Consumer advocate Ralph Nader said Friday that the traditional alliance on insurance issues between consumers' organizations and trial lawyers has been disrupted by what he termed the lawyers' desire to avoid combat with the insurance industry.
Nader was in Los Angeles to endorse what is perhaps the most sweeping initiative directed at the industry to force rate reductions and other changes. He said in an interview that he has been informed that the California Trial Lawyers Assn. plans to back another initiative the industry objects to far less.
Trial Lawyers Assn. President W. Gary Gwilliam, responding several hours later, said his organization still hopes to work out a compromise that will lead to speedy adoption of a legislative insurance package that would avert the need for any insurance initiatives on the 1988 ballot.
Gwilliam said that pending the results of the present discussions--between lawyers, insurers and some consumer representatives--the Trial Lawyers Assn. has not decided which initiatives it will support this year and is not even sure it will go forward with its own.
Traditionally, the trial lawyers and consumers have been allied to cut insurance rates and further regulate insurance companies, while preserving citizens' rights to sue for damages. Insurers, on the other hand, try to keep down prices by restricting lawsuits.
Seven insurance-related initiatives have been proposed for the November ballot. None has yet qualified. In several cases, petitions are already being circulated to acquire the 372,178 signatures of registered voters necessary to make the ballot.
Nader on Friday endorsed an initiative proposed by the Access to Justice organization. That group has now created a coalition and renamed its effort the Voter Revolt to Cut Insurance Rates.
The initiative would cut all liability insurance rates, for auto owners, homeowners and businesses, by 20% the day after it was enacted, require all future increases to be justified to state regulators, end the territorial rating system of auto insurance pricing, guarantee motorists with a good driving record a 20% discount, eliminate the antitrust exemptions of the insurance industry and provide for election of the state insurance commissioner.
Shift of Power
Nader called these changes "fundamental" and said they would "shift the balance of power" from the insurers to their customers.
Insurance industry representatives have made it clear that the industry, which is proposing its own initiative, directed more at the trial lawyers, will strongly oppose the Voter Revolt initiative.
The insurers and the trial lawyers both are able to spend millions of dollars to campaign before the electorate. However, both have indicated they would rather not spend heavily if they can avoid a fight.
Nader said he had been informed that, aside from its own initiative, the Trial Lawyers Assn. may end up backing an initiative proposed by the Insurance Consumer Action Network, a group headed by Steven Miller of Los Angeles.
This initiative calls for a "flex-rating" system of insurance price regulation involving requirements that the state Insurance Department approve all rate changes that exceed a set annual percentage. Passage would lead to milder changes in the law than the Voter Revolt initiative.
Too Weak for Him
Nader said Miller's initiative "doesn't shift power" to consumers and is too weak for his taste. By contrast, he asserted, if the Voter Revolt initiative is passed, it would send a powerful signal to the rest of the nation that would lead to sweeping change in many states.
The trial lawyers, he said, "are driven to compromise because they don't want to be driven to combat. They want to avoid an all-out power struggle they might lose."
This was a reference to efforts by the insurance industry to pass their own initiative, setting up a "no-fault" auto insurance system, restricting litigation and cutting the lawyers' lucrative contingency fees.
The trial lawyers, Gwilliam said, "are working very hard to try to resolve a very complicated problem," which he said includes high auto insurance rates in the state's urban areas.
"I believe progress is being made," he said. "I hope this complicated problem can be solved through a package of legislation."
He called Nader's comments about Trial Lawyers Assn. backing for the Miller initiative "premature."