Senate Barely Passes Prop. 103 Consumer Advocate Bill

Long-stalled legislation that would create a powerful new state office to advocate the interests of California consumers on Proposition 103 and other insurance issues cleared the Senate with no votes to spare Friday.

The embattled bill, stymied on the floor by the stiff opposition of the insurance industry for nine months, abruptly broke free as the Senate neared a deadline for acting on it.

Senate President Pro Tem David A. Roberti (D-Los Angeles), the bill’s author, argued that all the confusion in trying to implement the Proposition 103 insurance initiative approved by the voters in 1988 “convinced me more than ever that we need a consumer advocate.”

A 21-11 vote, the precise majority required in the 40-seat Senate, sent the bill to the Assembly where it faces an uncertain future. It is supported by consumer organizations and politically potent trial lawyers and opposed by the insurance industry.

The bill would establish in the state Justice Department an “insurance consumer advocate” who could intervene in virtually “any judicial or administrative proceeding” related to insurance.

Proposition 103, which established a new elective insurance commissioner and promised a 20% rollback in most insurance rates, was substantially modified by the state Supreme Court. The court retained the commissioner but threw out a provision requiring an insurance “intervenor,” who presumably would fight the battles of consumers before the commissioner.

Roberti maintained that the proposed “consumer advocate,” who would be appointed by the attorney general and be subject to confirmation by the Senate, merely would substitute for Proposition 103’s intervenor.

“Insurance companies can spend jillions (of dollars) on attorneys, but consumers cannot,” Roberti said.

But opponents argued that creating a new state office would add another level of bureaucracy and confusion in trying to make Proposition 103 work.

“One of the side effects of this bill may be to dramatically undercut the authority of the new elected insurance commissioner,” warned Sen. John Doolittle (R-Rocklin), an ally of the insurance industry. “This will hopelessly further mire the whole (Proposition 103) process.”

Under the bill, the consumer advocate would have access to all records of the state Department of Insurance, a requirement supporters said would make available closely guarded insurance information. “Right now, it is impossible to get information from the insurance companies,” said Sen. Herschel Rosenthal (D-Los Angeles).

In addition, the insurance commissioner, when elected later this year, would be required to “cooperate fully” with the consumer advocate. If an insurance company wanted to adjust its rates, it would have to submit the proposal to the commissioner and advocate simultaneously.

The advocate’s operations would be financed by a 10-cent charge on new and renewed insurance policies. Insurance industry litigants also could be billed for reimbursement of the advocate’s expenses in cases where the advocate made a substantial contribution to the proceedings.