Garamendi Won’t Lift Rate Freeze : Insurance: Commissioner will pursue an appeal of key Prop. 103 suit, taking his battle to implement the premium- rollback initiative to the Supreme Court.

Following his court defeat in a key Proposition 103 lawsuit, Insurance Commissioner John Garamendi says he plans to maintain a freeze on insurance rates while taking his fight to implement the 1988 premium-rollback initiative to the California Supreme Court.

Garamendi and legal aides spent the weekend and Monday examining the 85-page decision Friday by Judge Dzintra I. Janavs of Los Angeles Superior Court in an effort to find the best avenue for appeal.

Janavs, in a long-awaited ruling involving 20th Century Insurance Co. of Woodland Hills, rejected Garamendi’s regulations for implementing Prop. 103, saying that his attempt to apply a single formula to all insurers illegally ignored their differences.

Insurers, Janavs ruled, are entitled to individual hearings to determine their rollback liability under the initiative. She also said Garamendi exceeded his authority under Prop. 103 by trying to set rates instead of merely reviewing them.

Most rates in California have been frozen for four years while the Prop. 103 battle has raged.

Hailing Janavs’ decision, insurers Monday called on Garamendi to push ahead with company-by-company rebate hearings and drop his quest for a formula.

“If (insurance regulators) want to go forward and decide our case, we’re ready to roll,” said Paul Alexander, a lawyer for State Farm Insurance Group, which has been involved in rebate hearings since last spring.

State Farm, California’s largest property/casualty insurer, says that it had a $40-million operating loss in California in 1989 and therefore shouldn’t have to pay any rebate.

Under his formula, however, Garamendi ordered State Farm in October, 1991, to pay rebates and interest of $235 million.

“Of course the companies want to go ahead with the hearings,” said Harvey Rosenfield, whose Voter Revolt organization led the successful campaign for Prop. 103. “They know that under this decision, none of them would have any rollback liability.”

Deputy Insurance Commissioner Steven Miller said the Insurance Department plans to move forward with the hearing process, but first will take steps to head off a “stampede of insurers who want us to rubber-stamp their filings.” He declined to detail the steps.

Garamendi, in a press conference Saturday at Los Angeles International Airport, declared that he would not abide by a ruling that would “force the elected insurance commissioner to sit on the sidelines while the insurance industry pillages the people of California.”

He said he expected the ruling to spark companies to seek rate increases.

As of November, the Insurance Department had spent $7 million on legal fees connected with the Prop. 103 fight. Asked whether an appeal might be throwing good money after bad, Miller said there was never any question that the case would end up in the high court, regardless of who won in Superior Court. It would be irresponsible of Garamendi not to pursue the appeal, he said.

The stock of several property/casualty companies active in California gained sharply on Monday, apparently in reaction to the ruling Friday.

Twentieth Century Industries, parent of 20th Century Insurance, gained $3 to close at $31.872 a share on the New York Stock Exchange. Mercury General Corp.--whose Mercury Insurance Co. unit settled with Garamendi and issued rebates last year--was up $2.25 to $34.625 in over-the-counter trading.