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Assembly Rejects Move to Keep Car Insurers in State

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Times Staff Writer

Legislative efforts to strengthen enforcement of the insurance initiative, Proposition 103, suffered a major setback Thursday as the Assembly rejected a bill aimed at preventing auto insurers from pulling out of the California market.

The bill, which would have severely penalized companies that arbitrarily cancel auto policies, fell seven votes short of the two-thirds needed for passage.

The defeat, on a vote of 47 to 23, came after the legislation had already passed the Senate. It was the only one of several strong enforcement measures introduced in the wake of the ballot measure’s narrow approval that had been considered likely to reach the governor’s desk.

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Effort Sidetracked

Like those earlier efforts, this one was sidetracked by a nearly solid bloc of Republicans amid intense lobbying by the insurance industry.

After the vote, the bill’s author, Sen. Alan Robbins (D-Tarzana), and other supporters vowed to have the measure reconsidered. But they conceded that it would take a massive lobbying effort by voters and business groups to gather the additional votes needed for passage.

“I’m not going to wave the white flag today,” said Assemblyman Patrick Johnston (D-Stockton), chairman of the Assembly Finance and Insurance Committee, who carried the bill on the Assembly floor.

Noting that the legislation is backed by local chambers of commerce, retailers and independent insurance agents, Robbins added: “We will rally our support. . . . We will go to those business constituents and get them to lobby a few of the Republicans and ask them if they want to stand with the insurance companies or every other business in California.”

The Ralph Nader-backed initiative seeks to roll back insurance rates and impose stringent controls on future premium increases. As passed by the voters, it prohibits insurers from arbitrarily canceling policies or refusing to write new ones. But the proposition’s $250,000 maximum penalty for “willful violations” has been criticized as far too lenient.

The Robbins bill, by contrast, would assess companies that violate the provision up to 50% of the premiums collected on all the affected policies. That could run into millions of dollars for the largest insurers.

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Initially, the measure was aimed at Travelers Insurance and several other firms that began canceling policies after the Nov. 8 election. But these firms relented under pressure from Insurance Commissioner Roxani Gillespie. Now, supporters say they are convinced that without the bill, insurers may attempt to leave California if the Supreme Court upholds substantial portions of the initiative.

Penalties imposed under Proposition 103 amount to no more than “traffic tickets,” said Johnston, who predicted that many insurers will simply “pay the fine and skip. . . . Our constituents will be left high and dry with the legal responsibility to purchase insurance and no ability to do so.”

Opposition Argument

The bill’s Republican opponents, however, argued that legislation cannot change the laws of economics and if there is no profit to be made under Proposition 103, companies will simply go out of business.

“If we look at this bill alone we can come up with logical arguments to support it,” said Assemblyman Charles Bader (R-Pomona), who argued that Robbins’ bill would drive insurance companies out of business, leaving the state to fill the void with a government-run insurance program.

Bader predicted that passage of the Robbins bill would result in a system like that in New Jersey, where premiums are among the highest in the nation and the state-run system faces huge deficits.

The Robbins bill was one of several introduced with great fanfare shortly after the passage of Proposition 103 and amid predictions that even lawmakers who opposed the initiative would push for strong enforcement. Supporters likened the success of the insurance measure to the landmark Proposition 13 of 1978, which cut property taxes and spawned an anti-tax fervor within the Legislature.

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Rejected or Moribund

However, all of these bills have either been rejected or are considered moribund. Among them is a major bill by Johnston to freeze insurance premiums until the Supreme Court acts or the initiative’s rate regulation provisions take effect in November. The Johnston bill was rejected on the Assembly floor last month, falling eight votes short of passage.

Johnston, who was among those who predicted early on that there would be strong support for these bills, conceded after Thursday’s vote that the political dynamics of the Legislature have changed very little.

“Part of it is that many members actively opposed Proposition 103 or didn’t support it,” Johnston said. “It sounds like their logic was that if 103 doesn’t make sense, I don’t want to do anything to enforce it.”

But Robbins placed the blame for rejection of his bill and the others squarely on the insurance industry.

“The insurance companies are looking for legislative friends and have found on the floor of this house a group of legislators to defend them,” he said.

Difficult to Resurrect

Although it may be difficult to resurrect his bill, Robbins has a track record of reviving measures once considered politically doomed. The same bill rejected by the Assembly on Thursday was once defeated in the Senate as well. But Robbins was able to bring sufficient pressure to reverse the votes of several Republicans.

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Robbins was supported Thursday by a solid majority of Democrats but received only two Republican votes. The two came from Curt Pringle, newly elected assemblyman from Garden Grove, and Bev Hansen of Santa Rosa.

Asked why he called for the vote when it was clear that his bill lacked sufficient support, Robbins supplied a glimpse of his political strategy: “You’ve got to pin down the votes that you have by putting them on the record and pin down the (opposing) votes so you can go after them as well.”

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