Advertisement

Prop. 103 Will Reduce Gouging by Insurance Firms, Nader Says

Times Staff Writer

Consumer advocate Ralph Nader declared Thursday that Proposition 103, far from forcing insurance companies into bankruptcy, would merely reduce “super-gouging” of consumers by the companies to “modest gouging.”

Nader was rebutting contentions of the insurance industry and state Insurance Commissioner Roxani Gillespie that the premium rollbacks of 20% from levels prevailing a year before the election, called for under Proposition 103 for all auto, homeowner and commercial liability policies, would put many companies out of business.

“The companies won’t be able to super-gouge anymore,” Nader said. “They still will be able to make a reasonable profit. . . . It is now up to millions of Californians to decide if they want to teach the insurance industry a lesson and get lower rates now, or vote no (on Proposition 103) and accept more of the same high rates they have now.”

Nader embarked on a new California swing for his measure with a speech to students at Cal State L.A., for which school authorities said he was paid a fee of $3,500. He has scheduled news conferences in Sacramento and San Francisco today to challenge advertising by the industry’s initiative campaign that his measure would ultimately raise rates for 12 million policyholders outside Los Angeles.

Advertisement

At a news conference after his talk, Nader said Proposition 103 would end the territorial rating system under which people in some neighborhoods are charged more for insurance than residents of other neighborhoods. But he challenged the notion that this would mean broad price increases in the lower-priced areas, such as Northern California.

He said the insurance industry argument that millions of policyholders outside Los Angeles would be hit with increases “assumes the company will have their own way on what they charge.”

“They won’t,” he said. “Under our initiative, they will have to justify every rate they charge to the insurance commissioner and the decision on rates will rest with the commissioner.”

Proposition 103 would mean a rollback immediately for everyone, and later rates would be readjusted only as a result of state rate regulation, Nader said.

Advertisement

Territorial Rating

Taking issue with Nader in an interview Thursday was industry spokesman Scott Carpenter, who said:

“We would certainly disagree that everyone will get a decrease. Based on what Gillespie has already said about granting exemptions to companies that would go bankrupt, many of the decreases will not go into effect. It would appear from what she has said that half the companies will be exempt.”

As for the end of territorial rating, Carpenter said, this would inevitably lead to rate increases for some policyholders, no matter who was controlling rates. “The effect of the elimination of territorial rating is to flatten rates for all geographical areas of the state, which will cause some individual rates to go up and some to go down,” he said.

During his appearance at Cal State L.A., Nader also assailed Proposition 100, an insurance initiative supported by the California Trial Lawyers Assn., on grounds that it does not go far enough to give consumers rate relief.

Nader went straight to the campus upon arriving in Los Angeles, and missed a news conference that he had been scheduled to attend at which State Controller Gray Davis and Los Angeles County Supervisor Kenneth Hahn both endorsed Proposition 103.

Appeal by Hahn

Davis became the third Democrat mentioned as a possible 1990 gubernatorial candidate to endorse one of the insurance initiatives on the Nov. 8 ballot. Atty. Gen. John K. Van de Kamp is a supporter of Proposition 100 and former San Francisco Mayor Dianne Feinstein is supporting Proposition 104, the insurers’ no-fault auto initiative.

Advertisement

Davis said he doesn’t think Proposition 103 is perfect, and that in his view it would be necessary for the Legislature to subsequently correct some of its “extreme” features, if it passes, but that he believes the measure provides “needed relief” to ratepayers.

Hahn said, “I’m blowing the trumpet today for all the people of California: Slay the Goliath insurance companies that are spending millions of dollars in advertising to intimidate you. Act as David did with his slingshot to overcome their campaign.”

In another development, insurance industry spokesman Carpenter said the industry campaign had withdrawn from a scheduled debate on Channel 22, KWHY, a cable business station in Los Angeles. Carpenter said the station told the campaign that its representative in the debate, Marlyn Dinon, wasn’t acceptable because she had “too strong a Hispanic accent.”

KWHY producer Renee Weddel said the station had not rejected Dinon, but had told the industry campaign that Dinon had a strong accent and could not be understood.

Wife of Insurance Executive

Dinon, a high school teacher in Woodland Hills, is the wife of a leading executive of the 20th Century insurance company. She said in an interview, with only a slight accent, that she has lived in the United States for 22 years and recently has represented the industry campaign on radio and television.


Advertisement