Documents as published by the California Senate

The Foundation for Taxpayer and Consumer Rights has posted the Executive
Summaries of the California Department of Insurance "Market Conduct
Examinations" of State Farm, Allstate, 20th Century and Farmers Home
Insurance on our website.

These exams, kept hidden from the public by California Insurance
Commissioner Chuck Quackenbush, detail serious violations in the claims
handling practices of the companies after the 1994 Northridge
Earthquake.  Quackenbush ignored the results of the exams and
recommendations of his own staff when he required insurers to contribute
to private foundations rather than pay official fines and create victim
restitution funds.

The exams can be downloaded in 'pdf' format at:

The FTCR news release about the exams follows:

Documents Refute Quackenbush's Alibi

Insurance Company Examinations, Released by Senate, Give Devastating
Account of Rampant Violations By Insurers After the Northridge Quake

Sacramento--Commissioner Quackenbush's main alibi in defense of his
special deals with insurance companies after the Northridge
earthquake -- that he had insufficient evidence against insurance
companies to fine them -- was refuted today when Senator Martha Escutia
released Executive Summaries of the detailed examination reports
conducted by the Department of Insurance (DOI) Market Conduct Bureau.
According to the documents, the formal examinations of State Farm,
Allstate and 20th/21st Century provide thorough documentation in support
of high fines against the companies and a massive victim restitution
fund to remedy cheated policyholders.

"Until now Mr. Quackenbush has claimed that the state did not have
sufficient evidence to take serious action against insurance companies.
These exams are the smoking guns that expose the insurance companies'
bad behavior after the Northridge quake," said Douglas Heller of the
Foundation for Taxpayer and Consumer Rights.  "Insurance companies
signed a sweetheart deal when they agreed to making tax-deductible
donations to Quackenbush's foundations, because, as these reports show,
they had a lot to hide."

Contrary to insurance companies' descriptions of these reports as
generic negotiating tools, the executive summaries indicate that the
Department, in fact, conducted full-scale investigations between
November 26, 1997 and November 18, 1998 into the companies' behavior.
The exams show violations of a variety of claims handling laws and
regulations. For example :

* State Farm did not properly explain policyholder's benefits, misled
policyholders or misrepresented settlement in 37% of the 825 files
* 20th Century offered unacceptably low settlements in 32% of the 431
* Allstate reduced settlements based on unnecessary or excessive
depreciation of property value in 16% of the 808 files reviewed.

"These exams show patterns of misbehavior by the companies that
Quackenbush has hidden under lock and key until these documents were
made public.  It is now the state's job to:
1. Make sure that Northridge victims are fully paid for unresolved and
low-balled claims;
2. Make sure that insurance companies are punished for their
3. Pass new consumer protection legislation to prevent this kind of
tragedy in the future;
4. Determine if Mr. Quackenbush should be removed from office," said

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The URL for this document is:
Created: June 17, 2000
Last Updated: June 17, 2000