A Monster Legislature

If anyone needed further proof of the Legislature’s utter inability to address the problems of the state of California, consider the stalemate over automobile insurance.

It has long been apparent that the Legislature needs to reform the current system, which has seen premiums balloon by 40.1% in the past two and a half years and put car insurance beyond the reach of an estimated 3 million California drivers. But, given the lack of leadership in Sacramento, it is unlikely that the lawmakers will be able to break the impasse between the insurance industry and the state’s trial lawyers over what to do. Ultimately, the very complex question of how to bring down premiums while assuring accident victims of adequate compensation will be put before the electorate this November in the form of competing ballot initiatives. And it seems to us that voters are not equipped to make that kind of decision and that the initiative process is not the way to go.

The auto-insurance mess cries out for compromise, for mediation, for the kind of fine-tuning that legislatures are supposed to deliver. At this point, we would gladly settle for a deal concocted in a smoke-filled room, as long as it did the job. Instead, what Californians face are well-financed petition drives to put on the ballot conflicting and extreme initiatives, sponsored by the insurers or the trial lawyers, in which neither side gives an inch.

The insurers are pushing a no-fault system that would allow each policyholder to be paid for losses by his own insurance company regardless of who was at fault; the sponsors insist that limiting lawsuits, lawyers’ fees and exorbitant judgments would ultimately reduce the companies’ costs and allow them to trim premiums. The trial lawyers support their own initiative, one that calls for insurance-rate regulation by the state Department of Insurance and premium rollbacks of 20% for good drivers but preserves the tort litigation system the insurers want to restrict.

What’s wrong with these initiatives is that each side wants the other to make all the financial sacrifices; the insurers would like to snuff out most personal-liability suits and the livelihood of the state’s trial lawyers, and the trial lawyers just as stubbornly contend that the insurance companies must accept lower profit margins for the sake of lower premiums. Efforts by Consumers Union to forge a compromise that would combine a no-fault system with rate reduction collapsed over the weekend. After thrashing out the whole issue in the Assembly’s “committee of the whole” Wednesday, some Republicans and the Democratic dissidents who compose the “gang of five” pledged to work out a no-fault reform package next week, a promise everybody has heard before.

For us amateurs, it’s hard to figure out who’s right. A mandatory premium rollback has obvious attractions, though it might result in insurers’ simply refusing to sell insurance at all in some areas. No-fault, once regarded as the most sensible alternative, does cut court costs and assure victims of quick compensation, but other states, after adopting no-fault, have learned that it does not automatically reduce premiums; the California insurers also acknowledge that their initiative would at most slice a few hundred dollars from premiums, not much for consumers paying upwards of $1,500 to insure a single car. And does any reform package make sense if it leaves in place the territorial-rating system that makes a driver in central Los Angeles, no matter how good his driving record, pay four or five times what someone in San Diego or San Jose pays for the same coverage?

Instead of taking charge of this issue, California’s lawmakers have been content to leave it to the special interests to cut a deal--a clear impossibility. Real debate has been stymied because the legislators are locked into positions dictated by their allegiances either to the insurers or the trial lawyers; both groups are generous with campaign contributions. Watching the struggle between these two giant adversaries reminds us of one of those old monster movies, maybe “King Kong vs. Godzilla.” While the monsters roll around, snarling at each other, battling to the death, the little people get trampled.