Insurance Legislation for Hate-Crime Victims Moves to Gov. Davis

I think more and more folks are getting comfortable at least to the point of neutrality now.”

That is one insurance industry spokesman’s take on AB 1193, a bill that would prohibit insurance companies from terminating or failing to renew policies of religious organizations, educational institutions or nonprofit agencies due to losses from hate crimes. After gaining legislative approval, the bill (sponsored by Calif. Assemblyman Darrell Steinberg, D-Sacramento) was sent to the desk of California Governor Gray Davis for his review and possible signature.

Among those supporting the bill is California Department of Insurance Commissioner Harry Low. In a letter to Davis last month, Low noted that AB 1193 acknowledges and confronts the disturbing societal problem of hate crimes.

“This bill would make it clear that insurers cannot cancel or refuse to renew specified policies based on claims made by victims of such crimes, and the CDI believes that is a fair and just business practice,” Low stated. “A personal injury or a property loss is a difficult time for any of us. When those injuries or losses are caused by the willful and destructive behavior of others because of someone’s race, religion, etc., they are especially troubling. These victims should not suffer the additional loss of the comfort and security of their insurance policies. The CDI believes this bill sends a very important message to the citizens and companies of this state, and we fully support that goal.”

Support for the bill was also evident from California’s State Assembly when it recently put its backing behind the bill. On its first day back from the summer recess Aug. 21, the State Assembly voted in an overwhelming 66-1 count to approve minor Senate amendments.

However, it took some maneuvering for the bill to win near-unanimous support from lawmakers after it was reworked weeks ago to not include homes and offices at the request of insurance companies. Arguing against including homes and offices, insurers noted that some policyholders could inaccurately describe their losses as hate crimes and put companies at risk for unwarranted, possibly large payoffs.

The bill’s creation was fueled by a move by Allied Insurance to non-renew the property policy of Sacramento’s Congregation B’nai Israel following a 1999 arson attack that resulted in more than $1 million in damages. Two other Sacramento synagogues were also set on fire the day that Congregation B’nai Israel was attacked. Two brothers were arrested in the arsons and are set to stand trial.

According to Rick Phillips, corporate communications manager for Nationwide—of which Allied is a subsidiary—Allied did receive feedback when it made the decision not to renew.

“The kind [of feedback] you would expect—there hasn’t been any extended fallout from that,” Phillips said. “The feedback was generally with those directly involved with the issue.” Asked if there had been any policy changes since the decision not to renew Congregation B’nai Israel’s policy, Phillips noted, “We continue to write business as before.”

With AB 1193 awaiting the signature of Gov. Davis in Sacramento, Phillips said the company’s position on the proposed bill is neutral.

“It is much improved from where it started. The issue we had originally [with the initial bill] was any sort of vandalism could be deemed as a hate crime. With the provisions put into the bill, we’re much more comfortable with it at this point in time. From what I understand, most of the insurance industry and most of the reps were not favorable to the initial bill.”