State Farm hit by state high court

0 Comments | Oakland Tribune, Apr 27, 2004 | by Eve Mitchell, BUSINESS WRITER

State Farm Insurance companies in California have to reveal the total number of auto premiums written along with the sales volume for a specific ZIP code, the state Supreme Court ruled Monday.

The ruling stems from a long-running case involving consumer groups, the state Department of Insurance and State Farm, California's largest auto insurer with policies on more than 3 million vehicles.

The court's ruling applies to other auto insurers as well as insurers that write homeowners and commercial policies for small businesses.

In 1999, State Farm sued the department, arguing that policy- related data was proprietary and the state was not required to make it public under Proposition 103, a 1988-voter approved insurance reform initiative.

That prompted the San Francisco office of Consumers Union and the Southern Christian Leadership Conference of Greater Los Angeles to intervene. They argued such data should be publicly disclosed to help consumer groups determine whether State Farm was engaging in "redlining" practices of not writing policies in low-income and minority communities.

State Farm spokesman Bill Sirola said company lawyers were still reviewing the decision. He said that anti-redlining laws have been on the books for decades and that State Farm has never been cited for violating the laws.

Mark Savage, senior attorney for Consumers Union, hailed the ruling.

"What this means is instead of secrecy there will be sunshine on redlining data," he said. "If they are writing zero premiums (in a ZIP code), there will be zero dollar premiums," Savage said.

"(The ruling) could have some negative implications for competition," said Sam Sorich, spokesman for the Association of California Insurance Companies, which filed an amicus brief on behalf of State Farm. That's because insurers will now be able to find out how other firms are doing in an area, he said.

The court's ruling is likely to become final in 30 days.