Strict Controls in Insurance Field Urged

A confidential report to Atty. Gen. John K. Van de Kamp that advocates legal reforms as well as far more stringent state controls over the insurance industry will be the centerpiece of discussion today at a closed daylong meeting of 16 insurance experts, presided over by Van de Kamp.

The report by a Van de Kamp aide, special counsel Michael J. Strumwasser, urges the attorney general to support a package of legislation that would, among other things, repeal insurance company exemptions from antitrust laws, give the state insurance commissioner “far greater power . . . to act against rates that are either too high or too low” and limit territorial rate differentials in auto and other insurance.

A spokeswoman for Van de Kamp said the attorney general has read the report, but is not necessarily in agreement with all of its recommendations.

An early draft of the 283-page report was obtained last week from an undisclosed source by a trade publication, Mealey’s Litigation Reports, and was offered for sale by Mealey’s for $75. When the attorney general’s office learned of the sale offer, it gave a later draft of the report to The Times.

But Strumwasser indicated that he was most unhappy that his report, labeled “confidential,” had been publicized. He said he has since changed some of his ideas of what ought to be done, but he refused to say which ones.

Strumwasser also said Van de Kamp’s office would not release the names of the experts invited to meet with the attorney general today until after the meeting, and then only if they agreed to have their names made known. Those invited to the meeting were told it would be an off-the-record encounter, he said.

The Times learned, however, that two of those invited to attend are leading consumer critics of the industry: J. Robert Hunter of Alexandria, Va., president of the National Insurance Consumer Organization, and Steven Miller of Los Angeles, head of the Insurance Consumer Action Network.

Insurance industry officials also will participate, sources said.

After an exhaustive analysis of the causes of recent premium increases and occasional lack of insurance availability, Strumwasser advocates in his report that Van de Kamp support these, among other, changes in insurance and tort laws:

- Authorizing the insurance commissioner to mandate a joint underwriting association, in which companies would be compelled to participate, to guarantee liability insurance for those markets where insurance is not reasonably available.

- Providing that some punitive damage awards, instead of going to plaintiffs, go to charitable or public organizations chosen by the plaintiff or to the administration of the civil justice system.

- Limiting lawyers’ contingency fees in tort cases with the aim of preventing fees that are excessive compared to the amount of work done and the fees of defense counsel.

- Giving new powers to the insurance commissioner in department proceedings, including the authority to require testimony to be given under oath and to allow intervenors to cross-examine witnesses and to present evidence and testimony.

- Explicitly allowing consumers and their representatives to purchase group liability insurance, such as automobile insurance. (The Insurance Department has said such forms of group insurance are not authorized under current law.)

- Providing a substitute for insurance in the form of a government-operated, self-funding insurance pool, for those entities that are unable to find insurance in the private sector.