Executive Summary
It’s hard to imagine that the Sept. 11 terrorist attack could be the source of anything positive, especially for the insurance industry, which is expected to have to cough up as much as $70 billion once all claims are settled.
But the attacks came as the industry was entering into one of its hardest markets in years. The result? Property and casualty insurers are hitting customers with big premium hikes. And making them stick.
The effect is being felt in California, where the Top 25 property and casualty insurers wrote $34 billion in property, auto and a variety of commercial policies last year, up from $29.2 billion in 2000.
Not all sectors, though, benefited. The state workers’ compensation crisis that pushed Fremont General Corp., last year’s No. 23, off the list.
It also vaulted the State Compensation Insurance Fund of California, the workers’ comp insurer of last resort, to No. 2 from No. 5, though there are concerns the fund could get overwhelmed by failures in the sector.
The Pacesetter: Zurich North America
Zurich North America, parent company to Farmers Insurance Group, again tops the list of largest property/casualty insurers in L.A. County.
Los Angeles-based Farmers was formed in 1928 as an auto insurer, and the sector still accounts for the 60 percent of its business. The company provides management and administrative services to members of its Farmers Insurance Exchange, Truck Insurance Exchange and Fire Insurance Exchange.
In 1998, B.A.T. Industries, which owned Farmers, merged with the Zurich Group. The resulting Zurich Financial Services Group is the nation’s third largest home and auto insurer. Most of its U.S. revenues come from Farmers, which offers life insurance through its Farmers New World Life Insurance unit and reinsurance through its Farmers Reinsurance unit.
Its exposure has extended beyond its line of insurance products. In April, the group was ordered to pay a $15 million settlement for overcharging automotive insurance customers in Texas, and late last year an Oakland jury awarded $90 million settlement to 2,400 of its claims adjusters in back overtime pay.
At the helm of Farmers, which operates in 41 states and has more than 18,000 employees, is Martin D. Feinstein, who also sits on Zurich’s board. He runs the consumer business in the U.S., Canada and the insurance and financial services in Mexico and five other South American nations.
Samantha Lee
