Source: Insurance Newcast
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’s application for a 6.9 percent rate increase on their personal fire insurance product line.
Farmers’ 6.9 percent rate increase is the second such rate increase Greenlining is challenging against Farmers this year. The consumer group contends that for both rate increases Farmers reported calculations that were much larger on their applications, but suspiciously proposed 6.9 percent increases, one-tenth of a percent below the 7 percent necessary to mandate an automatic public hearing in California.
The group claims that Farmers’ request for a 6.9 percent increase 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 cancelling over 27,000 fire policies last year in California. Samuel Kang, managing attorney for the Greenlining Institute, said, “Farmers’ systematic cancellation of these policies throughout California will severely impact the ability of homeowners to recover after this summer fire season.”
Kang said Farmers is not the only insurance company that tries to avoid a mandatory hearing by requesting a 6.9 percent increase.
“So far this year, we’ve identified half a dozen major insurance companies trying to avoid public hearings by asking for 6.9 percent increases,” said Kang. “They’re maximizing profit while minimizing accountability. They’re gaming the system.”
Greenlining has urged California Insurance Commissioner Steve Poizner to look into the matter, but Kang said Poizner refuses to act.
“Commissioner Poizner calls himself California’s top consumer protection advocate, but all the biggest insurance companies are walking all over him,” said Kang. “Consumers are starting to think that he doesn’t care or doesn’t know how to lay down the law. Either way, it’s scary to think who’s right.”
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.