State’s Insurance Refund Ads Puzzle Firms, Consumers

Television ads by Insurance Commissioner Chuck Quackenbush claiming that “billions of dollars” in insurance funds “are available to be returned to California consumers” are stirring puzzlement and consternation among insurers and consumer groups alike.

Insurance officials say their companies have been reporting a surge of calls from policyholders who have gained the apparently erroneous impression that they are owed money.

And a prospective opponent of Quackenbush’s expected reelection bid next year is accusing him of false advertising.

The three-week-long, $1-million “consumer outreach” campaign featuring Quackenbush as the spokesman started last week. It is being funded by two legal settlements with the Department of Insurance and private insurance firms.

In the two 30-second spots, Quackenbush makes such statements as, “My department has cracked down on insurance companies which have ripped off unsuspecting consumers,” and “This money is available because my department vigorously enforced consumer protection laws.”

Other than that, he is very general in his suggestions about the nature of the “billions of dollars” of money available for rebates.

He describes it in one spot as “auto insurance rebates, liquidated assets of bankrupt insurance companies, class-action lawsuits and settlements and restitution awards.”

Both spots end with suggestions that those interested call the department’s consumer hotlines.

But calls to the hotlines find departmental representatives also vague about the nature of the prospective rebates.

An unidentified representative who answered one hotline call Friday said that, actually, most Proposition 103 auto insurance rebates have been paid out, and the largest chunk remaining, from State Farm, is tied up in litigation.

Quackenbush, in an interview, said, “It’s hard to put specifics on a 30-second ad, but we figured we’d put it in generics [general terms] so as to not lose people’s attention.”

The commissioner said that by far most of the “billions” that he is referring to is $1.8 billion in 86 separate “open estates” being administered by his conservation and liquidation office.

These are companies, such as Executive Life, which have been liquidated, but from which some funds are still available to meet legitimate claims.

Also, he said, there is about $400 million being held by the state controller “waiting for consumers, a combination of things, $148 million in Proposition 103 rollback refunds, our settlements with Hancock Life Insurance and Levitz furniture.” Again, these pertain to potential legitimate claims that have not been made.

But, departmental officials said later, much of the overall money might not be available.

They said that in 84 of the 86 “open estates,” the period for making claims has run out, and claimants would have to secure a court order reopening their claims on the basis that they had not properly been notified the money was available.

This, said Mark Lauter, head of the conservation and liquidation office, would not be a very common procedure.

So, there may be “billions,” but most of it is probably not very readily accessible, departmental officials suggested.

Barry Carmody, president of the Assn. of California Insurance Companies, said: “What troubles me about this process is that we don’t have a list of what Quackenbush says is owed.

“Companies are getting these wild calls [from people] saying they are policyholders and they want their money. So we say, ‘Give us the list, and we’ll do our best to get it to people who have a right to it.’ ”

Jerry Davies, a spokesman for the Personal Insurance Federation, another industry lobbying group, said: “We [too] are puzzled” about what rebates Quackenbush has suggested are owed.

Bob Mulholland, a Democratic party campaign advisor, took a political view of what Quackenbush, a Republican, is doing.

“In one month, Quackenbush will file for reelection,” he said.

“He’s done nothing for the consumers in three years, and now he’s running a political scam with misinformation for the voters. . . . There should be a law against this, where a politician can use money that’s not his own to advertise. But he knows what he’s doing and he’s hoping to get away with it.”

Meanwhile, consumer advocate Harvey Rosenfield, who is pondering running against the commissioner, said he was thinking of suing him for allegedly false advertising.

Quackenbush, however, maintained that in strict terms, everything he says in his spots is true.

“I take a lot of hits, so I guess I can take some credit for my department,” he said.