CALIFORNIA ELECTIONS INSURANCE COMMISSIONER : Bannister Vows to Back No-Fault Initiative

Republican insurance commissioner candidate Wes Bannister suggested Thursday that his opponent, Democrat John Garamendi, is opposing no-fault auto insurance because he has fallen into the grasp of the trial lawyer lobby, and he vowed, as commissioner, to sponsor a new no-fault initiative if that becomes necessary.

“I would ask (Assembly Speaker) Willie Brown (D-San Francisco) for legislative action first,” Bannister told a meeting of the Arcadia Republican Women’s Club. “After he told me ‘no,’ as I assume he would, I would spearhead an initiative.”

Bannister, an insurance agent in private life, contended that without no-fault, no low-cost auto insurance policy is feasible in California. He added that without such an affordable policy available, at least 40% of the state’s drivers soon will be uninsured and the whole auto insurance system could collapse.

The Republican candidate, who is raising campaign money from insurance agents and insurers, said he had found that Garamendi’s “largest group of contributors” is lawyers.

But Garamendi denied in a telephone interview that lawyers who have a stake in the insurance issue--specifically the trial lawyers--are giving to his campaign. He also denied that they are giving to the campaign of his wife, Patti, who is running for the state Senate vacancy created by his recent resignation from the Legislature.

“The fact is that as of this moment, my contributions from trial lawyers, and my wife’s, are virtually zero,” Garamendi said. “It is minimum. I would suppose there would be some lawyer money from all kinds of lawyers, but trial lawyer money is virtually nil.”

Trial lawyers, who press the claims of accident victims, are staunch opponents of no-fault, in which one’s own insurance company pays losses and lawsuits are strictly limited. The trial lawyer lobby traditionally has contributed heavily to Democratic campaigns.

Bannister has been saying in his campaign speeches, as he did Thursday, that cutting costs of litigation would bring insurance cost savings of at least 25%.

Garamendi on Thursday said the savings, even if all litigation were ended, would amount to no more than 20% and there are many other ways of cutting insurance costs. In any case, he maintained Thursday, the Legislature is not going to pass no-fault so there is no point in pursuing it.

In his Arcadia talk, Bannister also questioned whether the 11.2% minimum insurance company profit set by outgoing Insurance Commissioner Roxani Gillespie for determining future California insurance rates is high enough.

“Public utilities in this state are allowed 13.5%,” Bannister said. “Banks are allowed 15%, and businesses get 16%. I’d like to know how the commissioner came up with 11.2.”

Gillespie has said the 11.2% figure represents the average annual rate of return for all U.S. property casualty insurers from 1973 through 1987. But she has held out the possibility of granting a rate of return as high as 19% under certain circumstances.

Garamendi responded later that he found it “outrageous” that Bannister was suggesting he might be willing as commissioner to grant the insurers higher rates of profit than those allowed by Gillespie.

Bannister, discussing proposals for low-cost, no-frills policies said he supports the terms of a no-fault bill sponsored by Assembly Finance and Insurance Committee Chairman Pat Johnston (D-Stockton) that died this year. The Johnston bill called for a policy costing only $180 a year. It would have given accident victims a maximum of $15,000 in bodily injury benefits, but would have sharply restricted the right to sue.