California May Re-Examine Handlinq of Quake Claims.

In light of California Insurance Commissioner Chuck Quackenbush's resignation amid investigative hearings into alleged misappropriation of insurer fines, a group representing homeowners wants state officials to re-examine insurance claims from the 1994 Northridge earthquake.

George ehrer, executive director of Community Assisting Recovery, a nonprofit group that helps earthquake victims, said market-conduct exams released by the state Legislature showed the insurance department recommended that four insurers pay $3.37 billion in fines and pay $240 million in restitution.

"We're hoping there's some way this $240 million could be paid to homeowners," ehrer said. "Now the focus can be on how earthquake victims can be helped."

He said the group supports a state Senate bill that would reopen Northridge claims for one year, lifting an existing one-year statute of limitations on the claims.

Some insurers say the claims should not be reopened. Peter Gorman of the Alliance of American Insurers, said the companies have never had an opportunity to respond to the allegations in the market-conduct study.

"We ask that due process continue, particularly since the vast majority of the violations are technical in nature," Gorman said. "The market-conduct studies by no means make the case that insurance companies treated policyholders unfairly."

Nina Lill, a spokeswoman for the National Association of Independent Insurers, said that while the bill would only reopen claims from policyholders who did not reach a written settlement with their insurers, the legislation isn't necessary.

"The commissioner's resignation doesn't negate the fact that insurers handled more than 400,000 claims and paid more than $15 billion in insured losses from the Northridge earthquake," Jill said.

Quackenbush, once a promising star in the Republican party, announced his resignation June 28, two days after an insurance department lawyer testified before a legislative hearing that she was outraged that regulators let insurers pay $12 million to a nonprofit foundation created by Quackenbush instead of paying up to $3.7 billion in fines relating to mishandled Northridge earthquake claims.

On July 10, Clark elso took over as acting insurance commissioner. Within the first days of his appointment, elso accepted resignations from seven members of Quackenbush's staff.

Foundations that received the insurers' money were supposed to aid earthquake victims, but instead $4.1 million was used to buy television ads that featured Quackenbush; hundreds of thousands of dollars allegedly went to groups with no connections to earthquakes but were connected to Quackenbush, including a sports camp that his children attended, according to the Los Angeles Times.

Quackenbush was also under fire for accepting campaign contributions from the insurers that he regulated and transferring some of that money to his wife's failed state senate campaign. A state ethics board was investigating a complaint about the contributions.