2005
Insurance Reference Manual
Personal Insurance Federation of California Insurance Reference Book
PRESIDENT'S YEAR IN REVIEW - 2004
The 2004 Legislative Session started with the focal point being the historic recall of Governor Gray Davis in 2003 and the election of Governor Arnold Schwarzenegger by a near majority of California voters.
The final tally report of the Secretary of State's Recall Election was barely out before the late October/November Southern California fires lit up the sky and scorched more than 750,000 acres, destroyed 3,700 homes and took 25 lives. The insurance industry responded immediately and sent thousands of insurance personnel to the fire sites to assist victims even before the fires were extinguished. By spring of 2004, more than 19,100 claims had been filed directly from the fires and claims costs reached $2.06 billion. By fall of 2004, over 90 percent of the claims had been satisfactorily settled by the insurance industry.
Insurance Commissioner Garamendi conducted a series of town hall meetings (nine in all) in Southern California throughout 2004 to "help" fire survivors with their claims. At many of the hearings, the Commissioner encouraged the public to sue the industry that in his words "was not treating its customers properly." With 19,100 claims being handled by the insurance industry, the California Department of Insurance (CDI) received 476 complaints from the town hall meetings and less than half of those dealt with underinsurance. PIFC member companies continue to work diligently with their policyholders to settle outstanding claims related to the fires. Some of the remaining claimants have yet to decide if they will rebuild, others are rebuilding in another part of the state while others are actually moving out of California. Make no mistake, all remaining claims will be settled.
In addition, the Commissioner sponsored the "Homeowners Bill of Rights" legislative package which included five measures. Four of the five measures were enacted, and PIFC worked with each author on amendments that made them workable to the insurance industry.
In the tort arena, PIFC opposed SB 494 (Escutia) which would have allowed hospitals to charge auto insurers excessive fees above normal costs paid for medical services to Medi-Cal patients injured in auto accidents. The measure was eventually vetoed by Governor Schwarzenegger who noted that allowing excessive medical charges in the auto insurance marketplace would drive up costs for consumers as well as local governments.
Commissioner Garamendi has announced that he is running for Lieutenant Governor in 2006. It is unfortunate that there are constant attacks on the industry by the Commissioner concerning firestorm victims, auto insurance territorial rating practices and, most recently, the unsubstantiated claims that there is a "widespread agent and broker incentive compensation scandal." However, notwithstanding these attacks, PIFC continues to cooperate with CDI on all of these key issues to find solutions where needed that will be beneficial to the millions of PIFC member company policyholders. California is a complex and challenging regulatory market in which to operate.
The Federation also continues to provide successful communications leadership on a number of fronts. During 2004, PIFC met with several key editorial boards and reporters to discuss and educate them on the facts of the key legislative and regulatory issues being debated.
Our members have given us the opportunity to work in a cooperative effort with the business community to educate the media on the pitfalls of legislation and regulatory actions that would have a severe negative impact on policyholders and industries doing business in California.
IFC looks forward to working with Governor Arnold Schwarzenegger, the Legislature and CDI in 2005. A strong and financially viable insurance industry is critical to meet the needs of consumers and to simultaneously assist with the economic growth of California as the Governor and Legislature struggle with the deficit.
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