Source: The Greenlining Institute | Written by: Samuel Kang
The Greenlining Institute, a multi-ethnic consumer protection organization, filed a petition today with the California Department of Insurance challenging United States Automobile Association’s (USAA) insurance rates.  Greenlining’s objection was based on a number of serious concerns stemming from USAA’s treatment of its 5.9 million customers, all of whom are either members or family members of the United States armed forces.

USAA’s proposed rate hike came on the heels of the insurer’s cancellation of over 25,000 policies designed to protect California’s military service personnel and their families from multiple perils including earthquakes, flooding, and mudslides.  According to Greenlining Legal Counsel, Samuel Kang, this would have a disastrous impact in the event of a major earthquake.  Kang says, “California’s Insurance Commissioner has repeatedly commented that this state is not prepared to rebuild from the next big earthquake.  But USAA is ignoring the Insurance Commissioner’s warning by making the problem worse and cancelling thousands of policies.”

Greenlining also contends that USAA overprices its automobile insurance by not participating in the California Low Cost Auto Insurance Program.  USAA’s failure to offer Low Cost Auto Insurance to its low-income military customers drew strong criticism.  Leo Avila, a World War II veteran and a member of the American GI Forum, says, “USAA has a special responsibility because the company specifically targets members of the armed forces as customers.  But instead of serving our men and women in uniform, USAA is cheating them.”

Kang says that USAA’s disregard for American veterans is also reflected in the fact that USAA lacks any supplier diversity program.  “It’s troubling that USAA, a company that supposedly is in the business of reaching out to our troops, has made no meaningful effort to reach out to a divers group of suppliers, including disabled veteran business owners.”

Greenlining further contends that USAA has invested nothing in California’s Organized Investment Network (COIN), a voluntary program that serves as the state’s primary reinvestment vehicle for insurance companies.  Kang says that USAA, a Fortune 500 company, is undermining COIN by not participating.  He says, “Since COIN is a voluntary program, it depends on companies like USAA, one of the largest companies in the world, to set the example for the rest of the industry.”  Kang goes on to say that “USAA’s absence from COIN is not only irresponsible, it sabotages the ability of COIN to function.”

USSA is seeking rate hikes of up to 23.5 percent on their homeowner multi-peril insurance product line.  Greenlining is requesting a hearing from California Insurance Commissioner Steve Poizner so that USAA can respond to its allegations.  The California Insurance Code directs the Commissioner to hold a hearing on the rate increase, when requested within 45 days, if the company’s proposed increase exceeds 7 percent.

Kang says, “Not protecting out troops while they protect all of us undermines our very security.”  He is hopeful that Poizner will call a hearing sooner rather than later, saying that, “The Commissioner has proclaimed himself to be a strong proponent of consumer protection.  I just hope that means he’ll go to bat for our troops.”