$1 Million Raised So Far for No-Fault Measure

Insurance industry organizers of an initiative campaign for a no-fault auto insurance system raised $1,015,893 and spent $866,480 of that in 1987, even before circulating any qualifying petitions, according to reports filed with the California secretary of state’s office.

The expenditures listed by the Insurance Industry Initiative Campaign Committee included $752,046 to the San Francisco campaign management firm of Clinton Reilly, which will coordinate the campaign for the initiative. Reilly said Thursday that the money went primarily for polls, numerous focus groups to explore public attitudes and production of advertisements.

Another $45,034 was paid to the Sacramento law firm of Nielsen, Merksamer, Hodgson, Parrinello & Mueller. One of the senior partners in that firm is Steven Merksamer, former chief of staff to Gov. George Deukmejian. And $25,000 went to American Petition Consultants of Sacramento, one of the state’s two principal petition-circulating firms.

Tip of the Iceberg

The heavy early spending probably is just the tip of the iceberg. Both sides say a veritable spending deluge is in prospect this year from both the insurers and their traditional rivals, the California Trial Lawyers Assn., as they struggle to defend their economic interests. J. Gary Gwilliam, head of the trial lawyers group, estimated last week that total spending by the two sides and their allies could amount to $50 million.

Under the no-fault system advocated by the insurers, people involved in accidents would recover their losses from their own insurance company regardless of who is at fault. The system would sharply curtail the number of lawsuits and cut severely into the income of the trial lawyers.

Meanwhile, according to a formal announcement, the trial lawyers have decided to support an initiative offered by Steven Miller of the Insurance Consumer Action Network that would preserve and even expand the lawyers’ prerogatives, while mandating both discounts and regulation of insurance rates by the state Department of Insurance.

‘A Vast Coalition’

Gwilliam said Thursday that his organization’s campaign consultants, Jack McDowell and Dick Woodward, are assembling “a vast coalition” behind the Miller initiative and that the lawyers have decided to abandon circulation of their own initiative in its favor. This reduces the number of pending insurance initiatives from seven to six.

The California Bankers Assn. on Thursday officially announced that it is joining the coalition. Spokeswoman Nancy Sheppard noted that the initiative would for the first time allow state-chartered banks to sell insurance. She said studies have indicated that this would save consumers billions of dollars. Sheppard said she had no comment on reports that the bankers would initially contribute $30,000 to the coalition.

Benefits for Consumers

Both the insurers’ and trial lawyers-bankers’ initiatives promise rate rollbacks to consumers, or at least so-called “good drivers,” but under the insurers’ initiative it would come at the expense of the lawyers, while under the bankers and lawyers’ proposal it would come at the expense of the insurers.

The Assn. of California Insurance Cos., chief lobbying group for the industry, held a closed meeting Thursday in Los Angeles to outline campaign plans for the insurers’ initiative.

Harvey Englander, manager of one of three “independent” insurance initiative campaigns that are also getting under way, that of Assemblyman Richard Polanco (D-Los Angeles), said he has been informed that the Reilly firm has developed a campaign plan for the insurers that would cost $18.3 million.

Reilly, asked for comment, said the spending options developed by his firm range from $10 million to $18 million.

Meanwhile, the trial lawyers got an advertising jump on the insurers Wednesday, running full-page ads in newspapers in Sacramento blasting the proposed no-fault system. The ads charge, among other things, that no-fault insurance “takes compensation away from innocent victims of auto accidents and gives it to those guilty of causing the injury.”

Tye, speaking for the industry, responded: “We’re not taking compensation away from innocent victims. Actually, we’re enabling people who might otherwise wait for as much as five years to get compensated to get benefits in 30 days upon submission of proof of loss. And they don’t have to pay an attorney to get those benefits.”