Lawyers, Insurers--Truce May Be Fading

A truce aimed at averting ballot initiative warfare between the California Trial Lawyers Assn. and a coalition of business and insurance industry interests appeared to be cracking badly Tuesday.

Sources on the two sides said that both the state’s biggest insurance lobby, the Assn. of California Insurance Companies, and its most influential legal lobby, the Trial Lawyers Assn., plan to file initiatives later this week that would be detrimental to the interests of the other.

Browne Greene, immediate past president of the Trial Lawyers Assn., declared:

“We’ve been told by representatives of the insurance industry that they’re preparing an initiative on auto insurance that would partially be aimed at the tort (legal) system, and the initiative effort we’ve been working on is a response to that.”

Rate Reduction

Gary Graham, president of the Trial Lawyers Assn., said the lawyers’ initiative will be filed today. He said it would mandate a 25% reduction in auto insurance premiums for people defined as “good drivers.” He said a good driver would not necessarily be required to have a perfect record to qualify for the reduction.

An official on the insurance industry side, who asked not to be identified, confirmed that the insurance industry also will file an initiative this week.

But officials on both sides say the filing of the initiatives may be the prelude to further negotiations and maneuvering among the various interests concerned with insurance issues, particularly auto insurance. They say a compromise may yet be reached that would avert efforts to qualify the initiatives for the 1988 general election ballot.

Both the business-insurer coalition and the trial lawyers were reported to be concerned that if they do not go ahead now with efforts to qualify their conflicting initiatives, and the negotiations fail, they might be left next spring with no initiative ready for the ballot that would adequately put their case before the electorate.

Other Activity

The situation is complicated by the fact that as of Tuesday night five other groups, not directly affiliated with either side, had announced attempts to qualify their own initiatives, all of which would be detrimental to either the insurers or the lawyers or both.

Attempts to lower insurance prices usually try one of two approaches. Either they reduce damage claims and litigation, thus hurting the interests of the lawyers, or they try to control insurance rates, thus hurting the interests of the insurers. Rarely are they aimed at doing both.

But Tuesday, two consumer groups, the Consumers Union and the Center for Law in the Public Interest, announced an independent initiative effort that they said would seek to evenhandedly take something from each group in an attempt to lower prices dramatically.

This initiative would establish a new state agency, the California Auto Accident Reimbursement Bureau, to sell the state-mandated minimum liability insurance to drivers through the annual automobile registration process. The base price would be about $300, considerably less than the mandatory insurance costs now in the state’s urban areas.

Describing the initiative, Jim Wheaton of the Center for Public Interest Law said the state bureau would reimburse auto accident victims for economic losses on a no-fault basis. There would be no reimbursement for non-economic losses such as pain and emotional suffering.

Reduction in Litigation

This would hurt the economic interests of the trial lawyers by sharply reducing litigation, while at the same time hurting the economic interests of the private insurers by taking away billions of dollars of premiums they get now from drivers buying the minimum liability insurance required by the state.

The private companies would continue to sell all liability insurance above the minimum limits, plus comprehensive, collision and other kinds of auto coverage.

The announcement of the new initiative effort was the fourth in recent weeks. Only hours later Steven Miller, head of the Insurance Consumer Action Network, said he and others seeking more rate regulation authority for the state Insurance Department soon would unveil a fifth initiative effort. The Trial Lawyers and insurance-business coalition measures would be the sixth and seventh measures.

Some observers have expressed doubt that more than one or two of these initiatives will get the 372,178 signatures of registered voters necessary to qualify them for the ballot, but there was new evidence late Tuesday that some of the efforts will get support from influential politicians.

State Sen. Alan Robbins (D-Van Nuys), chairman of the Senate Insurance Committee, announced that Los Angeles Mayor Tom Bradley has asked to meet with him at City Hall on Friday to discuss joint efforts to circulate petitions for qualification of an initiative sponsored by Adam Burton, a former congressional and supervisorial aide, to end territorial ratings in auto insurance.

Robbins, who unsuccessfully challenged Bradley for the mayor’s job in 1977, said he will endorse the Burton initiative and at least one other. He said he hopes all the ongoing initiative efforts will put heavy pressure on the Legislature to act quickly to lower auto insurance prices.