Organization Files Suit to Halt Violation of Proposition 103

San Francisco, CA–Fireman’s Fund Insurance Company is providing financial incentives to its insurance agents to avoid selling discounted “Good Driver” auto insurance policies to Californians who qualify for them, a consumer group alleged today in a lawsuit filed in San Francisco Superior Court.

Proposition 103, the insurance reform initiative approved by California voters in 1988, requires insurance companies to “offer and sell” automobile policies at a 20% discounted rate to any motorist who meets the statutory definition of a “Good Driver.” Insurance agents and brokers are subject to the requirement. The purpose of the statute is to make sure that motorists, who are required by California law to purchase automobile insurance, can obtain insurance policies, and at a price that rewards safe driving.

According to the lawsuit brought by The Foundation for Taxpayer and Consumers Rights (FTCR), the Novato, California-based Fireman’s Fund is systematically violating the law by refusing to provide the Good Driver policy to all qualified applicants who request it. The complaint alleges that Fireman’s Fund has established certain “target markets,” which exclude many qualified good drivers. Fireman’s Fund provides financial incentives to its agents that discourage them from submitting applications from motorists who are not within the “target market.”

The suit comes as the insurance industry’s market practices are being subject to increasing scrutiny, particularly by New York Attorney General Eliot Spitzer.

“Fireman’s Fund‘s refusal to sell Good Driver Discount policies to motorists hurts consumers and undermines the integrity and fairness of the insurance marketplace,” said Harvey Rosenfield, author of Proposition 103 and counsel for FTCR. “This company must obey the law like everybody else.”

Proposition 103 authorizes citizen organizations to go to court to protect the public against violations of the law by insurers. The suit against Fireman’s Fund is brought under Proposition 103 as well as under the California Unfair Competition Law, Business and Professions Code section 17200.

FTCR, a non-profit, non-partisan citizen organization, has frequently taken action to enforce California’s consumer protection laws against insurance companies, HMOs, and cell phone companies.

Click here for a copy of the complaint against Fireman’s Fund.

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