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CA Commissioner Calls Hearing Into Alleged "Excess Profits" by Insurers

California Insurance Commissioner John Garamendi has scheduled a hearing into alleged "excess profits" by private-passenger automobile and homeowners insurers. Garamendi claims that for the past...
May 31, 2006

California Insurance Commissioner John Garamendi has scheduled a hearing into alleged "excess profits" by private-passenger automobile and homeowners insurers. Garamendi claims that for the past two years, "the amount they [insurers] pay for claims has dwindled, while the money they keep has soared." Garamendi said that if a full review and the hearing confirms his understanding, "I am confident that I will be ordering a significant number of insurers to reduce their rates."

In a prepared statement, Garamendi also said "My new pricing reforms would require insurers to base auto insurance rates primarily upon how safely you drive, and not just where you live. The rules would reward good drivers and end the industry's practice of punishing safe drivers with high premiums simply because they live in the 'wrong' zip code." He also accused the insurance industry of "shady methods…employed in a failed attempt to intimidate me."

What It Means to Agents:  Commissioner Garamendi is running for lieutenant governor in the California Democratic primary on June 6.

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