Impasse Over Prop. 103 Rebates Broken

State Insurance Commissioner John Garamendi and the state Office of Administrative Law reconciled their differences Tuesday and the office approved, one day after the original deadline, Garamendi’s emergency regulations for ordering Proposition 103 premium rebates to millions of California policyholders.

The agreement gives Garamendi the go-ahead to announce the first general rebate figures on Thursday. He is expected to reveal his proposed total amount for rebates of 1989 premiums for auto, homeowner, commercial and other lines of property casualty insurance. But a company-by-company breakdown is not expected for another month.

Garamendi’s calculations for various companies will vary sharply, depending on the firms’ 1989 profits, allowable expenses and the ratio of premiums collected to the surplus each company has set aside. Therefore, individual policyholders are not apt to learn much on Thursday about what their rebates may be.

Regardless of what figures Garamendi ultimately decides on, many insurance companies have indicated they will appeal his orders in the courts, which means it may be a long time before rebate checks are in the mail.

Garamendi aides say they reserve hope that some companies will make the rebates rather than continue anti-Proposition 103 litigation that already has lasted nearly three years. If they do, some policyholders could get rebate checks, with 10% interest since 1989, this fall.

The matter, stalled by a disagreement between Garamendi and the Office of Administrative Law, was moved along Tuesday when representatives of the office and Steven Miller, deputy insurance commissioner for rate regulation, agreed to make changes in the regulations Garamendi submitted earlier this month. The Administrative Law Office had refused Monday to approve them.

The most important changes included the Insurance Department’s agreement to put any figures that apply to all companies into the formal regulations. These figures include an annual rate of return, caps on executive compensation and standards for company efficiency.

Garamendi had hoped to get the authority to simply announce general formulas for calculating rebates. Now he will have to submit to a formal process under which the formulas will be filed with the Office of Administrative Law, which must approve them and submit them to the secretary of state before the rebates can go into effect.

In other words, the numbers that Garamendi will announce Thursday will have to be formally adopted later, which should happen within a week or two.

The breakdowns of rebate amounts each company will have to pay, based on the formulas in the regulations, will not have to be submitted to the Office of Administrative Law.

“We’re delighted to be able to proceed and process the rollback orders as the commissioner has always intended by the end of summer,” Miller said.

“They agreed to make some changes that I requested, and it’s fixed to our satisfaction,” said John Smith, deputy director of the Office of Administrative Law.