8,000 Quake Policies Sold as New Plan Begins

In the first six weeks of operation of the new state earthquake insurance agency, more than 8,000 California homeowners, not insured in the recent past for quakes, have purchased policies, the head of the California Earthquake Authority said Friday.

Greg Butler said most of the new quake policies were sold to policyholders affiliated for regular homeowners insurance with the Allstate and Farmers companies. Quake policy sales are being handled for the state by private insurers.

State Farm--California’s largest homeowners policy seller--will not make the new earthquake policies available to its customers until about Feb. 15.

Altogether, there are about 6 million homeowner policyholders in California and nearly 4.5 million of those have not had earthquake coverage in the recent past.

Butler cautioned that it is too early to draw conclusions from the sale of 8,000 policies about how popular the state earthquake insurance will be.

Meanwhile, Butler told a Century City luncheon of the Insurance Industry Charitable Fund that it is too early to say how many of those who have been insured for quakes will renew their policies with the Earthquake Authority.

“We won’t get the first rollovers until next month,” he said.

In another development, the quake authority executive announced that administrative hearings into Consumer Union’s objections to some of the rates charged by the agency were formally called Friday to start in February.

The hearings will probably take three to four weeks, Butler said, and then the hearing officer will have to write his report.

But, he indicated, on a fairly expedited basis questions that have been raised about disparate rates--with homeowners in certain parts of the state, such as the San Fernando Valley and the San Francisco Bay Area, paying much more than in other parts--will be examined and resolved.

Butler said that in one respect the new state quake insurance system is already a success: It has brought major insurance sellers back into the homeowners market, now that they are relieved of the requirement of selling their own earthquake policies.

Butler said he has been informed that Allstate has recently sold 28,000 new homeowners policies after months of selling very few, and that State Farm resumed most new sales just this week, and has made made a commitment to sell 100,000 new policies.

The lack of availability of homeowners policies for new home buyers was a major factor inducing the Legislature to create a state earthquake insurance system last year.

Officials of the Insurance Industry Charitable Fund said at the luncheon that the fund, founded in 1994, had raised $500,000 in 1996 and hopes to raise $1 million this year.

Grants have gone to disaster preparedness, health and educational organizations, including free legal services for disabled and abused children, newcomers services for immigrants and insurance education workshops.