Frustrated with his slow progress in obtaining Proposition 103 rebates, state Insurance Commissioner Chuck Quackenbush on Friday asked the Legislature for $19 million to hire judges, lawyers and experts to prosecute rebate cases against companies that won't voluntarily settle their liabilities under the 1988 rate rollback initiative.
Certain insurers "refuse to accept reality and continue to stonewall the department and their customers," Quackenbush said in a statement. Consumer advocates say the unpaid rebates total more than $1 billion, including interest accrued since 1988.
At the same time, Quackenbush announced 10 new Proposition 103 settlements. In the largest, Chubb & Son will rebate $6.67 million to its policyholders. The others all involve companies with less than a tenth of 1% of the California market, and the largest of those rebates is $216,000.
The two biggest Proposition 103 holdouts are State Farm Mutual Automobile Insurance Co. and Farmers Insurance Group, the state's No. 1 and No. 3 property-casualty insurers, respectively.
Quackenbush says State Farm owes $229 million in rebates. State Farm, however, contends that it collected no excess premiums in the rebate year and owes nothing.
The Insurance Department has yet to arrive at a rebate figure for Farmers, a spokesman said.
Republican Quackenbush, whose election campaign was boosted by more than $2 million from the insurance industry, came into office in January promising that within six months he would secure the remaining rebates that were promised under Proposition 103 but held up for years by legal challenges.
But more recently, with carriers digging in their heels and 150 cases still unsettled, Quackenbush has started sounding more like his Democratic predecessor, John Garamendi, the king of the insurance industry bashers.
"My patience has its limits," Quackenbush said in his statement. "It is time these recalcitrant insurers recognize that the only thing they stand to gain by delaying the inevitable is higher interest payments, bigger legal bills and more public frustration."
However, Quackenbush has not followed Garamendi's example of withholding rate hikes from the Proposition 103 holdouts.
On Wednesday, in fact, he granted State Farm a 65% increase in its earthquake insurance rates, which will garner the company $77 million a year in additional premiums and raise the average policyholder's bill by $150.
"The commissioner has separated the two issues," spokesman Richard Wiebe said Friday. Noting the current problems with earthquake insurance availability, he added, "The commissioner can't hold Proposition 103 over their heads and just watch them stand on the sidelines and withhold their products from the marketplace."
However, Wiebe acknowledged that the rate hike is not likely to cause State Farm to drop its current moratorium on new writings of earthquake and homeowners insurance.
State Farm, like most other major insurers in California, restricted sales after huge losses in last year's Northridge earthquake.
The Insurance Department intends to calculate the rebates owed by all remaining insurers, using its court-tested formula, and issue a blanket order for payment, probably in July, Wiebe said.
Companies that still refuse will face administrative hearings. Quackenbush requested the $19-million appropriation because the legal help required to stage a large series of hearings will exceed his current budget, Wiebe said.