Insurers Set for $20-Million Effort on No-Fault Plan, Nader Group Says

Consumer advocate Ralph Nader and his Voter Revolt insurance initiative campaign released insurance industry documents Thursday showing that the industry has budgeted between $20 million and $23 million to try to pass its own no-fault auto initiative.

According to the documents, apparently drawn up early in the year, nearly 300 insurance companies were asked to contribute to the no-fault campaign based on each one’s percentage of insurance business in California. Voter Revolt coordinator Harvey Rosenfield said the documents, including a detailed list of projected advertising expenditures before the fall election and the suggested contributions from each of the companies, were purloined from the industry’s campaign committee by a disenchanted employee and handed over to Voter Revolt.

Documents Reported Stolen

The coordinator for the insurers’ campaign, Clinton Reilly, noting bitterly that the documents had been stolen, said some budgetary amounts have changed since early in the year, but confirmed that the amounts mentioned were in the ballpark with what the industry plans to spend.

“The numbers expressed in those documents are not outside the realm of the cost for a hard-fought initiative campaign,” Reilly said. “The industry is putting its money behind its reform agenda. The numbers of what we’re spending are really quite small when contrasted to the amounts the consumer will save.”

But Nader, in a Washington news conference held about the same time as a series of Voter Revolt news conferences in California, said, “These secret documents show that California voters may be subjected to the biggest campaign of corporate deception ever to be conducted in California.”

Nader and Rosenfield contend that the no-fault provisions of the insurers’ initiative would restrict victims’ damage recoveries and save the companies, rather than consumers, large amounts of money, while other provisions would block all rate regulation and other reform efforts.

They argue that their own initiative, calling for rate rollbacks of 20% and stringent rate regulation in the future, constitutes “real reform.”

Nader also suggested Thursday that the industry is skirting state laws in raising money to fund the California campaign by receiving money from insurers in rate-regulated states such as New York. And he called for the Internal Revenue Service to investigate whether the industry is illegally using tax-deductible funds for grass-roots lobbying.

The budget document released Thursday showed that the industry set aside $7.8 million to “reshape voter opinion” between Feb. 1 and June 1, including $1.5 million for television and newspaper ads and $1 million to obtain signatures for the no-fault campaign, at the rate of 70 cents a signature.

Second Petition

Actually, a lawsuit by the California Trial Lawyers Assn. knocked out the first version of the no-fault initiative, and a second was hurriedly circulated. The insurers also decided to gather signatures for another initiative to slash lawyers’ contingency fees. So, Rosenfield said, this part of the budget was probably exceeded by a wide margin.

Reilly would not comment on that, noting that the insurance industry will file a complete report of contributions and expenditures July 21.

The budget projected between $6.7 million and $9.4 million in expenditures on television ads alone between June 1 and election day, plus $2.5 million on voter mailings.

In addition, there were sizable expenditures budgeted for staff, research, brochures, billboards, phone banks and radio advertising.

The grand total, the budget stated, would range from $20,207,000 to $23,296,000.

Smaller Budget

By contrast, coordinators Rosenfield and Bill Zimmerman said “Voter Revolt” has budgeted between $1 million and $2 million on behalf of its initiative, and is not sure it can even raise that much.

The other document, on insurance company contributions to the no-fault campaign, showed that by June 1, various insurance companies were supposed to have contributed a total of $8.6 million to the campaign, as compared to an overall contribution goal of $26.6 million. There was no explanation why the contribution goal was bigger than the projected budget.

According to the document, suggested insurance company contributions included $2.3 million from State Farm, $2.1 million from Farmers, $1.1 million from Fireman’s Fund, $1.4 million from Allstate and $1 million from American International Group. Generally, according to the document, each company was expected to contribute $1 for every $1,000 it collected in premiums from California policyholders.