The Campaign for Proposition 51

Insurance, as George Bernard Shaw once pointed out, is a form of gambling--a wager on whether or not a certain event, a fire, an earthquake, or perhaps an automobile collision, will occur. Like other bookies, insurance companies “lay off” their bets through a system called co-insurance in which their risks are shared with syndicates of financiers. These financiers are called “names” at Lloyd’s in London, where much of the world’s co-insurance is negotiated. Each name assumes a certain amount of risk. However, under the legal theory of “joint and several” liability, if one of the names is unable to meet his obligations in case of a loss, the insurance company is paid off by those names who have deeper pockets.

What I am getting at is this: if the insurance companies who are railing so loudly about the injustice of the “deep pocket” theory when it is brought up against them succeed in fooling enough voters to pass Proposition 51, will they then in the name of fairness renounce their right of recourse to the deep pockets of Lloyd’s names? I doubt it. An industry which lies about its making $1.5 billion in profits in 1984 and then hides much more in fake reserves doesn’t have the honesty of the neighborhood bookie.

I. M . RICHLIN

Burbank