New Round of Insurance Hearings Slated

Amid continuing disagreement over who is to blame for legislative inaction on the insurance crisis this year, Assembly Speaker Willie Brown (D-San Francisco) has scheduled a new round of hearings on insurance issues--beginning in Sacramento on Oct. 8.

The hearings will continue in Los Angeles on Oct. 14 and in San Francisco on Oct. 20, and constitute a wide-ranging review of the liability crisis and legal reforms proposed to deal with it, Brown’s deputy chief of staff, Barbara Milman, said Friday.

The powerful insurance and legal lobbies have often fought each other to a stalemate, and Milman said a special effort is being made to invite hearing testimony from witnesses who are not committed to either side in the dispute.

Brown, she said, is confident that state lawmakers will be ready next year to deal substantively with insurance issues, including the problem of rising auto insurance rates.

In separate interviews in recent days, the chairmen of the state Senate and Assembly insurance committees disagreed on prospects for a break in past deadlocks.

‘Lobbies . . . Put to a Fight’

Sen. Alan Robbins (D-Van Nuys), said: “We have, for the first time, the Consumers Union and other groups actively focusing their attention on the subject of insurance, and when you talk to the insurance companies and to the trial lawyers about meaningful reform, for the first time they aren’t laughing in your face. . . . The lobbies for the first time are being put to a fight and are beginning to realize they will have to make some concessions.”

But Assemblyman Alister McAlister (D-Fremont), who is retiring as the Assembly Insurance Committee chairman, said he remains pessimistic about the chances for change soon.

“The lesson of this past year is that you need some enormous force to change things,” he said. “The average legislator reads so many conflicting accounts from all sides, I don’t think it’s an easy area for anyone to come to a strongly held conviction. There’s no consensus on what to do.”

One major reform proposal, supported by Gov. George Deukmejian in a special address on the insurance issue last June 10, did not win legislative backing in the recent regular session, and officials differ as to why. This was the suggestion, first made by former Insurance Commissioner Bruce Bunner, that the state Insurance Department be authorized to set up a joint underwriting authority that would compel the private companies to sell commercial and municipal liability policies to those who now cannot find coverage.

Some officials, such as Robbins and his committee staff director, Sheldon Davidow, contend that Deukmejian was not really pushing the proposal and was seeking behind the scenes to couple it with tort reforms, such as a restriction on attorneys’ fees, which he must have realized the Assembly Speaker--a lawyer himself--would never go for.

Influence Carefully Balanced

Others report that Brown was simply unwilling to let the joint underwriting authority proposal come to the Assembly floor. And still others suggest that the insurance and legal lobbies were so carefully balanced in their influence that any such reforms never had a chance, regardless of any individual politician’s position.

Deukmejian’s new insurance commissioner, Roxani Gillespie, denied in an interview this week that Deukmejian ever made his support of the proposal contingent on acceptance of tort (legal) reforms.

“The Administration wanted the joint underwriting authority,” said Gillespie, who sat in on some of the closed-door discussions between Robbins and Deukmejian aides on how to push the joint underwriting authority through the Legislature. “It was the insurance industry that wanted it coupled with tort reform. Willie Brown didn’t want the tort reform.”

Brown aide Milman, meanwhile, acknowledged Friday that the Assembly Speaker had played an important role in the final days of the session in blocking consideration of the joint underwriting authority proposal.

She said, however, that legislation introduced by Assemblyman Dan Hauser (D-Arcata) and passed by the Legislature resolves much of the problem for municipalities by allowing them for the first time to form joint-powers authorities that will negotiate collectively to obtain municipal liability insurance covering most of their large claims.

‘Complicated Questions’

As for commercial liability, she observed, “there were very complicated questions as to how to set this up, and how it should work. . . . There are hundreds of different kinds of this insurance, and it’s hard to figure out what the rates should be. Besides, we still don’t really know the causes of the lack of availability.”

In short, Milman said, the time was not ripe this year to deal with this and other reform proposals. She said the Oct. 14 hearing in Los Angeles will focus on the joint underwriting question.

Although both the Assembly Speaker’s aide and Robbins insisted that such legislation as the Hauser bill and a Robbins bill allowing the Insurance Department to set up voluntary market assistance plans to arrange insurance availability when necessary are first steps toward resolving the insurance crisis, most officials agree that this past year was a disappointment.

‘Nothing but Hors d’Oeuvres’

Even Robbins said: “It’s nothing yet but hors d’oeuvres. The true meal for the consumer has yet to be served.”

Gillespie said she disputes Milman’s assertion that the Hauser bill provides a solution to the liability crisis for the state’s municipalities, many of which have not been able to buy insurance at any price.

She said her own checks indicate that while the Hauser bill will help get insurance for the biggest claims, it will not resolve the problem of municipalities that have been unable to buy protection against routine small claims.

The new insurance commissioner, however, said she welcomes the Assembly Speaker’s hearings and will attend them.