This page mirrors, with comment and references, the publication by the California Senate of the allegedly "secret" summaries of the CA DOI's investigations into claims improprieties of four major insurers. The publication of these documents is a testament to the integrity and bravery of Senator Martha Escutia.

Despite the National Importance of this News The Mainstream Media has completely ignored it!

Senator Martha Escutia is a courageous woman who has opened up, on a legislative level, the deep dark secret; of the insurance cartel which rules our nation, and other nations; of the corruption of State DOIs by those whom they are supposed to regulate, and the corruption of Commissioners of insurance that is rampant if not total. See From Insurance Crime Outline 06/13/2000, the Insurance Crime Outline 06/14/2000, the Insurance Crime Outline 06/15/2000, and Insurance Crime Outline 06/15/2000. Jim Mooney covers insurance pretty generally, gratis; if you can help him out, please do. If you have difficulty downloading the pdf documents from this site, try Jim's at

This case of corruption and mafeasance in office by Commissioner Quackenbush is not isolated, it is merely so blatantly outrageous that it cannot be ignored. His arrogance almost matches the arrogance of State Farm, the largest and wealthiest insurer in this Country.

Please write to Senator Escutia to support her at, no matter where you live. This essential corruption of our government by the insurance cartel is probably the most crucial issue of our times. This new Insurance Cartel Mafia, quite, literally, maims and kills many Americans every day. I only wish this were a fantastic conspiracy theory; but, I know better.

Write to your own State Senators as well.

Note that while the California Senate page offers only the PDF format, the PostScript Formats of these documents are additionally avaliable here. We are working on a text version. "The difficult we do immediately; the impossible takes a little longer." Meanwhile -

See the summary by the Foundation for Taxpayer and Consumer Rights (FTCR) and the link to FTCR at

Judicial Reversal: Judge Gray will order the California Senate to remove its publications of the DOI summaries from the web that were refused the Senate. All papers and evidence are to be returned to the DOI. June 22, 2000.

Also see, DATELINE NBC - Paperchase June 23, 2000
Interestingly, the tapes (800) 420-2626 and transcripts (800) 777-8398 usually available for Dateline, are *not* available for this edition. The reason? Guess!

    ~Bad Faith Liability and Consumer Rights ~
     Allstate Insurance Company Market Conduct Examination Report
     [PDF Format] [PostScript Format]
     Farmers Home Mutual Insurance Company Market Conduct Examination
     [PDF Format] [PostScript Format]
     State Farm General Insurance Company Market Conduct Examination
     [PDF Format] [PostScript Format]
     20th Century Insurance Company Market Conduct Examination Report
     [PDF Format] [PostScript Format]
   Public Hearing, June 12, 2000, 9:30 a.m., State Capitol, Room 112
   Good morning and welcome to the Senate Judiciary Subcommittee on Bad
   Faith Liability and Consumer Rights.
   The Northridge earthquake lasted 14 seconds yet sent shock waves for
   the next six years.  Southern California residents continue to
   struggle to put their lives back together.  While here in Sacramento,
   nine legislative hearings in the last two months have uncovered
   evidence that the Insurance Commissioner and his executive staff took
   questionable actions on findings of claims handling violations by
   The focus in recent weeks has been on the Market Conduct Examinations
   conducted after the Northridge earthquake and the departments response
   to those exams.  Market Conduct Exams are audits performed by trained
   DOI staff to make sure claims are being handled fairly and legally.
   This subcommittee heard testimony that the department received
   thousands of consumer complaints about Northridge claims handling.
   The Assembly Insurance Committee heard testimony that the department
   was aware of many lawsuits alleging bad faith practices by insurers
   after Northridge.  Witnesses have testified that the Market Conduct
   Exams found only technical violations.  Without the reports
   themselves, all we get in one hearing after another is he said...she
   said, or I dont remember, and that is not good enough for this body.
   It is not good enough for the citizens of California.
   Our job is to find out whether or not insurers committed large-scale
   violations of claims handling laws and regulations after Northridge
   and whether or not they were subjected to appropriate disciplinary
   action.  Without those exam reports, it is literally impossible for
   this body to do its job.
   This Subcommittee has come into possession of the executive summaries
   of the market conduct exams and is releasing them for legislative and
   public review.
   The Department was asked to provide the Senate with these reports.
   On May 12, 2000, I asked the insurance companies to provide us with
   all documents relating to the exams, including their responses and/or
   criticisms of the exam findings.  (See Exhibit 6) We did not get the
   documents we asked for.
   The refusal of the Commissioner and the insurance companies to provide
   us with copies of the exam reports has been a major roadblock in
   evaluating the DOI and carrier conduct. Where the regulatory process
   fails, the legislature must step in and conduct a full and open
   Findings in the exam reports include:
   ? Earthquake damages were grossly underestimated by company
   representatives, ( Ex. 1 at p.  13,  Ex. 2 at p. 15, Ex. 3, at page
   11, Ex. 4 at p. 12).  In some cases, entire rooms and fireplaces were
   never inspected.
   ? Companies made unfairly low settlements, (low balled claims)  (See
   Ex. 1 at pp. 12,  14, 16,  Ex. 2 at pp. 16-17, Ex. 3 at p. 12,  Ex. 4
   at pp.  13, 16).
   ? Companies misrepresented pertinent facts and policy provision (Ex.
   2, p. 18, Ex. 3, p. 10, Ex. 4, p.15)
   ? Consumers were misinformed about the statute of limitations, (Ex. 3
   at p. 14).
   The reports also state that as to three of the examined carriers, DOI
   staff found that The findings of this examination indicate that many
   of (the carriers) claims handling practices affect all settlements of
   first party property losses and are not necessarily exclusive to
   earthquake claims.   (See Exhibits 1-3 at p. 8)  These are very
   serious findings.
   These are only some of the specific violations identified in the
   reports.  Some of the findings can be characterized as technical, such
   as failure by the company to record the date a document was received,
   (Ex. 3, p. 10) and could have been remedied had that been the
   intention of the Commissioner.
   In fact after each violation summary, the exams indicate that remedial
   action is to be determined.   We dont know if such action was
   undertaken; what we do know is that there were settlements,
   foundations were established, money was transferred to the
   foundations, and the Market Conduct Exams were shelved.
   Our focus and concern is on the numerous substantive violations the
   examiners identified, and the fact that the settlement agreements
   attached as Exhibit 5" appear to directly conflict with the examiners
   findings.   For example, the settlement agreements state that insurers
   acted in good faith in adjusting Northridge claims.  However, the
   market conduct exams and trained DOI examiners found numerous
   violations in the sampling of files reviewed.  Violations of Unfair
   Claims Practices Act, Insurance Code provisions, regulations, and case
   These are not the complete exam reports.  They do not contain the
   specific findings that identify the policyholders whose files were
   reviewed.  They do not contain exhibits that might reveal insurer
   trade secrets.  They do not reflect all the responses the examined
   insurers made to the department.
   The Market Conduct Exams are only part of the puzzle, but they are a
   very important part.  We look forward to getting full cooperation from
   the department and from insurers to put together the whole puzzle.
   Thank you.
   Page of the California Senate

Home Page
Insurance Page
Our RICO Case Diary

Email me, Bill Hammel at

The URL for this document is:
Created: June 15, 2000
Last Updated: June 26, 2000