Sterling Tops List of Worst Auto Carriers : Insurance: Farmer’s scores last with homeowners in state ranking. Some companies question survey methodology.

Sterling Casualty Insurance Co. ranked worst among auto insurers and Farmer’s Insurance Exchange ranked last among homeowners insurers in the Insurance Department’s annual consumer complaint survey released Thursday.

For the second straight year, United Services Auto Assn. of San Antonio, Tex., rated tops in both categories.

Also for the second straight year, some insurers took issue with the survey’s methodology and its usefulness as a guide for consumers.

The survey ranked carriers by the number of justified consumer complaints lodged against them in 1992 per 100,000 policies issued. The Insurance Department investigates complaints and determines whether they are justified.

The total number of justified complaints against auto insurers dropped to 2,801 last year from 3,214 in 1991. On the homeowners side, complaints rose to 794 from 569 in 1991.

Insurance Commissioner John Garamendi, at a Thursday news conference, said the rise in homeowner complaints stemmed largely from the aftermath of the disastrous Oakland fire of October, 1991, which led to 388 justified complaints in 1992. He had no explanation for the drop in justified auto insurance complaints.

Some companies questioned the survey’s fairness.

James F. Chapel Jr., president of Western United Insurance Co. of Newport Beach, noted that most of the lower-rated auto insurers--Western United ranked second-worst--write a large volume of “non-standard” business for drivers with poor records who cannot qualify for “premium” policies.

Chapel noted that his customers also tend to have low incomes, with more than 50% paying premiums monthly instead of twice a year. When customers fail to pay, their policies are canceled, which often generates complaints, Chapel said.

The Insurance Department said Western United had 83 justified complaints against it, but Chapel said the company’s records indicate there were only seven. A spokeswoman said the Insurance Department stands by its figures.

David Smith, senior vice president of Sterling Casualty, a small, non-standard carrier based in Van Nuys, said many of his customers borrow from finance companies to pay their premiums. Disputes with finance companies can result in complaints being filed, he said.

Farmer’s Insurance Group is parent of both Farmer’s Insurance Exchange, which ranked worst on the homeowners list, and Fire Insurance Exchange, a much larger unit that ranked 11th-best.

Spokesman John Millen was at a loss to explain the difference. He said the same employees handle complaints from all Farmer’s companies and that there is no difference in the way they treat people.

California Insurance Complaints

In this annual Insurance Department survey of auto and homeowners insurers doing business in California, the “best” and “worst” charts rank firms by their “complaint ratio”--the number of justified complaints per 100,000 policies written.

The “largest” charts rank insurers based on premium volume. The full survey is available free of charge through the Insurance Department’s toll-free consumer hot line at (800) 927-HELP.

Auto Insurance

Insurers With the Best Records

Justified Complaint Company complaints ratio United Services Auto Assn. 14 7.7 State Farm Mutual Automobile 293 9.4 Allstate Indemnity 16 11.0 American Economy Insurance 4 14.7 Calif. Casualty Indemnity Exch. 4 14.9 California Casualty & Fire 4 15.4 Liberty Mutual Fire Insurance 8 15.4 Wawanesa Mutual Insurance 10 16.4 USAA Casualty Insurance 16 16.6 Amco Insurance 5 17.2

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Insurers With the Worst Records

Justified Complaint Company complaints ratio Sterling Casualty Insurance 126 583.0 Western United Insurance 83 360.5 Coast National Insurance 123 310.5 Stonewall Insurance 65 114.1 Colonial Penn Insurance 36 102.8 Calfarm Insurance 19 102.3 Financial Indemnity Co. 72 98.4 Continental Insurance 15 75.3 Civil Service Employees 25 74.4 Clarendon National Insurance 10 65.0

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Records of the Largest Insurers

Justified Complaint Company complaints ratio State Farm Mutual Automobile 293 9.4 California State Auto Assn. 281 28.4 Farmers Ins. Exchange 374 25.9 Allstate Insurance 264 29.6 20th Century Insurance 145 24.6 Auto Club (AAA) 148 28.1 Mid-Century Insurance 110 19.5 United Services Auto Assn. 14 7.7 Mercury Insurance 57 37.1 Mercury Casualty 64 58.3

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Homeowners Insurance

Insurers With the Best Records

Justified Complaint Company complaints ratio United Services Auto Assn. 4 2.9 Allstate Indemnity 1 4.0 USAA Casualty Insurance 2 4.6 State Farm General Insurance 8 5.7 American Economy Insurance 2 5.7 American National Fire 1 5.7 Liberty Mutual Fire Insurance 2 6.0 State Farm Fire & Casualty 97 6.2 GEICO 1 6.3 American Manufacturers Mutual 2 6.9

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Insurers With the Worst Records

Justified Complaint Company complaints ratio Farmers Insurance Exchange 71 229.2 Colonial Penn Insurance 23 116.8 Republic Insurance 20 89.4 Continental Insurance 15 83.9 Vanguard Insurance 15 78.8 Farmers Home Mutual 14 66.6 Home Indemnity 4 59.3 Reliance Insurance 9 52.1 American Bankers of Florida 5 48.4 Fireman’s Fund Insurance 14 38.5

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Records of the Largest Insurers

Justified Complaint Company complaints ratio State Farm Fire & Casualty 97 6.2 Allstate Insurance 151 13.8 Fire Insurance Exchange 62 7.3 California State Auto Assn. 20 8.5 Safeco Insurance of America 26 14.2 United Services Auto Assn. 4 2.9 20th Century Insurance 18 9.0 State Farm General Insurance 8 5.7 Fireman’s Fund Insurance 14 38.5 Federal Insurance 5 20.3