California plans to file insurance lawsuits

SACRAMENTO, Calif. — California’s top insurance regulator said Wednesday that he will be filing a civil suit shortly in the widening scandal over insurance industry sales practices.

California Insurance Commissioner John Garamendi also said he expects the investigation to widen beyond the property and casualty lines targeted in a suit filed last week by New York Attorney General Eliot Spitzer alleging price fixing and bid rigging. These could include life and health policies as well as auto and home insurance.

“As we moved forward with that we have discovered problems in other areas,” he said.

“This department, the New York (insurance) department, the attorney general in New York and insurance commissioners across the nation are pursing many different paths,” Garamendi said.

“We have opened the first couple of pages in a very long and sordid book. The early indication is it’s an extremely serious breech of trust … by some of the largest and most well-known insurance companies and brokers in America.”

Garamendi did not give the names of companies he expected might be involved, but said “I would expect to see virtually every line of insurance investigated.” He also said he believed consumers and businesses should be reimbursed in investigations prove they were victims of illegal activity.

Garamendi said he was working with Spitzer in developing his case. He also said a number of state insurance commissioners took part in a conference call Wednesday morning to “coordinate investigation activities.”