Insurance ‘De-Linkage’ Sought : Consumers: New commissioner asks Legislature to repeal law requiring firms to offer both quake and homeowners coverage.

Moments after being sworn in Wednesday as California’s second elected insurance commissioner, Charles Quackenbush called on the Legislature to repeal the law requiring homeowners insurers to also offer earthquake insurance.

Quackenbush said “de-linkage” would quickly revive the California homeowners insurance market, which has been in near-collapse since last summer because of losses from the Northridge earthquake.

But consumer advocates attacked the proposal, saying it would make earthquake insurance even less available than it is now.

Quackenbush, a Republican and former Silicon Valley entrepreneur whose campaign was fueled by $2.3 million in insurance industry contributions, presents a stark contrast to his Democratic predecessor, John Garamendi, the commissioner whom insurers loved to hate.

Quackenbush, in a 20-minute speech after his swearing-in ceremony in the office of Gov. Pete Wilson, said the message of the Garamendi administration to insurers was “We don’t need you.”

“But voters did not ask us to provide insurance by government fiat or to drive insurers out of the state,” he said.

Quackenbush promised streamlined, market-oriented regulation, which he said will result in lower insurance rates. He said he believes that a speedier, more responsive regulatory system will encourage insurers to innovate and improve.

He vowed to reduce delays in processing applications by new insurers seeking to enter California and in ruling on requests for rate changes. He predicted that “cutthroat competition, falling prices and better service” will result.

Of Proposition 103, the 1988 insurance rate-rollback initiative, Quackenbush repeated what he had said during the campaign: “It is the law and it will be enforced.” He said he will follow the regulations Garamendi drafted to enforce the measure--regulations that withstood a state Supreme Court challenge but are under appeal to the U.S. Supreme Court.

Quackenbush said that within the next few days, he will send letters to the chief executives of every insurance company that still owes a Proposition 103 rebate to policyholders and invite them to negotiate a settlement. He again promised to reach settlements with all remaining insurers and have rebate checks in consumers’ hands within six months.

In order to ensure that new regulations conform with his philosophy, Quackenbush said, he will immediately withdraw all Garamendi regulations that have not yet been implemented but are pending before the Office of Administrative Law. He said some regulations may be resubmitted if he agrees with them.

To deal with remaining problems from the Jan. 17 earthquake, Quackenbush said, he will establish a “mediation project” to help resolve disputes between policyholders and their insurers over quake claims.

Quackenbush may encounter problems getting an earthquake insurance de-linkage past Wilson, who has previously opposed such a plan. However, a Wilson aide said Wednesday that the governor might consider signing such legislation if it contained sufficient safeguards to make sure earthquake insurance would remain available.

Citing the current turmoil in the California homeowners insurance market--where nearly all big insurers have stopped offering new policies or sharply curtailed their writings--Lisa Briggs of the Utility Consumers Action Network in San Diego said insurers clearly do not want to offer earthquake insurance and that if the requirement were removed, they probably wouldn’t.

Quackenbush said he would favor legislation that required insurers to continue serving their existing earthquake insurance customers. He said he expects the kinds of market innovations that arise from freer competition to result in creative solutions for new earthquake insurance customers.

Quackenbush also said he will drop Garamendi’s pending plan to use the California Fair Plan--the industry-sponsored insurer of last resort--as a vehicle for stand-alone earthquake insurance, citing unspecified legal problems. However, he said he will leave in place Garamendi’s earlier action under which the Fair Plan expanded its homeowners coverage statewide and offered limited quake coverage.

Like Garamendi, Quackenbush believes that the ultimate solution to the earthquake insurance problem is a national one. He said he will lobby Congress for passage of the Natural Disaster Protection Act, which would create a nationwide pool of insurance money to cope with disasters ranging from hurricanes to floods to earthquakes.