Quackenbush, Consumer Group Trade Jabs : Insurance: Gloves are off as new commissioner engages in battle over Prop. 103 issues.

The honeymoon is over between new Insurance Commissioner Chuck Quackenbush and one of the state’s best-known insurance consumer groups.

The two came out swinging Wednesday, with the Proposition 103 Enforcement Project charging Quackenbush with costing consumers $221 million through actions taken in his first 30 days, and Quackenbush accusing the group of having “gotten fat off the public trough” by intervening in Proposition 103 litigation.

The West Los Angeles-based Proposition 103 Enforcement Project is headed by Harvey Rosenfield, who led the campaign for the 1988 rate-cutting initiative. In his Wednesday broadside, Rosenfield said insurance industry interests contributed $2.4 million to Quackenbush’s campaign, including $266,000 after the election.

“There is disturbing evidence that their investment is paying off,” he added, citing recent Quackenbush decisions granting major rate increases to California’s two largest insurers; suspending regulations imposed by his predecessor, John Garamendi, and allowing 20th Century Insurance Co. to settle its Proposition 103 case on terms that Rosenfield considers overly lenient to the insurer.

Last August, the California Supreme Court unanimously rejected 20th Century’s challenge to Garamendi’s Proposition 103 regulations and upheld Garamendi’s order that 20th Century pay its policyholders $120 million in premium rebates and interest. The insurer later asked the U.S. Supreme Court to review the decision, but the chances of reversing a 7-0 verdict by a conservative California court were seen as slim.

Citing his desire to put Proposition 103 litigation to rest and to spare further financial damage to a company already badly weakened by Northridge earthquake claims, Quackenbush on Jan. 27 announced a settlement under which 20th Century would pay an initial $46 million in rebates and as much as $32 million more, depending on the amount of its future earthquake claims.

Rosenfield said that deal cost policyholders up to $74 million. He also listed a $33-million increase in homeowners premiums for State Farm Mutual Automobile Insurance Co. and a $62-million increase in earthquake insurance rates for Allstate Insurance Co. among other consumer-unfriendly actions by Quackenbush.

Quackenbush, for his part, questioned Rosenfield’s motives, saying that he and his groups have collected $1.8 million in legal fees and expenses since 1990 by acting as consumer interveners in lawsuits, such as the 20th Century case.

Noting that the Rosenfield group has more than $500,000 in additional legal bills pending, Quackenbush said in his statement that he intends to “crack down on frivolous legal bills.” He added that the Oakland-based Economic Empowerment Foundation has applied for $950,000 in fees as well.

“An end to litigation in Proposition 103 matters is not in Harvey Rosenfield’s best interests,” Quackenbush spokesman Richard Weibe said Wednesday, adding that much of the consumer group’s time was billed at $300 an hour.

A spokesman for the Proposition 103 Enforcement Project said that Quackenbush had far overstated the amount of the intervener fees, but neither side could supply documentation as of late Wednesday.