Compromise on Insurance Held Unlikely

On the eve of an unusual session of the state Assembly on the auto insurance issue, the heads of the insurance lobby and the California Trial Lawyers Assn. said Tuesday that talks between the interest groups have broken down and no compromise between them is in the offing.

The Assembly will meet today as a committee of the whole, bypassing the regular committee process, to consider ways to lower insurance prices.

But J. Gary Gwilliam, president of the trial lawyers, and Stanley Zax, president of the Assn. of California Insurance Companies, said they are convinced that the question of what to do about the high insurance prices will be put before the electorate this November in the form of ballot initiatives.

In fact, Gwilliam said petition signatures for the initiative the trial lawyers support, calling for some regulation of insurance prices and rollbacks of 20% for good drivers, “are close to being filed” with county registrars of voters throughout the state.

Once one side submits its signatures, it is too late to stop the process of qualifying an initiative and a fight would be virtually inevitable.

The two sides are struggling to defend their own economic interests by putting the burden of the sacrifices needed to bring about lower rates on the other. The insurers’ no-fault system--in which each policyholder is paid for losses by his own insurer regardless of fault--would cut back lawsuits and the lawyers fees, reducing costs that way. The reforms supported by the lawyers would cut into companies’ profits. Several so-called “independent” initiative efforts lean toward one side or the other.

So far, the Legislature, through years of debate influenced by heavy campaign contributions from both sides, has been unable to decide to proceed with either line of suggested reforms or find a satisfactory middle ground.

That situation is not expected to change today.

Legislative aides interviewed Tuesday said no action is likely to be taken by the Assembly at its session. The planned four-hour discussion is scheduled mainly to include testimony by the various interest groups, including consumer groups.

Then legislative committees will resume their normal role of debating the issues and considering proposed bills in smaller groups in subsequent days, and a move may be made then to advance the no-fault auto insurance concept backed by the insurance industry.

But doubts were expressed by the aides that such a move would be successful. They said Assembly Republicans, who would have to unite with a group of dissident Democrats behind such a move for it to pass, are divided on the insurance issue.

Attempts at Compromise

For months, sporadic talks have gone on among the insurers, the trial lawyers and some consumers to fashion a compromise. One state senator, Herschel Rosenthal (D-Los Angeles) stated weeks ago that without such a compromise the Legislature would not be able to act.

As late as last weekend, hopes were expressed that talks between the insurers and the Consumers Union, a leading consumer group, might lead to a compromise no-fault solution although there was real doubt the trial lawyers would have gone along. Now, even this move has foundered.

Tuesday was mainly a day for staking out positions for a likely initiative fight.

The insurers held a news conference where their honorary co-chairmen for the no-fault campaign, state Supt. of Public Instruction Bill Honig and state Sen. Ed Davis (R-Valencia), cited statistics they said proved that no-fault would pay California policyholders on a more equitable basis and at lower premiums.

29% Increase Claimed

The statistics included an asserted 29% increase over the last year in auto accident lawsuits in California and a 47% increase in Los Angeles County under the present system of litigation, which the insurers claim is primarily responsible for driving up insurance costs.

As always, the statistics cited were challenged by the other side. Gwilliam said in an interview after the news conference that last year was not representative of the general trend in lawsuits, which over the last 10 years are only up about 30%, very close to the statewide population increase over this period.

Besides, he added, the big reason there are lawsuits is that insurance companies are not paying their claims in a reasonable fashion.