Jill Rogers of San Clemente is a former insurance agent with the Auto Club of Southern California. At a news conference Thursday, Rogers alleged while an Auto Club agent she and other agents were penalized every time they sold an auto insurance policy to someone who previously didn't have insurance or was a first time driver.
"That was the first thing that you asked when you answered the phone: 'Do you have prior insurance?' And then that's when some agents, if they said no, that's when they would hang up," said Rogers.
Harvey Rosenfield, attorney and founder of Consumer Watchdog in Santa Monica, says ever since the passage of Proposition 103 in 1988, it is illegal to discriminate against potential clients who have not had insurance before. Rogers filed a lawsuit alleging the Auto Club has been using a scorecard to determine insurance premiums and how much commission the agent should receive. It is also alleged points were given to the agent for signing up clients with a past history of insurance and were penalized with no points if the customer did not have insurance before. Allegedly fewer points meant agent commissions would drop dramatically.
"The penalty can enormous," said Rosenfield. "An agent can make $500 in commissions for selling a policy to someone who has had prior insurance. But if the applicant did not have prior insurance, the agent makes about 20 bucks."
Rosenfield says such practices can make some drivers go without insurance. In turn, insurance companies charge higher premiums for uninsured motorist coverage.
Auto Club Spokesman Jeff Spring says more than 40 percent of this year's new Auto Club customers did not have prior insurance. He also says they do use a scorecard which does ask about prior coverage but believes it is legal.
"The policies that we have in place now and the activities for our agents we have in place now, we believe, are in compliance," said Spring.
Spring says the lawsuit is unfounded.
"We believe this lawsuit is without merit, and are confident that the truth will come out during the course of the litigation.
The lawsuit seeks to require the Auto Club to pay back commissions that were allegedly withheld from agents. Also, Prop. 33 is on the November ballot. If passed, it would repeal some of Prop. 103's provisions and would allow insurance companies to avoid selling coverage to those drivers without prior auto insurance.