''Good, Bad & Ugly'' report details state's best and worst auto, homeowners and life insurers; Garamendi's fourth annual survey shows consumer complaints declining.

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 1, 1994--Consumer complaints against insurance companies have dropped significantly after four years of tracking and publicizing the state's best and worst insurance companies, Insurance Commissioner John Garamendi announced Tuesday.

Unveiling the results of his fourth annual ``Good, Bad and Ugly'' survey of consumer complaints, Garamendi said that the annual study, coupled with stringent regulatory efforts, has helped insurers improve their customer service as well as significantly drive down the number of justified complaints filed with the department in 1993.

``I am pleased to report that some insurance companies appear to be taking the results of this survey to heart,'' Garamendi said. ``After four years of reporting the good, bad and ugly of California insurance, we are finally hearing fewer consumer horror stories.''

``Even Farmers -- which for three consecutive years ranked as the worst homeowners insurer, has finally tightened its ship based on the results of this survey and this year moved among the best homeowners insurance companies. This can be attributed to our efforts to make the Department of Insurance the best consumer protection agency in the nation.''

In auto insurance, in particular, the number of justified consumer complaints has plummeted in just one year. In 1992, drivers lodged 4,118 complaints against their insurers.

But in 1993, only 1,880 justified complaints were filed against auto insurers with the department. Across the board, large companies such as State Farm, Allstate and 20th Century -- and even last year's worst companies -- have improved the number of customer complaints. For example, Sterling Casualty continues to be among the 10 worst auto insurers, yet its justified complaints dropped from 126 to 28 in just one year.

Among life insurers, the number of complaints has steadily declined since Garamendi's first consumer complaint survey in 1990. Three years ago, consumers logged 1,084 complaints against life insurance companies. In 1993, they filed 499 complaints against life insurers, the survey found.

The new survey also found that some trends -- both good and bad -- have continued, with some of the state's best insurers consistently logging the least number of complaints, while some of the worst continue to draw the most criticism from consumers.

``Over the past four years, several companies have consistently been found at either the top or bottom of the ratings. In some very notable cases, this year is no different,'' Garamendi said.

``Once again, USAA has ranked as the best company for auto insurance -- the fourth year in a row that it has logged the lowest share of justified complaints among auto insurers. It also ranked fifth-best among homeowners insurers. This consistency for customer service deserves praise, and should be viewed as a model for other companies which rank poorly on an equally consistent basis.''

Wawanesa Mutual Insurance ranked second among auto insurers for the least complaints. Among homeowners insurers, Vigilant Insurance, Pennsylvania General Insurance, Insurance of North America and Assurance Co. of America had ranked at the top with virtually no complaints lodged against them.

Eight separate life insurance companies matched their record with no complaints. Based on their market share, however, Surety Life and First Penn-Pacific Life ranked first and second, respectively.

Some insurers who languished at the bottom of the survey in prior years subsequently approached the department about improving their image, Garamendi said. In 1991, United Insurance of America ranked worst among life insurers. After working with the department to develop a quality control program, the company has moved up to the middle of the rankings, along with two companies, Security Life of Denver and Provident Mutual Life, which went from the 10 worst to the 10 best.

The ``Good, Bad and Ugly'' report details the best and worst auto, homeowners and life insurers in California based on the number of justified complaints filed with the Department of Insurance by consumers. A justified complaint is one that involves a violation of the Insurance Code or other insurance laws, or one in which the consumer was unable to get an insurer to respond to his or her concerns of questions.

Consumers may file a complaint by calling the department's toll-free consumer hotline. Once a complaint is received by the department, a case file is opened and an investigation pursued. Typical complaints involve delay of payment on claims, disputes on amounts owed to policyholders by their insurers, misrepresentation of coverage purchased, surprise rate increases and arbitrary cancellation of policies.

Based on these complaints, the department successfully recovered an additional $88.5 million for consumers from their insurance companies, nearly $21 million more than the $67.8 million recovered in 1993.

``In one case alone last year, the department was able to recover $200,000 for an elderly retiree on an annuity that his insurer falsely claimed had been surrendered,'' Garamendi said. ``The consumer did not recall surrendering the annuity, but had no paperwork to back him up. Fortunately, we were able to get the insurer to pay out what their customer was owed -- $200,000.''

The ratios of complaints per exposure were worst among auto insurers, with a 169.9 ratio for Ohio Indemnity Company. The next worst company, Western United Insurance, had a ratio of 78.5. Among homeowners insurers, American Bankers Insurance of Florida ranked worst with a complaint ratio of 65.9, followed by Farmers Home Mutual with 58.4.

Life insurance generally receives the fewest consumer complaints of the three lines surveyed, as indicated by its low complaint ratios.

``Public scrutiny of service provided by insurance companies is clearly a key factor for many insurers who want to maintain good reputations and for others who want to polish their complaint records,'' Garamendi said. ``Consumers should continue to put this free survey to use as a means of ruling out less responsive insurance companies when shopping for insurance.''

Garamendi also cautioned, however, that complaint statistics alone should not be used to judge an insurer. Other variables, such as premiums and financial security, should also be considered. The Department of Insurance provides a variety of comparative studies, surveys and general information at no charge to the consumer, which can be obtained through the toll-free consumer hotline at (800) 927-HELP or [phone] for calls originating outside of California.

CONTACT: California Department of Insurance 

Candysse Miller, 415/904-5410 (Nov. 1 only)