Insurance Industry Suits

Lloyd's of London said Monday that its offer of compensation to its members, aimed at staving off court action, has failed. It said a $1.32-billion settlement proposal to 22,000 of the insurance market's backers, investors known as Names, had been rejected. A balloting of the Names, mostly members of the wealthy families who have supported the market since its inception 300 years ago, closed Monday with only 38% accepting the offer by value. Lloyd's had been looking for 70% acceptance, by value.

A settlement was announced Friday in a longstanding "bad faith" lawsuit against Allstate Insurance Co. by a South-Central Los Angeles family whose $40.5-million jury award was nullified by a judge eight years ago as "excessive." The settlement was reached as a new trial began in Superior Court to determine the damages to be paid by Allstate to Alice and Henry Fellows, their son and two nieces.

Legislation by former Sen. Alan Robbins (D-Van Nuys) intended to deregulate a specialized segment of the insurance industry has cost Californians millions of dollars, according to a class-action suit filed this week. The civil action filed Thursday contends that Robbins and Ron Gordon, president of now-bankrupt Sentinel Insurance Co., initiated a scheme in 1978 to lift caps on credit insurance rates.

Citing a legal case that resulted in a $58-million bad-faith judgment against a Farmers Insurance Group unit, state Insurance Commissioner John Garamendi on Monday announced a special regulatory examination of Farmers. In the "market-conduct examination," insurance examiners will visit Farmers offices and look through files to determine how certain types of claims are handled.

The fate of Executive Life Insurance Co.'s policyholders is still far from certain, Los Angeles Superior Court Judge Kurt Lewin said at a hearing Friday. Although state Insurance Commissioner John Garamendi recommended Thursday that an insurance industry plan to rehabilitate the company be accepted, the industry--represented by the National Assn. of Life and Health Insurance Guaranty Assns. (NOLHGA)--must satisfy several requirements before the judge approves the deal.