WATCHING THE California Elections : ...

The most expensive ballot measure fight in the nation’s history--with more than $60 million being spent on the insurance industry side alone--is winding to a close in an atmosphere of rising emotion and a torrent of insurer-financed mailings.

The industry is focusing its efforts on trying to turn back Proposition 103, a proposal for sweeping rate rollbacks for auto, homeowner, commercial and municipal-liability policies and all-encompassing rate regulation that is backed by consumer advocate Ralph Nader.

With support from state Insurance Commissioner Roxani Gillespie, the industry is saying that Proposition 103 could drive many companies either out of the state or into bankruptcy. Nader, on the other hand, says the measure will only reduce “super gouging” by the companies to “modest” gouging.

The insurers are also continuing to push, mostly in individual insurance company mailings to policyholders, for a no-fault insurance system, incorporated in Proposition 104.

The latest independent polls in the fight over the five insurance initiatives last week continued to show the Nader campaign in the lead--despite being deeply in debt and able to pay for only a trickle of advertising. The campaign managed to raise less than $3 million, far less than any of the other factions.

Also appearing in the polls to have a chance of passing was Proposition 100, an initiative backed by the state’s trial lawyers, bankers and various consumer groups that calls for auto insurance rate rollbacks for “good drivers” only, and Proposition 106, an insurer-backed initiative to slash lawyers’ contingency fees.

Trailing badly in the independent polls were the the no-fault initiative and Proposition 101, a measure to roll back insurance rates in exchange for limiting company pay-outs that is backed by insurance industry dissident Harry O. Miller, chief executive of Coastal Insurance Co.

At week’s end, Clint Reilly, coordinator of the mainstream insurance industry’s campaign, denounced the polls and vowed to pursue passage of Proposition 104. A spokesman for the industry’s campaign said that thousands of volunteers from the industry are canvassing the state this weekend for Proposition 104 and against 100 and 103. Extensive insurer telephone teams are also at work.

“We have done everything we can think of to prevail,” said industry spokesman Scott Carpenter.

On the other side, Nader and two other 103 supporters, state Controller Gray Davis and Los Angeles Mayor Tom Bradley, expressed confidence that their measure will win. “Like the Dodgers, 103 is destiny’s child,” Davis said. “I think they can spend $100 million and they won’t beat 103.”

But one of the measure’s campaign coordinators, Bill Zimmerman, said he believes it is nip and tuck, with all the negative advertising against it, whether 103 can win. He said that to him it is conceivable that none of the insurance initiatives will muster a majority.

With total outlays in the initiative fight approaching $80 million, more than three times the highest amount ever spent in a California campaign, the insurance industry’s traditional adversaries, the California Trial Lawyers Assn., trailed badly in finances.

The trial lawyers have provided more than 70% of the backing--or more than $10 million--for what appears likely to be about a $15-million campaign for Proposition 100.

That measure, among other things, preempts provisions in both Propositions 104 and 106 that would limit lawyers’ contingency fees.

The battle over attorneys’ fees is a major subsidiary issue in Tuesday’s insurance votes. The insurers say they are trying, with the fee limitations, to assure that victims’ winning damage awards will get to keep most of their money. Their main vehicle for doing so is Proposition 106, which would limit lawyers’ fees to 25% of the first $50,000 of any judgment or settlement, 15% of the next $50,000 and 10% of anything over $100,000.

Foes of Proposition 106 say the fee limitations would drive attorneys out of the field and make it impossible for victims to find competent representation at an affordable price.

The insurance initiatives would do many things. Propositions 100 and 103 would allow banks into the insurance business. Proposition 103 would let voters choose a state insurance commissioner, a post now filled by gubernatorial appointment. Proposition 104 would rule out state rate regulation, while Propositions 100 and 103 would require it. Proposition 101 would require that a victim be compensated first for his losses by his health insurer, rather than his auto insurers.

But most public attention has been focused on the size of the rate rollbacks called for under the various initiatives. In brief, these are the rollback provisions:

- Proposition 100 says that effective Jan. 2, 1989, every insurer would reduce rates for “good drivers”--those with no more than one minor traffic violation in the previous three years, to 20% less than they were on Jan. 1, 1988, in most categories of coverage, unless the insurance commissioner is given “clear and convincing evidence” that the rollbacks would mean “inadequate” earnings for insurers. Any rate increases of more than 7.5% a year in personal lines would have to be approved by the state Insurance Department.

