Commissioner Garamendi Responds To Judge’s Ruling On Insurance Industry Challenge To Emergency Homeowners Regulations

STate of CA, Oct 29, 2004

SACRAMENTO – “Today, a judge ruled that it is ok for the insurance industry to use a seriously flawed database to price and deny homeowner’s insurance to Californians. He said that I do not have the right to prohibit the industry from using these outrageous, abusive, unfair and discriminatory practices against California consumers.

I’m here to tell you that this judge’s decision is dead wrong.

As Insurance Commissioner, it is my job to protect the consumer. It is my duty to fight for the rights of consumers like Ken Pfeffer of Carlsbad. This 71-year-old homeowner was “blacklisted” after his wife Patricia simply called to ask State Farm a question about their coverage. The end result is that State Farm didn’t pay a dime for anything, but it did raise the Pfeffer’s insurance deductible from $1,000 to $5,000 because of this one inquiry. Folks, that is simply wrong.

Rachelle Goldberg, who lives in San Diego, faced a similar problem when she asked her insurance company if a broken plate would be covered under her policy. She didn’t file a claim, but her insurer non-renewed her after this question showed up on an electronic database as a claim.

The same kind of thing is happening all over the state. I have worked diligently to ensure that the industry stops these heinous practices, but every time I try to do my job I get sued. The industry knows this database, called CLUE, (Comprehensive Loss Underwriting Exchange) can contain totally inaccurate information. But for some reason, they don’t want to take the time to verify its accuracy. Instead, they let people like Ken Pfeffer and Rachelle Goldberg suffer. It’s time for this to stop.

The emergency regulations the judge overruled today were specifically designed to prevent the industry from arbitrarily canceling and non-renewing insurance policies. The regulations would have required insurers to verify the information they get from databases is accurate, and that it has some connection to the risk of future claims.

Well, no surprise, the insurers want to block me from doing what the voters of California elected me to do. They won this round today, but I’m here to tell you this is not the end of the story. I am going to appeal this decision to a higher court, and I will call for legislation to enact laws that provide consumers with these much needed protections.

It is clear the insurance industry does not have the best interests of the California consumer in mind. Well, I do. And I’m going to make sure that this abuse and discrimination is not allowed to continue."