Group Asks Polanco to Repudiate Prop. 101

Consumers Union on Wednesday called on Assemblyman Richard Polanco (D-Los Angeles) to repudiate his own auto insurance initiative, Proposition 101, charging that the November ballot measure would lower car insurance rates by shifting costs to health insurance and other forms of coverage.

Harry Snyder, West Coast director of the consumer group, predicted that the cost shift would drive up health-care premiums and drain money from Medi-Cal, the state-financed health program that could be called on to pay bodily injury claims when other compensation is not available.

“Proposition 101’s approach to solving the insurance crisis is . . . simplistic,” Snyder said. “It appears to be a happy solution where everybody wins. But when you look at it after 10 or 20 minutes . . . you see it’s a disaster looming for California.”

‘Should Withdraw’

Snyder added that if Polanco is “not willing to tell the voters the truth about the impact of his initiative, he should withdraw” as its sponsor.

In an interview, Polanco called the Consumers Union charges “erroneous and misleading,” adding that he has “absolutely” no plans to walk away from the initiative.

He also charged that the consumer group’s statements were motivated by its endorsement of a rival measure, Proposition 100, which provides for a 20% reduction in good driver rates and is backed by the California Trial Lawyers Assn. and Atty. Gen. John K. Van de Kamp.

Polanco’s initiative is one of a confusing array of five rival insurance measures on the November ballot, most of which seek to lower insurance premiums or impose regulations on the insurance industry.

The Polanco measure would require a 50% rollback in bodily injury liability premiums in exchange for restrictions on victims’ ability to collect damages for pain and suffering incurred in traffic accidents. But the measure also would change the system under which claims are paid out for medical costs.

Under the present system, auto insurance companies are required to pay all legitimate claims arising from accident, including those for bodily injuries. To keep rates down, Snyder said the Polanco initiative would require compensation to be paid first from private health insurance policies, Medi-Cal or other providers of health coverage. Victims, he said, would be able to turn to the auto insurance policy of the individual at fault only when no other form of coverage is available.

Health-Related Benefits

Consumers Union also maintained that other health-related benefits including sick leave, vacation time and workers’ compensation would have to be exhausted before the auto policy could be forced to pay a medical claim.

“It’s clear that Proposition 101 will cost taxpayers money and will increase the cost of health insurance,” Snyder said.

Polanco said his intent was to eliminate a current practice in which accident victims can collect “double payment” for their injuries by filing claims simultaneously on their auto and health insurance policies. But Polanco said he had no intention of including sick leave, vacation time and other benefits as possible sources of compensation and said he would introduce legislation to clear up the matter if the initiative passes.

Consumers Union originally leveled its charges in a proposed ballot argument that is to be distributed to voters before the November election. Polanco filed suit, contending the argument was false and misleading.

In a hearing last week, Superior Court Judge Horace E. Cecchettini struck down certain portions of the Consumer Union argument, but left intact the key allegations concerning how injury claims would be paid.

Although the ballot measure does not list the sources of coverage that could be tapped in the event of an auto accident, Cecchettini ruled that because of the measure’s vague wording, any source, from private insurance to state disability, could be targeted.

Backed by Company

The Polanco measure is backed almost exclusively by Coastal Insurance Co., a San Fernando Valley-based insurer that sells only auto coverage. The firm so far has provided $1.9 million or 93% of the measure’s financial backing.

In reply, Polanco maintained that his initiative, by cutting bodily injury rates in half, would “provide the most significant rate reductions for all consumers.”

In addition to its support of Proposition 100, Consumers Union has endorsed Proposition 103, the so-called Voters Revolt initiative backed by consumer advocate Ralph Nader. It would mandate a 20% reduction in auto insurance rates and provide for an elected, rather than appointed, state insurance commissioner.