Brown Expects Compromise on Insurance Issue

Assembly Speaker Willie Brown (D-San Francisco), under fire for meeting privately with an insurance industry lobbyist and six insurance company chairmen and then agreeing to scuttle an insurance measure sought by leading consumer organizations, said he believes that the Legislature will adopt a compromise this year acceptable to both sides.

The final product, he predicted in a telephone interview, will be a cross between the rejected bill by Assemblyman Lloyd Connelly (D-Sacramento), which would have given the state Insurance Department the power to approve or reject any sizable fluctuation in insurance rates, and a weaker substitute measure drafted by the insurers and authored by Senate Majority Leader Barry Keene (D-Benicia).

Industry sources said Thursday that two meetings in the last two weeks led to the substitution of the Keene bill. Keene reportedly sat in with Brown and other legislative leaders at both meetings with the main insurance lobbyist in Sacramento, Clay Jackson. Joining them at the first meeting were four chief executive officers of insurance companies flown to Sacramento for the purpose of talking to the legislative leaders. Two other insurance company chairmen attended the second one.

Failed to Clear

On Tuesday, the Connelly measure, which had passed through the Assembly Finance and Insurance Committee earlier with Brown’s support, failed to clear the Assembly Ways and Means Committee.

Neither its author nor the consumer organizations backing it--the Consumers Union, Common Cause, the Insurance Consumer Action Network and Access to Justice--were informed of the Brown meetings with the insurers until the committee met.

“The Connelly bill would not have had more than four or five votes without my own almost heavy-handed involvement (in the first place),” said Brown, who added that he had reluctantly come to the conclusion that it stood no chance of final passage.

So, he said, in the interest of bringing the insurance industry on board in behalf of some form of what is known as a flex-rating system--in which rate changes exceeding a specified percentage would be subject to Insurance Department approval--he and Keene agreed to the substitute.

Consumer leaders, joined Thursday by state Atty. Gen. John Van de Kamp, said the Keene bill would create so many obstacles to rejection of a rate change that it was virtually meaningless. They characterized the substitute bill as a step back to even weaker regulation over insurance pricing than the state has now.

Brown castigated Steven Miller, head of the Insurance Consumer Action Network and a prime mover behind the defeated bill, for saying that the Assembly Speaker was “more interested in satisfying the special interests than addressing the public interest.”

“He should not assume that those of us who are striving for rational compromise are evil people per se,” the Assembly Speaker said of Miller. “After all, he’s going to be in here next week asking for something else he’s advocating.

Melded Into One

“My prayer is we will be a hell of a lot better off at the end of this session than we were before,” Brown added. “It may not be ideal, and it won’t shut the Steve Millers of the world up.”

But, he said, he remains committed to increasing state control over insurance rates and believes that eventually all the bills being considered will be melded into one that will move the state forward to a form of regulation.

“The way things operate around here, you can get all versions of bills in the same (committee) position, and then you trade off until you have a vehicle that can move,” Brown said.

Miller, asked for comment, said he remains irate over the way it is all being done.

“We have a secret process only open to the insurance companies,” the consumer advocate charged. “It is becoming clear to me that meaningful insurance reform is going to require a citizen-based initiative.”

Miller said he had asked Brown for a meeting but had not been granted one.

As for Brown’s suggestion that an acceptable compromise will emerge, Miller said: “People that we respect and have confidence in in the Legislature say here is an opportunity for half a loaf, and it’s the best we can do. But half a loaf of moldy bread is not enough insurance reform. Besides, the Keene bill is worse than what we have.”

Agreeing with this assessment was Van de Kamp, who declared:

“I’ll believe in a rational compromise when I see it. . . . The Keene bill is a joke. I trust Willie Brown will be good to his word and strengthen that bill, but the Keene bill is weaker than what we have now and should be defeated out of hand.

“What has gone on up to now is the kind of thing that fuels initiative measures. The story has not been finally written on this yet, so you have to withhold final judgment. But it does not look good for insurance reform this year.”

A call to Keene for comment on the situation was not returned.