6 03-22-88 06:54 pes (1grafadd x x x any price _ allstate denies wrongdoing) By JERRY

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6 03-22-88 06:54 pes (1grafadd x x x any price _ allstate denies wrongdoing) By JERRY BERGER United Press International Eight states filed suits Tuesday charging four major U.S. insurance companies and Lloyd's of London manufactured a 1984-85 liability insurance crisis that forced small police forces to disband and threatened cancellation of San Francisco's Chinese New Year parade. Attorneys general in seven states filed suit in U.S. District Court in Northern California and a similar suit was filed in the Texas state court system charging violation of state and federal anti-trust laws by collusion to restrict the availability of liability coverage used by most businesses, public agencies and non-profit groups. The complaints charged the actions created a ripple effect in thousands of communities across the nation that found themselves with skyrocketing insurance premiums or no protection at all. The tiny town of Cleveland, Ala., was forced to park its only police car and fire its two police officers for lack of insurance, and San Francisco's traditional Chinese New Year's Day parade faced cancellation until last-minute arrangements were made. "Our investigation revealed the so-called liability insurance crisis of 1984 and 1985 was in great part created by the insurance industry itself," Massachusetts Attorney General James Shannon charged in one of a number of news conferences across the nation. "In an elaborate conspiracy, these companies agreed to severely restrict the amount of coverage available to consumers of commercial general liability policies," he said. Companies named in the 68-page complaint include the Hartford Fire Insurance Co., Allstate Insurance Co., Aetna Casualty and Surety Co. and the Cigna Corp. Also named was Lloyd's of London, the internationally known firm that provides protection to the insurance companies themselves and the Insurance Services Office, a trade group for 1,400 companies that write 95 percent of the casualty insurance in the United States. "We consider the allegations unfounded and without merit," said ISO spokesman David Ostwald in New York. Cigna spokesman David Willis said from Philadelphia the company would not comment on pending litigation, but that it was company policy to obey anti-trust laws. States bringing the federal action included Massachusetts, New York, California, Minnesota, Wisconsin, West Virginia and Alabama. A similar state suit was filed in Texas although that state and Arizona were expect to join the federal case within 24 hours, said California Attorney General John Van de Kamp. "The conspiracy began when Allstate and Hartford joined forces to create a new CGL policy with more restrictive terms" that changed coverage periods, excluded pollution coverage and required the inclusion of legal fees within the policy limits, Shannon said. He charged the defendants used "backroom deals, secret communications and thinly veiled threats" to expand the scheme to companies such as Lloyd's of London, which "threatened to boycott the American market if they didn't get their way." Shannon said the suits do not list specific monetary damages or the number of busisnesses and communities affected. "We're looking for an end to the kind of collusive behavior ... that denies people the coverage that they deserve, he said. "What we're saying is that they should play by the same rules that everybody else in a free market economy is supposed to play by." West Virginia Attorney General Charlie Brown, chairman of the Antitrust Committee of the National Association of Attorneys General, said, "We believe these discoveries of manipulation are helping to unravel the mystery of the continuous and the troubling liability insurance crisis. "As a result of this conspiracy, some kinds of coverage _ such as protection against pollution risks _ became virtually imposible to obtain at any price." In Washington, Robert Brandon, vice president of Citizen Action, a 1.6 million-member public interest group, hailed the legal action. "It will expose the collusive anti-competitive practices of major insurance companies," Brandon said, "and demonstrates the need for greater disclosure and regulation of the insurance industry." A spokesman for Allstate, based in Northbrook, Ill, said the company had not seen the specific allegations contained in the lawsuits, but said Allstate "is not now, and never has been involved in a conspiracy to fix prices or constrain the market. Any suggestions to the contrary are patently false."


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