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California and the West

Senator Asks Quackenbush to Release Quake Data

Probe: Commissioner has opposed requests to open reports showing violations by insurers.


When key hearings probing the actions of Insurance Commissioner Chuck Quackenbush open today in the state Senate, the subject will be confidential documents detailing a pattern of violations by insurance companies after the Northridge earthquake.

Senate Insurance Committee Chairwoman Jackie Speier (D-Daly City) wants the documents--compiled by the Insurance Department's own investigators--made public. Quackenbush has been just as adamant that the reports should remain confidential.

The documents were prepared by the Insurance Department to evaluate how insurance companies handled the costliest natural disaster in the nation's history.

The Times obtained the reports on four companies, which document 3,137 violations in 2,477 claim files examined. The two most common infractions were failure to properly explain policy benefits and unsupported depreciation reductions.

Behind the numbers, though, are individual tales of what homeowners went through in dealing with their claims. Some struggled with their insurance companies for years before coming to settlements; a few are still embroiled in litigation.

"If they had just given us the money at the beginning, we could have torn the house down and rebuilt it," said Irwin Kourland, whose Bel-Air home suffered major foundation damage.

Others, however, were surprised to hear that violations had been found in their files and said they believed they had been treated fairly.

The reports are at the center of the Quackenbush controversy. Required by state law to perform occasional market conduct studies of insurance companies, teams of Insurance Department investigators chose at random Northridge quake claims with Allstate, State Farm, 20th Century and Farmers Home Mutual in 1997 and 1998.

Insurance Department officials then confronted the companies with the findings, threatening to seek billions of dollars in fines. Instead, insurers were asked to donate a total of about $12 million to foundations controlled by Quackenbush's political associates.

Insurance Department officials did not respond to requests for comment on the findings of the market conduct surveys.

Gary Garbowitz of Woodland Hills was one of the 20th Century policyholders whose claim was reviewed by the state.

Although he was never contacted about the review, he said he was not surprised to hear from a reporter that state investigators found his insurer had failed to do a "necessary and proper" inspection of his home and property after the earthquake.

"That sounds like me, all right," said Garbowitz, who had bought his home less than a month before the quake and had not yet moved in. The initial settlement, according to the report, was for $7,706.

Garbowitz said he at first assumed that was fair. Then friends advised him to check further.

"Thank God I started to talk to people," he said. "They said, 'Did you look under the carpet, did you check your chimney?'

"It was kind of on-the-job training for me. I learned what I had to do to cover myself."

He hired his own inspectors, who determined that the damage not found by the insurance company would cost nearly 10 times the initial settlement. In 1996, the company issued him an additional check for $70,468, according to the report.

"I paid them for the insurance, but they didn't help me," Garbowitz said. "I had to prove everything myself. It was like they were trying to do anything to pay me the least amount of money they could."

After the second settlement, he sold the still mostly unrepaired house "as is" for less than he had originally paid for it. It was time, he said, to move on. "You get tired, you don't even want to deal with it anymore," Garbowitz said.

Will Hector of West Hills said he felt vindicated when told that Insurance Department inspectors looking at his 20th Century file found similar violations.

"They nickeled and dimed it," said Hector, a semiretired real estate agent. The report said Hector had been offered a "low settlement."

He sued the insurer, leading to an out-of-court settlement last year that allowed him to make repairs.

"We still have one more room to do," he said of the renovation. "We'll finish up this year."

Investigators also found that Allan Boardman's claim had not received a "proper investigation" from 20th Century, now known as 21st Century. In addition, they reported that the check sent to Boardman "contains wording that incorrectly indicates full and final settlement."

Several months later, when Boardman's contractor said the actual costs to make repairs would be double the original estimate, the company was not receptive.

"I believe the document they sent back discouraged us from filing a second claim," he said. "They left open the possibility that I could file a dispute."

Boardman decided not to press further, although he considered legal action. "Half of it would have gone to the lawyers, anyway," he said. "The hell with that."

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