- Proposition 101 says that effective Nov. 9, 1988, rates on the bodily injury liability portions of auto policies would be rolled back by 50% for one year from the rates in effect Oct. 31, 1987. Rates for other parts of auto policies would not be affected. Rates could then be raised according to the physicians’ services component of the consumer price index through 1992, when the measure would expire.

- Proposition 103 says that effective Nov. 8, 1988, rates would be rolled back on every auto, homeowner, commercial or municipal liability or malpractice policy by 20% from the levels of Nov. 8, 1987, unless the insurance commissioner found that a company was “substantially threatened with insolvency.” After a year, any rate increase could go forward only with the approval of the commissioner.

- Proposition 104 says that effective July 1, 1989, prices on the bodily injury liability, uninsured motorist and medical payment portions of auto policies would be reduced by a statewide average of 20% below the levels of Nov. 8, 1988, for a period of two years. Rates of other portions of policies would not be restricted, and after the two-year period was up, there would be no restriction on setting rates.

- Proposition 106 has no rate provisions.

In the background is a continuing argument between the insurers supporting Propositions 101, 104 and 106, and the proponents of Propositions 100 and 103.

The insurers insist that rate rollbacks can only come if there is a commensurate saving on their costs, such as a reduction in lawsuits, the costs of litigation, or awards for pain and suffering. The trial lawyer and consumer interests supporting the other initiatives contend that insurer profits are high and that rollbacks can come out of those, without cutbacks in lawsuits or awards.

As the initiative fight has worn on, there has been more and more talk of combinations of voting, despite the fact that at least three of the initiatives, Propositions 100, 101 and 106, contain preemptions that could rule out others should they get more votes than the others.

Of course, the mainstream insurance industry campaign is calling for a vote for both Propositions 104 and 106. Eight consumer organizations and some political leaders, such as Los Angeles Mayor Tom Bradley, are calling for votes for both Propositions 100 and 103. There have been suggestions in some recent audience-participation initiative debates that voters wishing to punish both the insurers and the trial lawyers will vote for both Propositions 103 and 106.

Another suggested course has been to defeat all of the measures. That is being urged by Gov. George Deukmejian and Assembly Insurance Committee chairman Patrick Johnston (D-Stockton), among others.

