Source: www.insurancebroadcasting.com | Written by: Insurance Newscast
The Greenlining Institute, a multi-ethnic consumer protection organization, filed a petition today with the Commissioner of the California Department of Insurance demanding review of Farmers and Fire Insurance Exchange (Farmers) application for a 6.9 percent rate increase on their homeowner multi-peril insurance product line.
Farmers indicates a 15.4 percent rate change on its application, but requests a 6.9 percent increase. Greenlining alleges that the proposed 6.9 percent increase, one-tenth of a percent below the 7 percent necessary to mandate an automatic public hearing, is “a conspicuously suspect figure that is intended to circumvent a mandatory hearing.”
Greenlining also contends that Farmers’ rate increase is unjustified, citing a number of serious concerns including Farmers’ lack of community reinvestments and charging its policyholders excessive fees for legal representation. Greenlining notes that legal action has already been taken in California courts against Farmers for overcharging its own policyholders 4.5 billion dollars in attorney fees.
Greenlining’s petition also highlights Farmers’ cancellation of 177,119 multi-peril policies last year in California. Samuel Kang, legal counsel for the Greenlining Institute said, “Multi-peril policies are designed to protect California consumers against the damages associated with floods and earthquakes. Farmers’ systematic cancellation of these policies throughout California will severely derail this state’s disaster preparedness.” Kang also says “it is especially troubling that Farmers is canceling so many policies because Farmers has the second highest market share for this type of coverage in California.”
Kang says Greenlining’s action against Farmers could set a new precedent for insurer accountability. “California Insurance Commissioner Steve Poizner has a very important decision to make in determining whether to grant a hearing. Will he blindly permit insurance companies to game the regulatory system, or will he at least take a look at their unscrupulous business activities on behalf of California’s consumers? Whatever decision Commissioner Poizner makes, it will be clear whether he is truly a pro-consumer advocate.”
The Greenlining institute is a multiethnic public policy and advocacy think tank that advocates for low income and minority communities through economic development, consumer protection, health advocacy, civil rights, and leadership development.
Farmers and Fire Insurance Exchange are subsidiaries of Zurich Financial Services. According to Zurich’s 2007 financial report it is one of the largest financial companies in the world with 384 billion dollars in assets. Zurich’s 2007 financial report also indicated that the company attained 55.1 billion dollars in revenue, and 7.5 billion dollars in Pre-tax income in its last fiscal year.