 USAA Casualty Ins. .395 43 108.744
23 Gov't Employees .407 49 120.272
Ins. Co.
24 Colonial Penn .409 16 39.064
Franklin Ins.
25 California .415 11 26.472
Casualty & Fire
26 Continental
Casualty
(CNA Ins. Group) .417 11 26.346
27 National
General Ins.*
(Crum & Forster) .417 30 71.816
28 Calfarm Ins. .420 20 47.6
29 All West Ins. Co.*
(Crum & Forster) .426 28 65.618
30 Foremost Ins. .454 14 30.834
Co. Mich.*
31 Farmers Ins.
Exchange
(Farmers Ins. Group) .459 521 1,133.179
32 Mercury Casualty .501 144 287.026
33 California .564 32 56.71
Casualty Ins.
34 Mercury Ins. .589 77 130.697
35 Prudential .653 30 45.893
Property & Cas.
36 Hartford .667 62 92.922
Underwriters Ins.
37 AETNA Casualty .668 57 85.294
& Surety
38 Financial
Indemnity Co.
(Teledyne Group) .690 45 65.197
39 SAFECO Ins. .748 85 113.567
of America
40 Wawanesa .799 29 36.269
Mutual Ins.
41 J.C. Penney .806 31 38.418
Casualty*
42 Allegiance Ins.
(Cigna Group) .883 27 30.543
43 Nationwide Mutual .899 25 27.778
Fire Ins.
44 Colonial Penn Ins. .903 59 65.304
45 Progressive .933 107 114.641
Casualty
46 Nationwide 1.001 59 58.925
Mutual Ins.
47 Topa Ins. 1.207 34 28.16
48 Viking Ins.
of Wisconsin*
(Crum & Forster) 1.273 55 43.197
49 Thriftco Ins.** 1.364 68 49.852
50 Stonewall Ins. 1.452 60 41.304
Company
Rank by
Company Sales
1 United Services 10
Auto. Assc.
2 American Economy 40
Ins.
3 Liberty Mutual 19
Fire Ins.
4 Amica Mutual Ins. 48
5 Fireman's Fund 26
of Texas
6 SAFECO Ins. 39
of Illinois
7 State Farm 1
Mutual Auto.
8 State Farm Fire 9
& Casualty
9 Progressive 29
Specialty Ins.
10 Inter-Ins. Exchange
(AAA of
Southern Calif.) 5
11 Mid-Century Ins.
(Farmers Ins. Group) 7
12 Auto.Ins. of
Hartford, Conn.
(AETNA Life
& Casualty) 45
13 20th Century Ins. 6
14 Calif. State
Auto Assc.
(AAA of
Northern California) 3
15 Continental Ins.
(Continental Group) 41
16 Allstate Ins. 2
17 Allstate Indemnity 15
18 Calif. Casualty
Indemnity Exchange 22
19 Transamerica Ins. Co. 33
20 West American Ins.
(Ohio Casualty Group) 20
21 United Pacific Ins. 44
22 USAA Casualty Ins. 16
23 Gov't Employees 12
Ins. Co.
24 Colonial Penn 37
Franklin Ins.
25 California 50
Casualty & Fire
26 Continental
Casualty
(CNA Ins. Group) 49
27 National
General Ins.*
(Crum & Forster) 21
28 Calfarm Ins. 31
29 All West Ins. Co.*
(Crum & Forster) 25
30 Foremost Ins. 43
Co. Mich.*
31 Farmers Ins.
Exchange
(Farmers Ins. Group) 4
32 Mercury Casualty 8
33 California 28
Casualty Ins.
34 Mercury Ins. 11
35 Prudential 32
Property & Cas.
36 Hartford 17
Underwriters Ins.
37 AETNA Casualty 18
& Surety
38 Financial
Indemnity Co.
(Teledyne Group) 24
39 SAFECO Ins. 14
of America
40 Wawanesa 38
Mutual Ins.
41 J.C. Penney 36
Casualty*
42 Allegiance Ins.
(Cigna Group) 42
43 Nationwide Mutual 47
Fire Ins.
44 Colonial Penn Ins. 23
45 Progressive 13
Casualty
46 Nationwide 27
Mutual Ins.
47 Topa Ins. 46
48 Viking Ins.
of Wisconsin*
(Crum & Forster) 34
49 Thriftco Ins.** 30
50 Stonewall Ins. 35
* No longer providing coverage in California.** Liquidated.
50 LARGEST HOMEOWNERS INSURERS
(Includes all personal property lines, for example: homeowners,
renters, condominium units, earthquake and fire coverages.)
1990 1990 1989
Complaints No. of Premium
per $1 Million Justified Volume
Company in Premiums Complaints (in Millions $)
1 USAA Cas. Ins. 0 0 8.435
2 Vigilant Ins. Co. 0 0 8.83
3 Assoc. Indemnity Corp.
(Fireman's
Fund Group) .021 1 45.691
4 Century-National .050 1 19.668
Ins.
5 Inter-Insurance
Exchange
(AAA of
Southern Calif.) .060 1 16.51
6 United Services
Auto. Assc. .062 3 48.381
7 American Economy .071 1 14.034
Ins.
8 Federal Ins. Co.* .103 5 48.369
9 Home Indemnity .107 1 9.261
10 West American Ins.
(Ohio Casualty Group) .118 3 25.341
11 State Farm Fire .119 52 435.374
& Cas.
12 California Cas. .122 1 8.148
& Fire
13 Liberty Mutual .126 2 15.783
Fire Ins.
14 State Farm .127 3 23.611
General Ins.
15 AETNA Casualty .150 5 33.25
& Surety
16 Travelers .156 3 19.203
Indemnity (R.I)*
17 Ins. of
North America
(Cigna Group) .157 2 12.694
18Calfarm Ins. .159 6 37.666
19 Fire Ins. Exchange
(Farmers Ins. Group) .162 42 258.575
