No-Fault Insurance

It is unfortunate that Commissioner John Garamendi, elected to regulate and force the insurance carriers to obey Prop. 103, would now flip-flop and endorse “no-fault,” the No. 1 item on the insurance industry’s wish list (front page, Sept. 6). The insurers want no-fault to increase their already substantial profits.

Automobile insurance is extremely profitable. The last time I looked, State Farm, a mutual company that is supposed to pass its profits along to its policyholders, had a surplus of $19 billion, growing at the rate of $160 to $180 million a month. The people of the State of California passed Prop. 103 and elected Garamendi in part to force the insurers to refund the excessive premiums they have collected. Instead, insurance companies have spent hundreds of thousands of dollars to successfully beat back in the courts all attempts to make them comply with 103.

There are several progressive alternative proposals being discussed in the Legislature that would result in meaningful cost savings and reductions in claims and cost of handling claims. These proposals would have imposed meaningful medical cost containment, gotten control of the body shops, significantly increased the penalties of those who present fraudulent claims as well as those who abuse the system and diverted the majority of the claims out of the courts.

Oddly, the insurance industry has shown very little interest in increased penalties for fraudulent and abusive claims practices, but have seemed content to merely pass the costs on in the form of higher premiums.

IAN HERZOG

President

California Trial Lawyers Assn.