Gillespie Won’t Seek Election : Insurance: The appointed commissioner of the state agency blasts the author of Proposition 103 as she withdraws as a candidate for the post.

Insurance Commissioner Roxani Gillespie on Monday bowed out of the state’s first contest for an elected insurance commissioner, declaring that she wants “to serve the people of California unencumbered by the distractions of political fund-raising and a divisive political campaign.”

The Republican Gillespie, an appointee of Gov. George Deukmejian, also used the occasion to issue a fresh blast at Harvey Rosenfield and his Voter Revolt organization on the same day that Rosenfield disclosed plans to place an initiative on the November, 1990, ballot that would establish a state-run auto insurance system in California as early as 1991.

Accusing Rosenfield of having sought a “quick fix” to California’s auto insurance problems with Proposition 103, Gillespie charged that his new solution would be even worse.

“I find it ironic that at a time in history when even Bulgaria is discovering that government-run industries don’t work, Harvey Rosenfield wants to establish government-run insurance in California,” she declared.

“My 20 years of experience in insurance law, finance and regulation convinces me that a government-run auto insurance system in California would be a disaster. Consumers would continue to pay higher rates because the costs would continue to escalate. And if the system went bankrupt, taxpayers would have to pick up the bill.”

Rosenfield responded, saying that, “To the extent that the insurance companies have abused their privilege to do business in California by refusing to obey Proposition 103, a publicly controlled auto insurance corporation is the only solution.”

He said Gillespie’s “failure to force the companies to obey Proposition 103” is at least “partially responsible” for his decision to pursue the public option. Rosenfield said he will begin circulating petitions next week to put the new initiative on the ballot.

But he pointed out that under its terms, private insurers could avoid ouster from the state if they were to lower their prices to Proposition 103-mandated levels by 1991.

Gillespie’s decision to bow out of the insurance commissioner’s race, after publicly exploring running for several months, came as no real surprise.

Many public opinion polls had indicated she is unpopular and would be a weak candidate. Aides to the prospective Republican candidate for governor, U.S. Sen. Pete Wilson, had said privately they feared her presence on the Republican ticket could hurt the chances of the rest of the ticket.

Gillespie did not allude to these political reasons in her written statement Monday, although she acknowledged in an interview that the polls were a factor. She said no one had urged her not to run.

“I will not seek the nomination for state insurance commissioner in 1990,” her statement said. “I have also decided not to seek employment in the insurance industry when my term in office expires next November.”

Gillespie’s departure from the race leaves only one present Republican candidate, Huntington Beach Mayor Wes Bannister, an insurance agent.

The leading Democrats who have expressed an interest in making the race are former Common Cause executive director Walter Zelman, Board of Equalization member Conway Collis, television commentator Bill Press and San Francisco attorney Ray Bourhis.

Gillespie, who worked in the insurance industry before Deukmejian sent her to the Department of Insurance, said in the statement that, “The people of California are angry and frustrated about the lack of affordable automobile insurance in California, and justifiably so.

“Proposition 103 was born out of this anger and frustration and offered a ‘quick fix’ in the form of a 20% automatic rate reduction,” she said.

But, she went on, “One thing should be abundantly clear to anyone who has followed this process--there is no ‘quick fix’ ” to the problem.

“Proposition 103 did not provide the fast, dramatic rate reductions promised by its proponents because it ignored the basic economics of the insurance industry,” she said.

“The insurance consumer pays for much more than insurance industry profits when he or she buys a policy. The consumer pays for the huge and growing cost of unnecessary lawsuits, fraudulent claims, shoddy repairs and inflated medical expenses.

“Proposition 103 gave state government the tools to control insurance industry profits and expenses, but it did nothing to control costs.”

Gillespie’s blast at Proposition 103 was nothing new. She opposed its passage--along with four other insurance initiatives that failed--even before the 1988 election. And the polls have indicated that a majority of the electorate blames her for failing to quickly and comprehensively implement the initiative.

But Gillespie said Monday that implementing Proposition 103 in a way that would not hurt millions of drivers and cause them to suffer higher rates, from a change in the neighborhood-pricing system, would be impossible.

She charged that Rosenfield, in drafting Proposition 103, “made a mistake and he’s blaming others for it.”

She said, “The solution of our insurance problems lies in a well-run, well-regulated competitive private insurance industry and a regulatory system which controls the costs of providing insurance, as well as insurance industry profits.”

Despite her feelings, Gillespie said, “My goal as commissioner during the next year will be to administer (Proposition 103) as effectively as possible.”

However, Zelman said Monday that he believes Gillespie’s negative views on Proposition 103 should cause her to resign as commissioner now. “If she doesn’t want to make the law work, she should get out,” he said.

Rosenfield earlier on Monday had said his new initiative would set up a state corporation to sell all auto insurance in the state, ousting the private companies, unless the private companies reduced auto insurance rates by 1991 “to the reasonable levels specified by the voters in 103 and unless the number of uninsured motorists has decreased.”

He said the reasonable-price levels referred to in the initiative would be 20% below 1987 price levels, adjusted since for inflation.