Payment of Insurance Claims

The ink had not dried on the headlines proclaiming the insurance industry’s victory with Proposition 51 (the so-called “deep-pocket initiative”) when Gov. George Deukmejian announced the Son of Proposition 51.

The governor’s proposals will limit or eliminate the available remedies for victims of poorly designed and built products, bad business practices and professional negligence of all sorts. The governor proposes these “reforms” in order to aid an industry that is funneling hundreds of thousands of dollars into his reelection campaign.

At the same time the insurance industry and the governor are poor-mouthing insurance company profits and howling about decreased availability of insurance and increased price, the insurance industry is reporting very substantial profits. For example, the May issue of Insurance Journal, a publication by and for the industry, lists the earnings reported by several companies as reported to their friends and cohorts. According to this industry publication, the Travelers Corp. reported first quarter earnings this year of 8% more than last year. Fireman’s Fund Corp. reported operating earnings of $30 million this year over a loss of $3.2 million last year. Aetna Life and Casualty earned $141 million in the first quarter of 1986 compared to $57 million one year ago. The Hartford Steam Boiler Inspection and Insurance Co. had an increased operating income per share of 91.6%. The Crump Companies Inc. report an increase of 62%. The list goes on. Of the 13 companies reported in the Insurance Journal, all showed that things are far better this year than they were this quarter last year.

It is no surprise that the governor hopes that the coming quarters before his reelection will continue to be profitable. Let us all hope that the press and the public are not hoodwinked by the governor’s protege--the “Son of Proposition 51.”

MARIAN TULLY

West Covina