Hearings into potential criminal practices within the California insurance industry were moved up to Monday in response to wishes of one of some 125 insurers under investigation following the collapse of the municipal liability insurance market.
Meanwhile, the California Insurance Department challenged insurance rates set by about 20 insurance companies following its own investigation into the commercial insurance industry's rate-making procedures.Both investigations by the department and the California attorney general, however, also are spurring accusations that they may be politically motivated.
Roxani Gillespie, state insurance commissioner, said the attorney general's investigation raises a question in my mind" since Attorney General John Van de Kamp is running for re-election next month.
He also was one of the highest-ranking public officials to oppose Proposition 51, which California voters in June endorsed by a 62 percent majority. The insurance industry supported the measure, which excluded non- economic damages such as pain and suffering from the so-called deep pocket doctrine of joint and several liability.
But consumer groups questioned the department's motivations, too. There's extraordinary pressure on the department to perform because (Gov. George) Deukmejian is running for election," said Steven Miller, executive director of Insurance Consumer Action Network.
Ms. Gillespie denied political motivations.
As far as I'm concerned, we just got right" down to business following her appointment in July, she said.
Thomas P. Dove, deputy attorney general in San Francisco, also denied ulterior motives. He called Ms. Gillespie's charges ludicrous and offensive," noting that pre-election surveys give Mr. Van de Kamp a 72 percent lead over the competition. He also said municipal insurance buyers began complaining about the industry more than a year ago.
In January this year, the formal complaint spurring the attorney general's investigation was filed by Mayor Richard Holmes of Lafayette. By April this year, Mr. Dove noted that only Planet Insurance, a unit of Reliance Insurance, was writing municipal liability, and only renewal business. That compares with about 1,400 insurers in the market earlier last year.
His office began issuing subpoenas to some 125 insurers on Aug. 11 to begin six weeks of hearings originally starting Sept. 8 on charges of antitrust violations and unfair trade practices. Mr. Dove said the hearings were pushed forward to Monday in response to wishes of one company that he declined to identify.
He declined to name those subpoenaed, noting that potentially a criminal investigation" would result.
He said other states also investigating potential antitrust violations in the insurance industry include Texas, where a formal investigation also is under way, and Oregon, Colorado, Massachusetts and a half dozen other states," where they're looking at the problem."
Ms. Gillespie said field examiners with the department have reviewed about 50 insurance companies since March 1985, when the department revived its field examination program by hiring six new examiners.
The program had been discontinued in 1980 during the administration of Gov. Edmund G. Brown Jr.
Ms. Gillespie said the department's hearings will resume today.