Prop. 103 Author Rejects Bid to Help Insurance Dept.

In a surprising overture to one of his sternest critics, Insurance Commissioner Chuck Quackenbush announced Tuesday that he had invited the consumer group headed by Proposition 103 author Harvey Rosenfield to act as the Insurance Department’s legal representative in its drive to obtain Proposition 103 premium rebates from insurance companies.

The move apparently reflects Quackenbush’s frustration with insurers that are resisting his effort to fulfill one of his central campaign promises: to get all remaining Proposition 103 rebates into consumers’ pockets within his first six months in office.

Rosenfield, who has incessantly criticized Quackenbush’s enforcement of the 1988 insurance rate-rollback initiative, declined the invitation, saying it would be a conflict of interest for his nonprofit advocacy group, the Proposition 103 Enforcement Project, to hire itself out to the commissioner.

Quackenbush also announced new rebate settlements with seven insurance companies, and Rosenfield--resuming his characteristic role--immediately attacked them as inadequate “sweetheart deals.”

The Quackenbush solicitation of Rosenfield’s legal help fell little short of bizarre.

The two have been at odds from the moment Quackenbush took office in January. Rosenfield’s group is currently suing the commissioner to overturn his proposed rebate settlement with 20th Century Insurance Co.

Two months ago, the commissioner accused the organization of having “gotten fat off the public trough” by intervening in Proposition 103 litigation. Quackenbush withheld more than $500,000 in legal fees earmarked for the group, questioning whether it had legitimately earned the money. The fees are still under review.

Richard A. Wiebe, Quackenbush’s media secretary, insisted that the invitation was sincere.

“We want to send a message to the industry that we’re serious about getting these rebates,” Wiebe said. “If this news release scares one of those companies (that are resisting settlements), then we’ve accomplished our purpose.”

Quackenbush singled out four insurers as having “demonstrated little movement toward resolving their refund obligations”: Nationwide Group, Employers Mutual, Ohio Casualty Group and Highland Insurance Group.

In rejecting Quackenbush’s offer, Rosenfield said: “It’s offensive to be used by the commissioner as a bargaining chip. . . . If he really wants our participation, let him pledge not to interfere with the intervenor process.”

Under the settlements announced Tuesday, Travelers Indemnity Co. will pay $15 million, an average of about $155 per California policyholder, on top of the $3.8 million that the company refunded in 1989, Quackenbush said. American Financial Insurance Group will pay $19 million, an average of $176 per policyholder.

Under other settlements, American Bankers Insurance Co. will rebate $4.1 million; the Gulf Insurance Group, $3 million, and California Accountants Mutual, $395,000. The average rebates per policyholder were not available for those three companies.

Indiana Lumbermens Mutual will rebate $229 to the lone Californian who held one of its policies during the rollback period, from November, 1988, to November, 1989. The seventh settlement was with Jewelers Mutual Insurance Co., which, like 37 other insurers so far, was found to have zero rollback liability.

Rosenfield, citing figures compiled by former Insurance Commissioner John Garamendi, said the rebates should be far greater. American Financial, for example, should pay $73.4 million; Travelers, $30.4 million, and American Bankers, 27.1 million.

However, Kenneth L. Gibson, chief deputy insurance commissioner, said the numbers Garamendi compiled were irrelevant to the settlements because they did not include all the expenses that the companies incurred in California in the rebate year, nor did they reflect the impact of a 1993 law allowing insurers to deduct agents’ commissions and premium taxes from their rollback liability.