Court Upholds Garamendi on Prop. 103 Rules

A state appeals court has endorsed Insurance Commissioner John Garamendi’s means of implementing Proposition 103, the 1988 auto insurance rollback initiative.

But the decision does not necessarily mean that long-delayed rebates will reach consumers any faster.

The unanimous ruling on Thursday by the 2nd District Court of Appeal in Los Angeles upholds a lower court’s decision that Garamendi was within his rights to sweep aside an earlier set of Prop. 103 regulations drafted by his predecessor, Roxani Gillespie.

Garamendi’s regulations provide a framework for determining how much money each insurer must rebate under the voter initiative.

Prop. 103 mandated a 20% across-the-board rate rollback for auto and homeowners insurance. It also required insurers to rebate any “excess” premiums collected during 1989. Garamendi says these unpaid rebates total about $2.5 billion. Three large insurers have already returned money to their policyholders.

The ruling by the three-judge panel also puts an end to a lengthy tug-of-war between Garamendi and the state Office of Administrative Law, which had three times rejected Garamendi’s proposed Prop. 103 regulations. The court ruled that the regulations do not require OAL approval.

That, in theory, would free Garamendi to file his regulations and pursue company-by-company hearings as the next step in the process of obtaining rebates.

In practice, however, all sides are waiting for a decision in another pending case--a lawsuit brought by 20th Century Insurance Co. challenging Garamendi’s order that the Woodland Hills-based auto insurer pay $102 million in rebates.