Earthquake Insurance Decision Brings an Emotional Temblor

Insurance Commissioner Chuck Quackenbush is socking it to consumers again, this time by his willingness to let a company that mismanaged its earthquake exposure and then withdrew from the homeowners and earthquake insurance market after the 1994 Northridge earthquake to come back in (“20th Century Will Resume Quake Coverage,” Dec. 25).

20th Century Insurance Co., a notorious cherry-picker, had over-concentrated its risk in the San Fernando Valley, violating the fundamental tenet of insurance--spreading the risk--and its policyholders paid the price. Ostensibly due to the earthquake, Quackenbush reduced the company’s Proposition 103 rollback liability by $32 million. This occurred less than a month after Quackenbush took office and shortly after the supposedly “broke” insurer gave him a $5,000 campaign contribution, after he had won the 1994 election. In addition, 20th Century was allowed to non-renew all of its existing homeowners and earthquake insurance policies and withdraw from the market.

But now guess what? 20th Century wants back in. Why? Because Quackenbush’s California Earthquake Authority is a dream come true for the insurance industry. In November, 20th Century had indicated it wanted to participate in the CEA, which allows non-participating insurers to come in later by rolling over earthquake policies into the CEA as they are renewed. In effect, insurers participating in the CEA will charge about twice as much for half the coverage, have their losses capped and force homeowners to foot the bill in surcharges and prorated claim payments if the CEA becomes insolvent after a catastrophic quake. Who sets and approves the rates that the CEA will charge? Why, Quackenbush, of course.

Interestingly, according to state disclosure records, 20th Century has contributed $100,000 to Quackenbush-controlled committees in 1996 alone. Meanwhile, some earthquake victims still await final payments by the insurer, nearly three years after the quake.

If 20th Century can afford to insure homeowners again, it can afford to pay the rest of its rollback. Quackenbush should make them pay up.

PHILIP ROBERTO

Proposition 103 Enforcement Project

Santa Monica

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So 20th Century Insurance has decided to reenter the California earthquake insurance field.

Is this a joke?

They deserted like rats in the wake of the 1994 disaster, stranding thousands without insurance, but now their accountants foresee a way to rosier profits.

20th Century stands accused in this state’s courts of acting the financial predator, of systematically cheating and misleading policyholders. Hundreds of people are charging 20th Century with bad faith and outright fraud. Lawsuits allege that 20th Century calculatedly took advantage of earthquake victims, hitting them when they were down, piling dollar distress atop the heaps of personal ruin and debris.

With cynical mathematics, they are still doing it.

The word is that if and when the juries find 20th Century guilty of fraud and bad faith, 20th will live up to its soulless reputation by filing appeals in every case, not for merit but for leverage that will further delay justice and make it too expensive for the victims to persist in their fight.

20th Century should not be allowed to deal in earthquake insurance in California until the last court allegation is resolved--including appeals.

Doesn’t the state commission have something to say about this?

JERRY LEBLANC

Woodland Hills