1 Proposed Initiative on Vehicle Policies Dropped; 2nd Is Shaky

One of six ongoing efforts to qualify auto insurance initiatives for the November ballot was abandoned Wednesday for lack of time and money to circulate petitions, and the coordinator of another effort conceded that it is going to be “very tough” to qualify his initiative.

The Consumers Union said it is dropping its initiative. The proposal would have combined “good-driver” discounts, rate regulation, a no-fault system and limits on damage recoveries. It was the only proposed initiative that would have required sacrifices from both the insurers and trial lawyers as a means of cutting insurance rates.

Meanwhile, former congressional aide Adam Burton, author of an initiative that would end the territorial rating system, under which drivers living in inner-city areas have to pay the highest insurance rates, expressed doubt that he would be successful in amassing the 372,178 signatures of registered voters necessary to qualify for the ballot by a March 21 deadline.

Each initiative effort has 150 days from the time it starts circulating to submit its petitions. Burton’s effort was the earliest to get under way and therefore, has the earliest deadline.

It has had endorsements from Los Angeles Mayor Tom Bradley and Los Angeles County Supervisor Kenneth Hahn, although neither of the officials has contributed sizable political funds to the effort.

In another development Wednesday, the insurance industry announced it has filed a second initiative to go along with the no-fault auto initiative it is already seeking to qualify for the ballot.

The second one would cut back even more drastically on lawyers’ contingency fees than the industry’s no-fault initiative. It would affect all personal injury claims, auto or not, except for medical malpractice claims.

The move for a new industry initiative, however, comes so late that it is doubtful that there is time to qualify it for the ballot. It was chiefly viewed, even by its sponsors Wednesday, as a means of putting more pressure on the California Trial Lawyers Assn. to make concessions in current negotiations on a proposed legislative compromise that would reduce the need for any initiatives.

The new proposed initiative would limit lawyers’ contingency fees to 25% of the first $50,000 in winnings in each case, 15% of the next $50,000 and 10% of any larger amount.

Such provisions are an anathema to trial lawyers, who often charge contingency fees of 30% or more. For them, personal injury cases, particularly from auto accidents, are their biggest source of income.

Under the contingency fee system, lawyers take cases for no initial fee, and they collect from clients only if they are successful in negotiating a settlement or winning in court.

Circulation Process

Wednesday’s developments portend a narrowing of the crowded insurance initiative field. Without the Consumers Union or Burton initiatives, there will remain in the circulation process only initiatives endorsed by the insurance industry or the trial lawyers or leaning toward the positions of one of the two.

Insurers and trial lawyers derive the most income from the insurance system, and the debate over how to lower rates, particularly for auto insurance, is dominated by the question of which side will make sacrifices.

Wednesday morning, meanwhile, the first hearing of a new state legislative conference committee was held in Los Angeles to explore what the Legislature can do to bring down rates.

One of the legislators present, state Sen. Herschel Rosenthal (D-Los Angeles), has said, however, that unless the insurers and the trial lawyers can agree on a compromise, the Legislature will not be able to act on its own.

Demonstrators from the Voter Revolt to Cut Insurance Rates, a group sponsoring a sweeping anti-insurance industry initiative backed by consumer advocate Ralph Nader, which calls for rate rollbacks of up to 40%, protested outside the hearing against the possibility of what its chairman, Harvey Rosenfield, termed “a back-room deal.”

Stole Thunder

State Sen. Alan Robbins (D-Van Nuys), who chaired the hearing, stole some of Rosenfield’s thunder by signing the Voter Revolt initiative and urging those present to sign any of the other initiatives, except the two from the insurance industry.

Robbins added that until auto insurance rates are substantially lowered, he will accept no contributions from either the insurers or the trial lawyers, a step he urged other legislators to take. He acknowledged that in the past, he has taken heavy contributions, particularly from the insurers.