Brown Urges Subsidizing Car Policies for Poor

Assembly Speaker Willie Brown, backed by consumer advocate Ralph Nader and the leader of the Proposition 103 insurance initiative campaign, proposed sweeping legislation Monday that could require most motorists to subsidize low-cost automobile insurance for poor people.

The proposal would require insurance companies to provide no-frills car insurance policies to qualified low-income Californians at an annual cost of $350 for people at or below the poverty level and $500 for others who meet eligibility criteria to be set later.

Since these policies can now cost more than $1,000, depending on where the motorist lives and his or her driving record, the policies will have to be subsidized.

Under the bill, every car owner in the state would be required to show proof of insurance when re-registering a car--a provision designed to cut down on the number of uninsured motorists.

To help make up the difference between the real cost of the policies and the amount the low-income motorists will actually pay, Brown’s proposal contains a series of cost-saving measures.

Among the proposals in the Brown bill to bring down the costs of insurance--each potentially controversial and far-reaching in its own right--are provisions to require periodic motor vehicle safety inspections of such things as brakes and tires, installation of safety bumpers on all cars sold in California and a change in law making it easier for police to give tickets to motorists who do not use seat belts.

Other Provisions

Other provisions would set up a fast-track arbitration system for the disposal of damage claims and add a $1 fee to motor vehicle registrations to subsidize prosecutions of insurance fraud. In an obvious attempt to placate California’s trial lawyers, longtime Brown political allies, the measure also would reinstate a law stricken down in court last year that allowed lawyers to sue insurance companies if they did not move fast enough in paying off claims. The trial lawyers have also favored the kind of arbitration system contained in Brown’s proposal.

Nader, who for years has been campaigning for improved highway safety, said Brown’s proposed legislation, if enacted in its entirety, would give California the most progressive automobile insurance system in the nation.

However, rival groups putting together their own legislative package for low-cost insurance, built around a no-fault system, immediately attacked the proposal, indicating that it faces an uphill fight in the Legislature.

Critics charged that Brown’s plan would be excessively expensive and would drive up costs for all motorists.

Brown conceded that potential savings probably will not be enough to pay the cost of providing the low-cost policies. Just how much of a subsidy would be required remains to be seen.

The $350 policies would provide basic liability coverage and be made available only to people at or below the poverty level. There would also be some kind of income eligibility criteria for the $500 policies, but the details have not yet been worked out, Brown said during a news conference attended by Nader and Harvey Rosenfield, chairman of Voter Revolt, the sponsors of Proposition 103.

Brown said the bill “effectively responds to the non-availability or non-affordability of auto insurance.”

Rosenfield, who helped Brown’s office draft the proposed bill, said the legislation is a follow-up to Proposition 103, the landmark measure approved by voters last November aimed at lowering the cost of rising insurance rates. The fast-track arbitration provision, he said, would set up a system providing “speedy and quick compensation.”

Plan Denounced

A rival measure for creation of affordable insurance for low-income motorists, backed by Consumers Union, Assemblyman Patrick Johnston (D-Stockton) and the insurance industry, is in the works.

Spokesmen for the rival group, who filed into the Brown press conference, immediately denounced the Speaker’s plan, indicating that it will run into stiff and possible lethal competition once it reaches final bill form and is processed through legislative committee hearings.

Harry M. Snyder, director of Consumers Union, asserted that the bill “is not going to bring down rates and make insurance more affordable,” as advertised.

In addition to promoting Brown’s bill, Nader also lobbied Monday in favor of proposed legislation by Senate President Pro Tem David A. Roberti (D-Los Angeles) that would create an independent, nonprofit corporation to act as an advocate for consumer interests in insurance matters. Proposition 103 called for creation of such an entity, but the state Supreme Court struck down that provision, citing a constitutional prohibition on initiatives designating private corporations to carry out any duty.

The bill was approved by the Senate Monday on a 24-9 vote. It now goes to the Assembly for further action.

Nader also used the Brown press conference as a forum to renew his attacks on state Insurance Commissioner Roxani Gillespie. Nader again said that Gillespie should resign her post because she has been slow in implementing Proposition 103.

Nader said Gillespie “has shown an irreversible bias and prejudice against the interests and rights of consumers and an irreversible prejudice on behalf of insurance industry interests.”

Gillespie, in a statement responding to the criticism, called Nader’s charges “vague and unsubstantiated.”

“Neither the insurance commissioner nor anyone at the Department of Insurance has ever heard from Ralph. It’s quite obvious that he has little or no knowledge of either the department or the California regulatory process,” the statement said.