A Mission Viejo firm and one from Mexico have agreed to provide auto insurance to Mexican drivers entering the United States, apparently averting a trade crisis along the U.S.-Mexico border.
The two firms--Westech Insurance Network Inc. and Prevencion de Riesgos Tijuana Caliente of Tijuana--have announced an international insurance pact that company officials say is prepared to provide coverage to tens of thousands of motorists crossing the border from Mexico into the United States.
Details of the plan are still vague and at least one official concerned about the insurance problem appeared to be taking a wait-and-see attitude.
"I am cautiously optimistic and I do hope that this will turn out to be the answer to the problem," said Francisco Herrera, director of binational affairs for the City of San Diego.
Herrera, who said he only heard of the proposal Monday, said the two firms would have to provide additional information about their plans.
Worried About Costs
"I, personally, don't know anything about the companies," said Herrera, who has been following the border insurance problem, concerned about a potential drop in trade for San Diego businesses. "Certainly we don't want the gap filled by someone who is trying to take advantage of the consumer."
However, Dal Watkins, president of the San Diego Convention & Visitors Bureau, reacted less equivocally.
"I'm very pleased," said Watkins, who said he had some knowledge of the Mexican firm.
Representatives of both firms said they are legitimate and will provide additional information about their plans at a news conference Wednesday in San Diego, when the new program will be formally introduced.
"We think this is a solution to the problem," said Arturo Alemany, chief operating officer for the Mexican firm's U.S. operations, who described the agreement as a "landmark" accord.
The potential crisis was triggered by the decision of the only three U.S. insurance companies that had been providing coverage to drop out of the market, apparently because of heavy losses.
California law prohibits motorists from operating here without liability insurance and Mexican insurance policies are no good on this side of the border--just as U.S. policies are worthless in Mexico.
The full impact of the firms' decision to quit issuing policies has yet to be felt, as many of the existing policies won't expire until later this year.
Drop in Commerce Feared
The defection of the three U.S. companies has prompted fears of a drop in commerce along the U.S.-Mexico border, a vibrant trade zone of importance to the economies of both nations. Officials have also expressed fears that the move could lead to an increase in the number of uninsured motorists on the road in San Diego County and other border communities, as Mexican drivers were expected to continue to drive in the United States--with or without insurance.
At least one observer was openly skeptical about the new insurance pact.
"I'm suspicious," said Oscar Padilla, a San Ysidro insurance agent who has been a vocal proponent of a replacement program. "They leave a lot of questions unanswered."
Alemany, the official for the Mexican firm, described his company as a brokerage concern representing 12 of the top insurance companies in Mexico.
David Beall, a spokesman for the Westech Insurance Network Inc., said that the insurance policies for Mexican nationals would be underwritten by Cal-American Insurance Co., a licensed carrier which Beall said is part of the Westech network.
Although the companies will initially write polices for vehicles crossing from Baja California into California, Beall said that the operation would eventually be extended. He estimated that annual premiums could eventually reach $15 million for both personal and commercial vehicles, most of that being collected from California-bound traffic.