Van de Kamp For an Insurance Initiative

Atty. Gen. John K. Van de Kamp said Monday that if insurance reform for this year dies in the Legislature this week, as he fears, he will be “very inclined” to support an insurance initiative on the 1988 ballot that would give the state control over rates.

Discussing bills to give the state Insurance Department approval rights over personal insurance rates that are raised or lowered by more than 10% and to repeal the industry’s exemption from state antitrust laws, Van de Kamp said:

“These bills are in trouble. Comprehensive insurance reform legislation lies today in critical condition in the Legislature. By Wednesday afternoon, reform may well be dead.”

If this happens when the bills come up for a vote in Assembly committees, he said, an initiative “absolutely” must be considered.

“If I were to run an initiative today on insurance reform, I think it would receive overwhelming support,” he said at a Los Angeles news conference.

“I think many people who looked for Proposition 51 (last year’s “deep pockets” initiative) to suddenly answer many of our problems in this area have been sadly disappointed, and I can’t imagine that the insurance companies today in this state look very good after that,” he said.

“Nor do they look very good when they go before the insurance commissioner recently with a very bloated request . . . for an increase in assigned risk auto premiums.”

The governing board of the California Assigned Risk Plan, composed mainly of insurance executives, has proposed a two-stage rate increase of 50%, but Insurance Commissioner Roxani Gillespie said last month that it was “obvious that we’re not going to give them anything like what they’re asking for.”

Assigned risk--under which drivers otherwise unable to get insurance are assigned to insurance carriers--is one of the few areas under existing law in which state officials have the authority to control rates.

Van de Kamp cautiously associated himself with a suggestion made by Michael Votichenko of the Citizens Actions League at an Assembly committee hearing two weeks ago that certain legislators may be loath to change insurance laws because they get substantial campaign contributions from the insurance industry.

He said that although he hopes this will not be the case, “I think you have to realize that when the campaign contributions come into play, at the very least there is a subliminal interest that is developed by those who are the recipients, and it has to be an important influence.”

He said records indicate that the insurance industry is the second-largest contributor to political figures in California, that it has given a great deal in the last year and that the industry’s lobbyists “have an amazing amount of clout in Sacramento.”

Van de Kamp also seemed at pains to dissociate himself from any suggestion that he is taking the side of the California Trial Lawyers Assn. in the strife between the legal and insurance lobbies over what can be done to ease insurance costs.

The insurers have been arguing for so-called tort reforms to cut down lawyers’ fees and reduce big judgments and settlements that they say drive up insurance costs. The lawyers, fighting this, say insurance industry profits ought to be sliced instead of payments to accident victims.