Wilson Again Pressured on Rebates : Insurance: A Senate committee urges the governor to overrule an appointee to clear the way for Prop. 103 checks.

A Democratic-dominated legislative committee Thursday turned up the pressure on Gov. Pete Wilson to again overrule one of his appointees and clear the path for Californians to receive $2.5 billion in long-delayed Proposition 103 insurance rebates.

Over GOP opposition, the Senate Insurance Committee urged the Republican governor to order the implementation of rebate and rate-setting rules even though they have been scuttled by Marz Garcia, Wilson’s director of the Office of Administrative Law.

Last month, Garcia rejected the regulations, which had been proposed by Insurance Commissioner John Garamendi, a Democrat, on grounds that they gave Garamendi “confiscatory” authority over insurance companies. Garamendi denied the assertion and asked Wilson to reverse Garcia. Wilson is expected to respond soon.

The committee’s 5-2 vote of the resolution by Assemblyman Byron D. Sher (D-Palo Alto) sent it to the full Senate for a vote next week. Although the measure is advisory, it would express the Legislature’s election-year impatience with the long failure to provide insurance premium rebates promised by Proposition 103 in 1988.

At a Senate committee hearing Wednesday, new Chairman Art Torres (D-Los Angeles) accused Garcia of using his post as chief screener of proposed bureaucratic regulations to “thwart the process” of putting insurance company rebate checks into the hands of car insurance and other casualty insurance customers.

“It is clear that he believes it is his duty or responsibility to put roadblocks in the way,” Sher said.

Neither Garcia nor any Wilson Administration official appeared before the committee. However, representatives of the insurance industry sided with Garcia and warned that it would be folly to conduct rate hearings based on legally defective rules.

In a prelude to the current dispute, Garcia, a former Republican state senator and banker, stirred controversy last summer by rejecting temporary refund and rate-setting regulations. Garamendi appealed to Wilson for a reversal. In October, Wilson handed Garcia an embarrassing rebuke by siding with Garamendi and ordering the temporary rules implemented so the rebates could be hastened.

The current controversy involves proposed permanent rules, but even if implemented they would only help clear the administrative thicket for implementation of Proposition 103. The insurance industry has fought the issue in court since voters approved the proposition, and the legal battle could go on for years.

The $2.5-billion rebate, basically, represents the “excess” profits that insurance carriers earned on equity in 1989, plus 10% in interest from May, 1989, when the constitutionality of Proposition 103 was upheld by the state Supreme Court.