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Insurance: Yes on 100 : California: Yes

In our view, Proposition 100, the so-called “good drivers initiative,” best meets these criteria. Drafted by consumer activists and a member of Atty. Gen. John K. Van de Kamp’s staff and supported by the California Trial Lawyers Assn., the California Bankers Assn. and Consumers Union, it would establish a coherent system of regulation that would promise good drivers an immediate 20% reduction in premiums and future discounts of 20% without threatening the solvency of the state’s insurance companies. Insurance companies would be required to open their books and to file proposed rate hikes with the state insurance commissioner, though only those above 7 1/2% annually would be subject to mandatory review. The industry’s practices could be challenged by consumers, businesses and a consumer insurance advocate in the attorney general’s office.

Making the insurance industry more competitive is the basic thrust of Proposition 100. Banks would be permitted to sell all lines of insurance, the industry’s longtime exemption from the antitrust laws would be lifted and insurance agents could offer discounts to their best customers. Public disclosure of insurers’ rates would allow for easy comparison shopping and should heighten competition--the best way to make rates affordable.

And yet, despite its many virtues, Proposition 100 has its flaws. It is stacked in favor of trial lawyers, but that can be cured. It provides no cost savings for insurers, leaves it unclear how the companies can absorb those 20% rollbacks and specifically nullifies both the no-fault provisions of Proposition 104 and the limits on lawyers’ contingency fees in Proposition 106. But, as a saving grace, these concessions to the lawyers can be overturned on a simple majority vote of the Legislature, rather than the two-thirds margin required to amend the other insurance propositions. That’s crucial because, if Proposition 100 passes, follow-up legislation will be in order; in fact, the insurers will be clamoring for it.

Proposition 100 seems to us just the device needed to break the logjam in Sacramento and force the Legislature to come to grips with insurance. The regulatory system in Proposition 100 is workable and sufficiently well-drafted to withstand the legal challenges and political assaults that can be expected from the insurers. But a regulatory system, even one as sound as that outlined here, is only the first step; the Legislature must then do its long-neglected duty and enact no-fault or other measures to contain costs. Vote yes on Proposition 100 to start this process.

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