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Delays Sought in Quake Policy Rate Hikes : Insurance: Consumer groups want hearings held on requests. Two leading firms want premiums to be doubled.

November 15, 1994|THOMAS S. MULLIGAN | TIMES STAFF WRITER

Arguing that earthquake insurance rate increases are being approved without adequate scrutiny, a consumer group Monday requested hearings on more than 20 applications for rate hikes, which could delay approvals for months--well into the term of Insurance Commissioner-elect Charles W. Quackenbush.

The Proposition 103 Enforcement Project, headed by Harvey Rosenfield, author of the 1988 rate-cutting initiative, said it will intervene in filings by State Farm Mutual Automobile Insurance Co., Allstate Insurance Co., Republic Insurance Co. and Fireman's Fund Insurance Co., among others.

"The project is stepping in as the watchdog (that) consumers need to stop the industry from stampeding the (Insurance) Department into granting outrageous and arbitrary earthquake insurance rate increases," Gina Calabrese, a lawyer for the organization, said in a statement Monday.

The department is not required to hold hearings on any rate increases, but under Proposition 103, consumer groups that request intervenor status are automatically granted hearings on rate increases of more than 7%.

State Farm and Allstate, California's No. 1 and 2 homeowners and earthquake insurers, are seeking to double their earthquake rates to about $3 per $1,000 worth of coverage on policies with a 10% deductible. Other companies have filed for increases ranging up to 174%.

Insurance Commissioner John Garamendi recently approved without hearings rate increases of 37% for Safeco Insurance Co. of America and 122% for Prudential Property & Casualty, as well as increases for three smaller companies.

Calabrese said in an interview Monday that there hasn't been adequate justification for the increases granted and that the hearings are needed to demonstrate how the companies arrived at the rates they are seeking.

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