Nader Assails Insurance Commissioner’s Position

Consumer advocate Ralph Nader on Monday said state Insurance Commissioner Roxani Gillespie must either go along with any rate rollbacks approved by the voters in the Nov. 8 election or face both public wrath and a lawsuit to force her to do so.

Nader’s comments were prompted by testimony given by Gillespie to a legislative committee Friday. She said that at least half of California’s top auto insurance sellers are making such low profits that her department might not require them to comply with rate rollback provisions in Propositions 100 and 103, if they are approved by voters.

Nader, in California to campaign for Proposition 103, an initiative he supports that calls for 20% rollbacks on rates for all auto, homeowner and commercial policies from levels prevailing a year before the election, charged that Gillespie is already laying plans to undo the will of the electorate.

“She is demonstrating why there should be an elected commissioner, as we call for in 103,” he said at a Santa Monica press conference. “She is working for the insurance industry rather than the consumer.”

The Nader-backed proposition is one of five initiatives on the November ballot that would alter rules governing insurance and its cost to consumers.

Gillespie on Monday expressed resentment that she is “being brought into this political battle” and said her testimony was only an effort to inform the people of the facts.

“I tried to play out (the results of) Proposition 103, so the voters would know what would take place,” she said. “There would be certain companies that would become insolvent. People have to know that, and they also should know that policyholders are surcharged to pay for insolvencies.”

In promising the voters a rollback if they support Proposition 103, Nader and the measure’s coordinators are “putting the state in a very difficult position, a choice between letting the companies go insolvent or going against the will of the voters,” Gillespie added.

The end result, she suggested, if she does not excuse the companies from at least some of the rollbacks, could be that many companies would quit doing business in California, forcing the state to form a state insurance company.

Nader, however, said Monday that Gillespie misstates the facts about the insurers’ financial situation.

“She’s using only data supplied by the insurers,” he said. “She’s left out their investment income. She’s accepted inflated estimates of what they will pay out in the future. . . . She has come down on the deceptive side of the insurance industry campaign.”

He said the companies are making billions of dollars on their California business and can well afford the rollbacks.

Also present at the press conference was Los Angeles City Atty. James Hahn, who joined Nader in his attacks on Gillespie.

Hahn accused the commissioner of “a deliberate attempt to confuse and deceive the voters,” and he added, “If the voters do pass 103, she must follow it. She will have to follow the law (and implement the rollbacks).”

In fact, however, Proposition 103 would allow the commissioner to exempt companies from its rollbacks if it is determined that they face a substantial threat of insolvency.

Meanwhile, in another development, Gov. George Deukmejian’s press secretary, Kevin Brett, said that Deukmejian is not taking a stand at this time either for or against any of the insurance initiatives.

Brett said there is “a possibility,” however, that Deukmejian may take a stand before the election.

Nader’s press conference was the last public event on a two-day visit to the state in which he also strongly assailed the two ballot initiatives being advanced by the insurance industry, Propositions 104 and 106.

He said the insurers are asking the voters to “trust us for 24,000 words” in their 122-page no-fault initiative. “I wouldn’t trust them for the first comma,” he said.

As for Proposition 106, an initiative setting limits on attorney’s contingency fees, Nader said it is an insurers’ “trick” to deprive victims of attorneys willing to take their cases. He said that if the measure becomes law, it will “open a Pandora’s box” that will lead to an initiative in the next election to limit all professional fees, including those of real estate agents, doctors and insurance agents.

Nader, however, said he is not endorsing Proposition 100, an insurance initiative on the ballot that would rule out such contingency fee limits, because he does not want to dilute his support for Proposition 103.