An investment bank analyst has written a report suggesting former California Insurance Commissioner John Garamendi should have kept a sharper eye on auto insurance rates.
The critical write up was produced by Morgan Stanley analyst William Wilt.
Mr. Garamendi recently became the state's lieutenant governor after serving four years as insurance commissioner and taking on a number of highly publicized fights with the insurance industry.
Earlier this month, in one of his final acts of office, Mr. Garamendi said that State Farm had agreed to nearly half a billion dollars in auto and home insurance rate cuts.
Mr. Wilt wrote this morning that the move was “ostensibly a win for both Garamendi and policyholders at the expense of State Farm.”
“However, our data shows that while Mr. Garamendi was busy fixing the Golden State's wobbly workers' compensation system, State Farm and other auto insurers quietly racked up tidy profits at the expense of California drivers,” Mr. Wilt wrote.
He said that according to Morgan Stanley data, Californians put a higher percentage of their income toward auto insurance than residents of most other states, including those in the most populous states.
“Over the 2003-05 period premiums in California increased 43 percent, versus a 33 percent increase nationwide,” Mr. Wilt wrote.
And underwriting income, as measured by per median household income or per licensed driver income, has been meaningfully higher in California than it has been in other states for at least the past seven years, he noted.
State offices were closed today and Mr. Garamendi could not be reached for comment.
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