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please click your print icon! Department of Insurance - Discrimination Against Minority Consumers? March 14, 2008 Commissioner Steve Poizner California Department of Insurance Attn: Insurance Commissioner's Office 300 Capitol Mall, 17th floor Sacramento, CA 95814 SENT VIA FAX AND US MAIL (415) 904-5889 Why Does the Department of Insurance Discriminate Against Minority Consumers? Dear Commissioner Poizner, We are writing to you in regards to a serious matter that requires your immediate attention. It has recently come to our attention that the Department of Insurance seems to be selectively neglecting the enforcement of its own policies at the expense of minority consumers. While we hope that this is not the case, we urge you to provide a swift response to clarify the Department’s policies and practices. As you are well aware, California Insurance Code § 1861.05(c)(3) requires the Commissioner to hold a hearing when: 1) an insurer’s requested rate increase is more than 7% for a personal line or 15% for a commercial line, and 2) a consumer representative timely requests a hearing. For more than three years, the Department of Insurance has followed a clearly established procedure in handling rate increase applications that meet these two elements. The Department’s Advisory Notice set forth on February 18, 2005, published on the Department’s website, clearly states that “when these two conditions are met, the Department will initiate joint discussions that include the consumer representative and the applicant regarding the rate application.” (For your convenience, the Advisory Notice is enclosed with this letter.) Inequitable Deviation from Department Policies Since November of 2007, the Greenlining Institute has requested a hearing on three personal line rate increase applications that exceeded 7%: 1) Liberty Mutual – requesting a 22.76% increase; 2) Unigard – requesting a 26% increase; and 3) United Services Auto Association – requesting 13.3-23.5% increases. Each time, Greenlining intervened on behalf of California’s minority communities. Despite three instances that should have prompted the Department’s initiation of a joint discussion between Greenlining and the affected insurer, not once have you or the Department of Insurance done so. We find it extremely disconcerting that the Department of Insurance is deviating from its own stated policy, which has been in effect for at least three years. We are especially uneasy that this deviation is coming at the expense of California’s minority communities. We are especially troubled by the fact that the Department is suspiciously deviating from this policy in regards to Greenlining, while initiating joint discussions for other intervenors. For example, USAA’s rate application garnered the involvement of Greenlining and another consumer protection group, the Foundation for Taxpayer & Consumer Rights (FTCR). The attached article shows that FTCR had already had extensive discussions with USAA about their rate increase when the media was reporting on Greenlining’s intervention. And while it seems that the Department afforded FTCR the benefit of initiating the discussion with USAA, no such benefit was afforded to Greenlining. Our question, therefore is this: Why was Greenlining, a consumer protection group advocating on behalf of people of color, not afforded the same benefit in the same exact case as that of another intervenor? Furthermore, the Advisory Notice clearly states that “If the applicant [insurer] submits any written or electronic data or correspondence regarding the application to the Department, the applicant must also send a copy to the consumer representative.” Clearly, FTCR and USAA were communicating with each other and were going through the Department of Insurance as a conduit. If USAA had sent any communication to the Department, even as a carbon copy to a communiqué sent to FTCR, the Department was required to send a copy of this communiqué to Greenlining. Greenlining never received any copy or notice of any communiqué regarding USAA and FTCR. Discriminatory Impact on Minorities We underscore the fact that when § 1861.05(c)(3) is triggered, initiating joint discussions between the insurer and the consumer representative is and was the established practice prior to and during your administration at the Department of Insurance. Hence, Greenlining and its members find it extremely troubling that the Department would selectively deviate from this practice in regards to Greenlining, a consumer advocate for California’s 22 million minorities. Under these circumstances, it is difficult to see how the inequitable employment of Department policies could not be interpreted as discriminatory. Without explanation or reason, the policies of the Department seem to deviate in regards to a minority advocacy organization. We simply ask that you explain why this seems to be the case. Consumer protection groups, especially ones that advocate on behalf of minority and other disadvantaged communities, already face difficult odds when challenging multi-billion dollar insurance companies. Skewing the system against minority advocates will inevitably result in exacerbating the disadvantages faced by California’s minority communities. Therefore, California’s 22 million minority consumers are depending on you to adjudicate over a just system that will treat their advocates fairly and equitably. We look forward to your swift response and thorough explanation. With great concern, Bob Gnaizda Samuel Kang Kenechukwu Okocha Policy Director Legal Counsel Legal Fellow Enclosure: 1) Department of Insurance Advisory Notice – February 18, 2005 http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/Advisory-Notice-February-18-2005.pdf 2) Insurance Journal article – February 4, 2008 http://www.insurancejournal.com/news/west/2008/02/04/87007.htm Cc: Jim Richardson Richard Robinson Chairman Joe Coto Assemblywoman Patty Berg Assemblyman Charles Calderon Assemblywoman Wilmer Carter Assemblyman Kevin de Leon Assemblywoman Sally Lieber Assemblywoman Nicole Parra Return to today's INSURANCE NEWSCAST
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