Ban on Insurance Rate Increases Asked : Attorneys for Sponsors of Prop. 103 Petition State Supreme Court

Attorneys for the Voter Revolt organization, sponsors of Proposition 103, petitioned the state Supreme Court on Thursday to ban any further insurance rate hikes in California until the court decides on the insurance industry’s challenge to the constitutionality of the measure.

Voter Revolt Chairman Harvey Rosenfield declared that insurers have taken unfair advantage of the Dec. 7 decision by the court to place a stay on rate rollbacks and price freezes called for in the voter-approved measure. Insurers have seized the opportunity to unconscionably raise rates, particularly for automobile insurance, and the court should act now to end the abuse, Rosenfield said.

“It is intolerable that consumers are forced to empty their wallets into the insurance industry’s coffers--directly in contradiction to 103--while the insurance companies exercise their right to a day in court,” Rosenfield declared.

He said that originally he had expected the high court to act much more rapidly to decide the case, and that he had grown frustrated as months have passed while such companies as State Farm, Geico and Hartford have taken big rate increases. The high court, he complained, is acting much more slowly to decide the fate of Proposition 103 than it did in 1978 to resolve a constitutional challenge to Proposition 13, the property tax limitation initiative.

The petition to the court to modify its stay order to stop such increases quickly drew adverse comment from an industry spokesman.

“Even the Legislature has rejected the rate freeze being suggested here,” said Dave Fountain, speaking for the Assn. of California Insurance Companies, a major lobbying arm of the industry. “Besides, nobody has put a freeze on medical costs or repair part costs or medical costs, or even litigation costs, and all of those things are continuing to escalate.”

Fountain added that “everyone pretty much feels a court decision is imminent,” so the industry will either be free to raise its rates or be ordered to implement the 20% rollbacks from 1987 levels called for under Proposition 103 in a short time anyway.

Rosenfield, however, argued that in the days or weeks before the Supreme Court rules, many companies may try to jack up their rates even more.

“Enough is enough,” he said. Declaring that there is “absolute anarchy in the marketplace,” he added, “It is time for the Supreme Court to block the insurance industry’s rampage.”

Karl M. Manheim, a Loyola School of Law professor who joined Rosenfield at a Wilshire-area news conference, acknowledged later that there may be only a slim chance that the court will go along with Wednesday’s petition, but he insisted that the issue of trying to prevent rate increases in the interim is “important and meritorious.”

The court heard oral arguments on the constitutionality of Proposition 103 on March 7 and by its own rules will decide the case by June 7. There have been rumors in recent days that a decision may come as early as next week.

Rosenfield said Wednesday that despite the court’s conservatism and a string of decisions in recent months favorable to the insurance industry on liability questions, he and his colleagues remain confident that the court “wants to keep politics out of the 103 case.”

But, he added, “If the court were to make a decision on political grounds, we’d meet it with a political response.”

Rosenfield declined to elaborate on precisely what response to an adverse decision he had in mind.