Nader Alters Criticism of No-Fault : Insurance: He says industry-backed bill would raise rates for most drivers. Previously, he blasted loss of policyholders’ right to sue.

Consumer advocate Ralph Nader on Monday denounced the no-fault auto insurance bill backed by Gov. Pete Wilson and the Consumers Union as “a cruel anti-consumer power play by insurance companies” that will result in higher insurance rates for most policyholders.

Nader, who has traditionally joined trial lawyers in opposing no-fault legislation because it would curtail the right to sue, adopted a new approach at a Los Angeles news conference, contending that the proposed California plan contains far fewer benefits than no-fault systems in Michigan and New York.

The lack of any coverage in the California bill for fixing damaged cars or paying off lawsuits still permitted for serious or permanent injuries would force most policyholders to buy expensive additional insurance to round out their coverages, Nader said.

He charged that the $220-a-year initial price tag on the “no-frills” policy is deceptive because it would not be the full price. He also noted that it is not indexed for inflation, so that each year its benefits will decline in “real dollars.”

Nader’s remarks were quickly assailed by spokespersons for a coalition of 27 consumer, low-income and minority organizations that have joined many insurance companies, agents and brokers in supporting the bill authored by state Sens. Patrick Johnston (D-Stockton) and Frank Hill (R-Whittier).

John Gamboa, executive director of Latino Issues Forum, charged that in expressing the concerns he did Monday, Nader is championing middle-class consumer interests.

“Unfortunately, he is a fish out of water on issues of concern to the poor,” said Gamboa, who maintains that the policy offering $15,000 in medical payments and lost wages from one’s own insurance company, regardless of who is at fault in accidents, will give low-income policyholders far more in benefits than they currently get from liability policies costing $1,000 a year.

Judith Bell of the Consumers Union, who wrote the bill with Johnston aide Jeffrey Shelton, conceded that there is “no question the benefits are less than Michigan and New York, but that’s the only way you make an affordable policy.” She, too, said that benefits under the new basic policy would exceed those available now.

Neither Bell or Shelton took explicit issue Monday to Nader’s contention that many policyholders would pay more under no-fault, although they previously have cited insurance company analyses as proof that, for the most part, this would not be the case.

In his news conference, Nader cited a 1985 federal study that “no-fault leads to higher insurance rates--as much as 40% higher on the average than in states without no-fault . . . primarily because under no-fault, both parties in a car accident are compensated by insurers, not just the innocent victim.”

Bell said the study includes many states that have watered-down rather than pure no-fault systems and that its results are misleading.

A spokesman for the Assn. of California Insurance Companies declined Monday to rebut Nader’s points, referring callers to the consumer groups that are backing the bill.

The spokesman, Bill Packer, said the industry is not officially a sponsor of the bill, even though it is supporting it with $1.2 million in advertising.

Nader also criticized the no-fault bill for its provision that state and federal disability coverages should be used first to pay for auto accident medical costs, before resorting to the no-fault auto policy. He said this would shift costs to already-strained governments.

He further contended that “if the insurance industry succeeds in shifting attention from Proposition 103 to no-fault, Californians will never see 103’s rollback and other reforms.”

By coincidence, hearings called by Insurance Commissioner John Garamendi to write new standards for Proposition 103 rollbacks and future insurance rate setting began Monday in Los Angeles and are expected to last several weeks.