Nader Lambastes California Insurance Chief as ‘Lackadaisical’

Consumer advocate Ralph Nader on Thursday assailed state Insurance Commissioner Roxani Gillespie as “one of the (nation’s) most lackadaisical” regulators, charging that she has “aided and abetted” the insurance industry’s “uniform defiance” of Proposition 103.

Nader, whose backing of the landmark insurance initiative--aimed at controlling the upward spiral of insurance premiums--was a major factor in its narrow passage by voters, told a Senate hearing that, with Gillespie’s encouragement, insurers have “behaved as if voters hadn’t approved” the measure.

“They have huffed and puffed and tried to intimidate and they have threatened to pull out of the state,” he said.

Nader contended that Gov. George Deukmejian, rather than trying to bring insurers into line, has been “lukewarm at instructing the commissioner to (enforce) all the provisions of 103.”

“That,” he said, “is leading to attitudes of anger, indignation and frustration” on the part of voters, and this resentment, he added, could spawn a new initiative.

As he did during much of the campaign, Nader used his rhetorical talents to draw a picture of a greedy insurance industry that is much healthier than its executives will admit but is crying poverty to plead for new laws restricting the rights of accident victims to sue.

Nader’s statements drew a subdued reaction from the insurance industry, which has begun efforts to repair its admittedly tarnished image. In a statement, Thomas F. Conneely, president of the Assn. of California Insurance Companies, called on all sides to “set aside past disagreements and work cooperatively for the common good.”

But Gillespie denounced Nader as a “professional critic” who has spent too little time in California since passage of Proposition 103 last November to accurately assess its impact.

“There we go again,” Gillespie said, borrowing a line from former President Reagan. “Mr. Nader says he observed all these things, but as far as I can make out, he is a commuter.

“He travels to California from the East Coast specifically to find fault. I don’t think he has ever truly looked at the record of the Department of Insurance. . . . If he had, he would not issue such a harsh statement.”

Recently, Gillespie has impressed even some of her harshest critics in the Legislature by moving against a number of the state’s larger insurers that sought to arbitrarily cancel policies, significantly boost rates or channel new clients into more costly policies.

But these critics say her actions have come mainly at the prodding of consumer groups and amid the threat of legislation that would circumvent her authority--a charge Gillespie adamantly denies.

Sen. Alan Robbins (D-Van Nuys), chairman of the Senate Insurance, Claims and Corporations Committee, invited Nader to the state Capitol to build political pressure before an Assembly showdown expected next week over Robbins’ bill to punish insurers that refuse to renew policies.

Gillespie has authority to block arbitrary cancellations, and she recently prodded Travelers Insurance and several smaller companies into rescinding their blanket cancellations. Robbins’ bill would remove some of her discretion and impose mandatory fines on violators that could total hundreds of millions of dollars.

In his testimony, Nader said that, contrary to Gillespie’s claims, many policy cancellations still “go unchallenged or uncorrected.”

“There is no excuse for this dereliction of duty, particularly during a time in which consumers must rely on the vigilance of the Deukmejian Administration to protect them against anarchy in the insurance marketplace,” he said.

Nader refused to venture a guess on the outcome of the state Supreme Court’s review of the initiative’s constitutionality. But he said if the court upholds the measure, the Legislature, governor and insurance commissioner “will be put to an even greater test” as insurers “renew their threats of economic intimidation.”

On the question of future reforms, Nader said insurance companies have perpetrated a myth that costs can be cut by scaling back on the rights of victims to sue.