Bradley Asks Action to Prevent Midterm Insurance Cancellations

Mayor Tom Bradley on Wednesday asked state Insurance Commissioner Bruce Bunner to use his authority to stop insurance companies from raising premiums or canceling coverage in mid-policy.

Calling the soaring liability insurance costs of private and public agencies “a crisis,” Democratic gubernatorial candidate Bradley also suggested that Republican Gov. George Deukmejian, who appointed Bunner, has done nothing to solve the problem.

“Agency after agency is saying we’ve had our policies canceled . . . or we’ve had our rates increased midterm,” Bradley said at a City Hall press conference. “This is the reason I call upon this action now. This is something that has already hit us.”

The head of the state Insurance Department’s Consumer Affairs Division said, however, that Bradley’s suggestion that a moratorium is needed is “moot,” because Bunner last July sent a letter asking all insurers in the state to voluntarily agree to stop premium increases or cancellations in the middle of a policy.

While saying that the letter sent last July by Bunner did not require insurers to comply, “it has had that effect,” said consumer affairs chief Everett Brookhart.

When people have complained of midterm premium increases or cancellations, the department has “looked into it,” he said.

When the department has sent letters to some insurers to question midterm rate hikes or cancellations, “they’ve backed off,” Brookhart added. “That has happened dozens of times,” he said.

A top insurance executive recently told the state Little Hoover Commission that more than two-thirds of California’s cities will be forced to go without liability insurance, because of the high cost of coverage. The City of Los Angeles is self-insured, which means that the city must keep enough money in reserve to pay potential legal judgments or settlements.

Bradley said a moratorium is needed, because the insurance commissioner has “done nothing” since issuing the letter last year cited by Brookhart.

In response to a question about Deukmejian’s role, Bradley said he did not want to make a partisan “political” issue out of it but added, “The governor appoints the insurance commissioner. . . . They have done nothing in the last six months, and the governor certainly is aware of the crisis nature of this problem.”

However, Bradley hedged on his stand on a ballot initiative that some say would help remedy the state’s liability problems. A June 3 ballot initiative seeks to alter a state liability doctrine that allows one party to be held liable for all the damages resulting from a personal injury, even if that party is barely at fault. Big businesses and public agencies complain that as a result, they are hit by too many lawsuits seeking to take advantage of their “deep pockets” of wealth.

Asked if he would support the initiative, Bradley said the “deep-pockets” initiative “is only a partial answer. . . .”

“I’m concerned that we not try to solve it simply by thinking that if we pass that initiative that we’re suddenly going to get lower premiums or have all the problems covered. . . . This may not be the full answer that we’re looking for. What we need is more information,” he said.