Assembly Stymied in Bid to Cut Insurance Rates

The state Assembly, meeting as a rare committee of the whole on the auto insurance issue, heard 3 1/2 hours of testimony Wednesday, but ended the session apparently no closer to finding a way to lower consumer rates.

While a Republican assemblyman and a leader of the “Gang of Five” dissident Democrats said they may move next Monday to bring directly to the Assembly floor a no-fault package even more sweeping than that in a proposed insurance industry ballot initiative, they do not at present appear to have the votes to pass it.

No other proposals that promise an immediate reduction of rates are anywhere near having the support to win Assembly approval at this time. The testimony taken Wednesday was essentially a repeat of past arguments between the contending forces--the insurers, the trial lawyers and consumer representatives.

Under the no-fault proposal floated in general terms Wednesday by Assemblymen Frank Hill (R-Whittier) and Charles M. Calderon (D-Alhambra), an average rate reduction of 25% would be mandated.

This is considerably more than the 7% to 17% promised in the insurance industry’s proposed initiative, one of five measures being pushed for the November ballot by various contending parties.

Under no-fault systems, each policyholder is paid for losses up to certain defined limits by his own insurer, regardless of who is at fault in the accident, thus curtailing lawsuits.

Depending on where limits are set and what other exceptions are allowed for lawsuits, insurers’ costs and consumers’ premiums may be cut back. Although the amount of cutback is the subject of debate.

The California Trial Lawyers Assn., representing the attorneys who litigate thousands of auto insurance cases, opposes no-fault as a deprivation of victims rights and also because it would cut sharply into lawyers’ incomes.

An association official, Will Glennon, said during the Assembly meeting Wednesday that the group is certain it has the votes to kill the prospective Hill-Calderon proposal, and embattled Assembly Speaker Willie Brown (D-San Francisco), under challenge from the dissident Democrats, agreed.

At least two of the Assembly’s 36 Republicans--Sunny Mojonnier of Encinitas and Larry Stirling of San Diego--have indicated they will not vote for no-fault. That means other Democrats of the 44 in the House would have to join the Gang of Five to push the bill over the top. Brown said he is certain of holding his 39 Democrats against it.

In short, the vote indicated Wednesday, if one is actually taken, would be no more than 39 for no-fault and at least 41 against.

Possibility of Change

However, state Sen. Alan Robbins (D-Van Nuys), chairman of the Senate’s Insurance Committee, said he feels there is a chance the situation could change between now and next week.

Even if this should happen, and no-fault went on to win approval in the Senate and the signature of Gov. George Deukmejian, the trial lawyers let it be known Wednesday they would go forward with their own ballot initiative, calling for some rate regulation and a 20% rollback in rates for good drivers, while preserving or extending the lawyers’ rights under the current system.

Much of the debate Wednesday centered around the merits or demerits of a no-fault system. With the emergence of the Gang of Five, the focus of the Assembly’s attention has moved to the right, shifting away from the concentration last spring on the lawyers’ issues of rate regulation and anti-trust reform, to the insurers’ push for no-fault. Traditionally, conservatives have supported the insurers’ position, while liberals have supported the trial lawyers.

In this context, state Insurance Commissioner Roxani Gillespie, representing the Republican Deukmejian Administration, indicated some support in her testimony Wednesday for no-fault.

Florida and New York

She said adopting the Florida no-fault system would mean an 11% rate reduction in California by her calculations, but adopting a different no-fault system used in New York would not mean any reduction.

The insurance industry’s initiative is supposedly modeled after both the New York and Florida systems. But an industry spokesman said after the Assembly session that the initiative “combined the best elements” of both systems, with the California savings greater than either.

Meanwhile, Deukmejian press spokesman Kevin Brett cautioned that Gillespie’s remarks do not necessarily mean the governor is committed to signing any no-fault package, should one win legislative approval.