THE INSURANCE MEASURES ON TUESDAY’S BALLOT PROPOSITION: PROPOSITION 100 Good Driver Insurance WHAT IT WOULD DO: Roll back auto insurance rates for “good drivers” 20% from the levels prevailing Jan. 1, 1988, unless the state insurance commissioner determines new levels would mean inadequate earnings for insurers. Protect present lawyers’ contingency fees. Require state to regulate future rate increases. End insurers’ anti-trust exemptions. ARGUMENTS FOR: Insurance industry needs more governmental control to keep rate increases down. Good drivers with no more than one minor traffic violation in the previous three years should receive special discounts. Present contingency fee structure enables victims to hire lawyers to represent them. Supporters: California Trial Lawyers Assn., California Bankers Assn., Atty. Gen. John K. Van de Kamp, Los Angeles Mayor Tom Bradley, Consumers Union, Common Cause. ARGUMENTS AGAINST: Rate regulation will only increase bureaucracy and may eventually increase rates. The rate rollbacks are not feasible, since no cost savings are afforded insurance companies, such as changes in the legal system that could reduce their payouts. Opponents: The insurance industry, Gov. George Deukmejian. PROPOSITION: PROPOSITION 101 Accident Claims Limit WHAT IT WOULD DO: Roll back rates on the bodily injury liability portions of auto policies by 50% for one year from the rates prevailing Oct. 31, 1987, in exchange for restrictions on damage payouts by insurers. Rates would then be permitted to increase according to an inflation index until Dec. 31, 1992, when initiative would lapse and matter would revert to legislative control. ARGUMENTS FOR: In order to make insurance more affordable, it is necessary that the public give up some of its rights to damages, particularly for pain and suffering, and agree to seek compensation first through health insurers and disability before going to auto insurers. New system should last only three years, so Legislature can decide what to do next. Supporters: Harry O. Miller, chief executive of Coastal Insurance Co., Assemblyman Richard Polanco (D-Los Angeles), and nine other legislators, American Agents Alliance. ARGUMENTS AGAINST: Rollbacks called for are far less than auto insurance companies would save in payouts. Making health insurers the first recourse for victims would lead to big increases in health insurance costs. And victims of accidents would lose many of their present rights to sue for damages. Opponents: California Trial Lawyers Assn., Common Cause, Consumers Union, consumer advocate Ralph Nader, Gov. Deukmejian. PROPOSITION: PROPOSITION 103 Insurance Rate Rollback WHAT IT WOULD DO: Roll back rates on all auto, homeowner and commercial or municipal liability policies by 20% from levels prevailing Nov. 8, 1987, unless insurance commissioner determines that new levels would result in a substantial danger of insolvency to insurer. Institute future state rate regulation on all increases. Mandate that insurance commissioner be elected. ARGUMENTS FOR: Insurance companies are making too much money and can afford to collect less from their customers. Rate regulation is needed to keep rates down. An elected commissioner will be more subject to popular, rather than insurer, control. Supporters: Consumer advocate Ralph Nader, AFL-CIO, Common Cause, Consumers Union, California Democratic Council, State Controller Gray Davis, Supervisor Kenneth Hahn, Mayor Tom Bradley. ARGUMENTS AGAINST: Rollbacks are so high they would drive many insurance companies out of business if they were implemented and could force the state into insurance business. State control would end up costing ratepayers more than now. An elected commissioner would be subject to special-interest control. Opponents: Insurance industry, California State Chamber of Commerce, Gov. Deukmejian, Insurance Commissioner Roxani Gillespie. PROPOSITION: PROPOSITION 104 No-Fault Insurance WHAT IT WOULD DO: Establish no-fault system under which accident victims would be reimbursed by their own insurance companies for medical expenses, work loss and funeral benefits, regardless of who was at fault. Roll back rates, effective July 1, 1989, on prices prevailing Nov. 8, 1988, for two years, on bodily injury liability, uninsured motorist and medical payment portions of policies by average 20% statewide. Reduce lawsuits and insurer payouts for pain and suffering. ARGUMENTS FOR: No-fault would cut back on lawsuits and claims that have caused insurance rates to soar. Would lead to quick compensation of wider range of victims. Rollbacks would be more feasible than in competing initiatives because they would be funded by savings in insurer costs. And in long run, rate increases would be impeded. Supporters: Insurance industry, California, Los Angeles and San Diego chambers of commerce, California Farm Bureau Federation, former San Francisco Mayor Dianne Feinstein. ARGUMENTS AGAINST: No-fault system proposed is stingy and amounts to deprivation of accident victims’ rights. This 122-page initiative constitutes insurers wish-list and would establish a system to their advantage and public’s disadvantage for years to come. Promised rate rollbacks are uncertain. Opponents: California Trial Lawyers Assn., Common Cause, Consumers Union, consumer advocate Ralph Nader, Atty. Gen. John K. Van de Kamp, Gov. Deukmejian. PROPOSITION: PROPOSITION 106 Attorney Fees Limit WHAT IT WOULD DO: Limit lawyers contingency fees to 25% of first $50,000 recovered in any judgment, arbitration or settlement, 15% of next $50,000, and 10% of anything recovered over $100,000. Courts could on their own or on motion of either of the parties review and lower fees still further. Contingency fees are in lieu of hourly, pay-as-you-go fees, and are levied only if a client wins something. ARGUMENTS FOR: Present fees ranging 40% or even higher deprive litigants of much of what they win and serve to enrich lawyers. By limiting them, more money will wind up in hands of those who have suffered damages. Supporters: Insurance industry, Assn. for California Tort Reform, California and Los Angeles chambers of commerce, California Manufacturers Assn., California Taxpayers Assn. ARGUMENTS AGAINST: Real effect of these limits will be to deprive victims of adequate representation, since state’s trial lawyers will move to other fields and many persons with good claims who cannot afford to pay hourly fees will be left without the ability to sue. Measure is unfair because it limits only fees of plaintiffs’ lawyers, but not those of insurance company and other defense attorneys. Opponents: California Trial Lawyers Assn., Consumers Union, consumer advocate Ralph Nader, Atty. Gen. John K. Van de Kamp, Mayor Tom Bradley, Assembly Speaker Willie Brown, Gov. Deukmejian.