Van de Kamp Writ Backs Prop. 103

Atty. Gen. John K. Van de Kamp and consumer groups banded together Wednesday to charge that insurance providers have not proved that they need hardship exemptions from the rate rollbacks ordered by voters under Proposition 103.

Van de Kamp put the objections in a formal petition that calls on Insurance Commissioner Roxani M. Gillespie to deny exemptions sought by hundreds of firms that sell insurance in California. He announced his position at press conferences in San Francisco and Los Angeles.

The petition enjoys no special force of law because it was filed by the attorney general, who is not directly involved in analyzing the exemption applications. But Van de Kamp, a Democrat who is expected to run for governor next year, has been a defender of Proposition 103. The initiative allows citizens to file petitions on insurance matters.

The initiative ordered insurance companies to drop premiums on auto and homeowner policies 20% below the rates in effect in November, 1987. After its passage last fall, the California Supreme Court ruled that Gillespie could waive the requirement for companies that prove they cannot make a fair return.

Thousands of applications for exemptions have been filed with the state and are under investigation by the Department of Insurance. Van de Kamp said Wednesday that, at his request an expert, J. Robert Hunter, scrutinized some of the exemption applications and found that they included “bogus claims” of expenses and demands for profit margins of up to 35%.

Hunter is a former federal insurance administrator who also found that insurance providers filed “manipulated numbers” with the state to justify being excused from the rollbacks, Van de Kamp said.

As part of his petition, Van de Kamp said that limits should be placed on the expenses allowed to count as overhead.