Car Insurance Agent Sues Insurer For “Illegal Practice”

It seems every week there is a new shady situation being reported on in the California insurance law realm. While not all of these situations directly involve insurance customers, they all involve customers in an indirect manner. When shady occurrences are going on behind the scenes, it affects prices and services and shows the culture of how these insurance companies deal with unsavory situations. All of these issues end up having major impact on average consumers, who often do not know anything about the complicated behind-the-scenes activities working against them.

This week, a former insurance agent filed a class action lawsuit in the Los Angeles Superior Court against the insurance company Automobile Club of Southern California over an illegal commission scheme, according to the Insurance Journal. The commission scheme penalizes agents who sell car insurance policies to people who did not previously have an insurance policy. The lawsuit points out it is currently illegal in California, due to Proposition 103, to discriminate based on previous insurance coverage. Auto Club states that agents at its Costa Mesa call center were awarded points based on the type of customer. The lawsuit claims that this resulted in a system where if an agent sold a policy to a previously uninsured customer they received a $20 commission, while selling to someone with a good driving record and previous insurance was worth a $500 commission.

Specifically, the lawsuit alleges that Auto Club is violating Insurance Code section 1861.02(c), which prohibits insurance companies from discriminating against people who did not previously have insurance. They claim the illegal commission scheme created financial incentives that led to agents hanging up telephone calls from consumers asking for a price quote, or agents lying to certain consumers by quoting an inflated premium. The suit claims unlawful business practices and unfair business practices and seeks declaratory relief. Auto Club strongly maintains that it is, and has been, in compliance with Prop 103.

This lawsuit has a political element as well, as our insurance lawyers have followed on this blog. In the rapidly approaching election, Proposition 33 will be on the ballot. Prop 33 would overturn Prop 103, and allow all insurers to use a persistently insured discount. This is similar to the failed Proposition 17 from 2010. There has been an ongoing battle between Consumer Watchdog, which is opposed to Prop 33, and advocates of the measure, including in court as well. Advocates of Prop 33 include Mercury Insurance Chairman George Joseph and the American Agents Alliance.

San Francisco Insurance Attorneys
While our insurance attorneys will be following the Prop 33 outcome, we understand that California insurance consumers just want a fair price and to receive the benefits they paid for when they need them, regardless of all the behind-the-scenes scheming of insurance companies. If you are having difficulty with your insurance company denying you benefits you deserve or generally treating you in an unfair manner, contact a San Francisco insurance lawyer in your area for assistance.

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