3 Insurance Agent Groups Support Push for Complete Invalidation of Prop. 103

Three insurance agent associations have submitted a brief to the state Supreme Court supporting the rest of the insurance industry in arguing for the complete invalidation of Proposition 103, the landmark initiative now under constitutional review by the high court.

But the agents’ groups--the Professional Insurance Agents of California and Nevada, the California Assn. of Life Underwriters and the National Assn. of Life Underwriters--argued particularly against the validity of clauses in the measure that allow agents to rebate part of their commissions to customers and that allow banks into the insurance business.

Many insurance agents do not like either the rebate or the banking provisions because they fear that they would diminish their income.

Indirect Arguments

The 20-page brief written by attorneys Roger L. McNitt and Robert K. Schraner of San Diego used a number of indirect arguments to support the view that neither provision is legitimate.

For instance, they contended that the effect of rebates would be to invalidate state minimum-rate laws governing workmen’s compensation insurance, and would end up by substituting one kind of rate-cutting with another that allows lower rates to companies with good safety records. This would reduce safety protections to workers, the lawyers argued.

And, they said, the way the rebate clause is written, a small number of agents working on behalf of reciprocal insurers, rather than stock or mutual companies, would not be allowed to give the rebates, thus not giving them equal protection under the law.

They also contended that Proposition 103 failed to repeal all the statutes keeping banks out of the insurance business, and that the net effect may be to make it even more difficult for banks to get into the business.

‘Failed to Achieve’ Goal

The view expressed in some of these arguments was that Proposition 103, in the lawyers’ words, “has failed to achieve its purported goal.” But, a spokesman for the Professional Insurance Agents, Ted Huntington, said Friday that the agents’ real position is that the goals should not be achieved in the first place.

Harvey Rosenfield, chairman of the Proposition 103 campaign, said of the brief:

“The insurance agents are complaining to the court that they don’t like Proposition 103, but in a democracy, when the majority decides, it must prevail. . . . Most of their attorneys’ arguments aren’t constitutional arguments at all. They are policy arguments and the public has decided those questions. The suggestion that they don’t like what Proposition 103 does doesn’t translate to a constitutional challenge.”

The high court has set a deadline of Jan. 23 for submitting briefs and responses to briefs in the Proposition 103 case.