Prop. 103 Supporters Ask Limits Be Set on Auto Policy Canceling

The Proposition 103 “Voter Revolt” organization and a coalition of consumer and civil rights groups filed an administrative petition with the state Department of Insurance on Wednesday proposing a specific set of regulations to limit insurance company rights to cancel or refuse to renew auto insurance policies.

The petitioners complained that Insurance Commissioner Roxani Gillespie has “failed to act decisively” to promulgate rules fleshing out and applying the portions of Proposition 103 that the state Supreme Court ruled on Dec. 7 could go into effect pending the court’s review of the measure’s constitutionality.

Among the groups filing the petition were the Consumers Union, the Center for Public Interest Law, the Southern Christian Leadership Conference, the National Assn. for the Advancement of Colored People, the South-Central Organizing Committee, the Latino Issues Forum and the Congress of California Seniors.

Under the petition procedure, the department has 30 days to either accept the regulations the groups propose, deny them or call a public hearing on the matter.

The petition was filed at the Insurance Department offices in Los Angeles. In San Francisco, a spokeswoman for Gillespie said the commissioner had not yet seen it and would reserve comment.

However, Gillespie, under pressure from a large association of insurance agents to issue regulations on how to apply portions of Proposition 103, said earlier this month that she would not do so until the Supreme Court rules on the measure.

The proposed regulations on cancellations and non-renewals filed by the pro-Proposition 103 groups Wednesday follow the filing of another petition last week by many of the same groups. That petition proposed procedures for exempting companies from the rate rollbacks called for by Proposition 103, if the Supreme Court upholds the rollbacks.

Under the measure, a company may be exempted from the prescribed 20% rollbacks from 1987 levels if it can show the insurance commissioner that it would face a substantial threat of insolvency if it made such cuts.

The pro-Proposition 103 groups are proposing that “urgency status” be given company petitions for exemptions, that hearings to be conducted by an administrative law judge be scheduled within 14 days and that the insurance commissioner make a determination within three days of receiving a proposed decision from the judge.

A key recommendation by the pro-103 groups involves standards for determining when there is “a substantial increase in the hazard insured against” that, under Proposition 103, would allow the companies to refuse to renew a policy.

The pro-103 groups advanced a regulation saying that such an increase in hazard exists for any person whose driving record shows a violation count, according to the state Department of Motor Vehicles, of more than three points within 24 months, more than four points within 36 months or more than five points within 60 months. Most speeding convictions count for a point, while negligent or drunk-driving convictions count for two points.

In addition, there would be a recognized substantial increase in hazard if a driver was involved in three or more accidents resulting either in injury or property damage of $200 or more within a five-year period.

In another development Wednesday, the Insurance Department officially barred the Fireman’s Fund group of companies from conditionally renewing auto insurance policies, a practice the companies implemented after Proposition 103 passed. The seven Fireman’s Fund companies have been telling customers their policies will not be renewed unless they agree to give the companies the right to later cancel coverage.