20 Continental Ins.
(Continental Group) .168 3 17.807
21 United Pacific Ins. .170 2 11.715
22 Hartford .210 2 9.497
Casualty Ins.
23 Transamerica .231 6 25.876
Ins. Co.
24 California .232 5 21.483
Capital Ins.
25 SAFECO Ins. .233 14 59.837
of America
26 Northern Ins. Co.
of New York
(Zurich-American) .243 2 8.207
27 California .247 4 16.184
Casualty Ins.
28 North River
Ins. Co.*
(Crum & Forster) .296 3 10.131
29 Allstate Ins. .319 120 375.05
30 Standard Fire Ins.
(AETNA Life
& Casualty) .337 3 8.897
31 Allstate Indemnity .344 3 8.696
32 Oregon Mutual Ins. .348 3 8.604
33 20th Century Ins. .359 14 38.94
34 All West Ins. Co.*
(Crum & Forster) .366 6 16.349
35 Unigard .378 4 10.574
Security Ins.
36 Civil Service .416 7 16.795
Employees Ins.
37 Western .428 5 11.667
Mutual Ins.
38 California State
Auto. Assc.
(AAA of
Northern Calif.) .430 38 88.214
39 Metropol. Prop. .433 4 9.225
& Liability*
40 Blue Ridge Ins.
(Republic
Financial Serv.) .449 12 26.693
41 Hartford .474 7 14.76
Underwriters Ins.
42 Farmers Home Mutual .506 4 7.904
43 Prudential Prop.
& Casualty .538 14 25.998
44 Residence .540 5 9.253
Mutual Ins.
45 Fireman's Fund Ins.
(Fireman's Fund Group) .555 14 25.221
46 Vanguard Ins.
(Republic
Financial Service) .591 6 10.152
47 Sequoia Ins. .709 6 8.455
48 Colonial Penn Ins. 1.021 9 8.807
49 Republic Ins.
(Republic
Financial Service) 1.038 14 13.482
50 Farmers Ins.
Exchange
(Farmers Ins. Group) 1.332 28 21.02
Company
Rank by
Company Sales
1 USAA Cas. Ins. 47
2 Vigilant Ins. Co. 44
3 Assoc. Indemnity Corp.
(Fireman's
Fund Group) 8
4 Century-National 20
Ins.
5 Inter-Insurance
Exchange
(AAA of
Southern Calif.) 25
6 United Services
Auto. Assc. 7
7 American Economy 29
Ins.
8 Federal Ins. Co.* 6
9 Home Indemnity 40
10 West American Ins.
(Ohio Casualty Group) 15
11 State Farm Fire 1
& Cas.
12 California Cas. 49
& Fire
13 Liberty Mutual 27
Fire Ins.
14 State Farm 17
General Ins.
15 AETNA Casualty 11
& Surety
16 Travelers 21
Indemnity (R.I)*
17 Ins. of
North America
(Cigna Group) 31
18Calfarm Ins. 10
19 Fire Ins. Exchange
(Farmers Ins. Group) 3
20 Continental Ins.
(Continental Group) 22
21 United Pacific Ins. 32
22 Hartford 37
Casualty Ins.
23 Transamerica 14
Ins. Co.
24 California 18
Capital Ins.
25 SAFECO Ins. 5
of America
26 Northern Ins. Co.
of New York
(Zurich-American) 48
27 California 26
Casualty Ins.
28 North River
Ins. Co.*
(Crum & Forster) 36
29 Allstate Ins. 2
30 Standard Fire Ins.
(AETNA Life
& Casualty) 43
31 Allstate Indemnity 42
32 Oregon Mutual Ins. 46
33 20th Century Ins. 9
34 All West Ins. Co.*
(Crum & Forster) 24
35 Unigard 34
Security Ins.
36 Civil Service 23
Employees Ins.
37 Western 33
Mutual Ins.
38 California State
Auto. Assc.
(AAA of
Northern Calif.) 4
39 Metropol. Prop. 39
& Liability*
40 Blue Ridge Ins.
(Republic
Financial Serv.) 12
41 Hartford 28
Underwriters Ins.
42 Farmers Home Mutual 50
43 Prudential Prop.
& Casualty 13
44 Residence 38
Mutual Ins.
45 Fireman's Fund Ins.
(Fireman's Fund Group) 16
46 Vanguard Ins.
(Republic
Financial Service) 35
47 Sequoia Ins. 45
48 Colonial Penn Ins. 41
49 Republic Ins.
(Republic
Financial Service) 30
50 Farmers Ins.
Exchange
(Farmers Ins. Group) 19
* No longer providing coverage in California.
SOURCE: Statistical Analysis Bureau, California Department of
Insurance.

---- START OF CORRECTION ----
For the Record
Los Angeles Times Saturday June 29, 1991
Home Edition Part A Page 2 Column 1 National Desk
2 inches; 37 words
Type of Material: Correction 
Insurance company--The status of Federal Insurance Co. was
incorrectly stated in a chart prepared from information provided by
Insurance Commissioner John Garamendi and published in The Times on
Wednesday. The company continues to do business in California.
---- END CORRECTION TEXT ----

PHOTO: John Garamendi
PHOTOGRAPHER: Los Angeles Times
GRAPHIC-TABLE: Complaints Against Insurers

Type of Material: Includes List

Descriptors: INSURANCE INDUSTRY -- CALIFORNIA; CUSTOMER SERVICE; COMPLAINTS; STATISTICS; AUTOMOBILE INSURANCE; HOMEOWNERS INSURANCE; GARAMENDI, JOHN

Copyright (c) 1991 Times Mirror Company