Insurers’ Lobbying Expenses Criticized

Consumer advocate Ralph Nader and Proposition 103 author Harvey Rosenfield released charts Monday showing that insurance industry lobbying costs in California in 1989 and 1990 exceeded $19 million, not including campaign contributions to legislators or the cost of lawyers engaged in anti-Proposition 103 lawsuits.

Spending by insurers vastly exceeded lobbying costs of the California Trial Lawyers Assn., with which Nader and Rosenfield are aligned in fighting proposals for no-fault auto insurance. Trial lawyer lobbying costs for the two-year period were $1.8 million.

“The insurance industry’s massive resources have been used primarily to lobby for the passage of no-fault and encourage state officials to join with the industry to undermine Proposition 103,” Rosenfield told a Sacramento news conference.

Of the $19.2 million spent by the insurance industry, at least $1.7 million was paid by health and life insurers that are only tangentially involved in the continuing struggle in the state over auto insurance reform.

But overall, “what these figures show is that the insurers have unlimited resources and will spend whatever it takes to get their way,” asserted Ian Herzog, president of the trial lawyers group, in a separate statement.

Echoing a frequent trial lawyer argument against no-fault, Rosenfield and Nader contended that the proposed system--under which accident victims collect from their own insurer regardless of who is at fault--would not result in lower average auto insurance premiums than Californians have now.

And they repeated their criticism of Insurance Commissioner John Garamendi for switching from an anti-no fault position to favoring the reform.

“It is disturbing that California’s first elected insurance commissioner has joined the industry in its phony campaign to convince the voters that no-fault will lower rates,” Nader said.

Garamendi, along with leaders of Consumers Union, the Latino Issues Forum and a spokesman for the Assn. of California Insurance Companies, said that no-fault would slow the rise of insurance rates and is best for California consumers.

Garamendi said that while he respects the work of Nader and Rosenfield on behalf of consumers, “virtually every other consumer advocacy organization in the country” supports no-fault.

Harry Snyder, West Coast director of Consumers Union, said the savings from no-fault auto insurance outweigh any increased costs. John Gamboa, head of the Latino Issues Forum, accused Nader of turning his back on the poor by opposing a bare-bones no-fault policy.

Robert Gore, spokesman for the industry association, noted that New York, a no-fault state, has shown a slower rise in the cost of auto insurance than California.