Accord Over Revised Laws for Insurers Believed Near

Times Staff Writer

Leading consumer advocates were closeted with the state’s most prominent insurance lobbyists in the Card Room of the exclusive Lodge at Pebble Beach on the Monterey Peninsula Thursday, trying to hammer out a series of changes proposed for the state’s insurance laws in order to avert a consumer’s initiative directed at the insurance industry.

Sacramento sources said there was a 90% chance that the two sides would sign an agreement they had drafted that would unite insurance and consumer group lobbyists in pushing for legislative changes next year.

In return for more insurance rate regulation by the state Insurance Department, the consumer groups would agree not to try to qualify an initiative for any election in the foreseeable future, the sources said.


Two Days of Talks

Steven Miller, head of the Insurance Consumer Action Network, reached at the meeting by phone, confirmed that it was in its second day.

But Miller took issue with the assessment that an agreement was 90% sure. “It’s not that close,” he said, although he confirmed that the language of a memorandum of agreement had been drafted.

Insurance lobbyist Clay Jackson, who Miller said was also in the room, and other lobbyists present declined to comment.

Miller said those participating in the discussions included Harry Snyder, director of the West Coast regional office of the Consumer’s Union, and Gene Erbin, an aide to Assemblyman Lloyd Connelly (D-Sacramento).

‘Flex-Rating’ System

It was Connelly who earlier this year unsuccessfully sponsored a bill calling for a “flex-rating” system under which the state Insurance Department would have the right to disapprove any rate changes beyond certain annual percentages that varied depending on the type of insurance. For instance, no annual rise or fall exceeding 10% in personal lines of insurance, such as auto, could have been implemented without the state agency’s approval.

Miller said Thursday that a form of “flex rating” was under discussion in the current meetings, but he would not go into detail, nor would he describe other proposed parts of the agreement.


Also present in Pebble Beach but not participating directly in the discussions was state Insurance Commissioner Roxani Gillespie. Gillespie, representing the Deukmejian Administration, had opposed the Connelly bill.

It is thought that if the insurance lobby dropped its opposition to a consumers’ bill package, it would clear the Legislature easily.

The discussions were patterned after a series of meetings held last summer between the business, insurance and legal lobbies that resulted in the Legislature, on the last night of its regular session, passing a package of so-called “tort reforms” and agreeing that neither side in the long feud between lawyers and an insurer-business coalition would sponsor an initiative against the other.

The idea in both that case and the present meetings has been to give those pressing for change something of what they want if they agree not to sponsor ballot initiatives that would mean greater change and that would cost the various lobbies millions to support or oppose.

When lobbyists for the lawyers’ and the insurance-business coalitions came to their agreement in mid-September, consumer organizations were unhappy. Their leaders charged privately that the California Trial Lawyers Assn. had abandoned its traditional consumer concerns in accepting the compromise that provided new protections for private industry and individuals against personal-injury lawsuits.

The consumers began talking of trying to field an initiative of their own, although some observers felt that they were not assured of being able to raise enough money to qualify one.


Nonetheless, according to both insurance lobby and consumer sources in recent weeks, the insurance lobby was still highly nervous, because it had polls showing that almost any consumer initiative directed against the insurance industry would have, at the outset, massive public support.

“We could spend $10 million and not be assured of beating it,” one lobbyist said a few weeks ago.

So talks between the insurance lobbyists and the consumer representatives began several weeks ago, Miller said.

The reports Friday, however, were the first indication that the two sides might be close to an agreement.