Activists Warn of Perils to Quake Insurance : Legislature: Consumer advocates fear that availability will be limited by conference committee. Insurers say they should not have to offer such policies.

As lawmakers prepare to thrash out competing insurance bills, consumer advocates warned Tuesday that earthquake insurance may soon become impossible to buy if the Legislature fails to preserve the people’s right to purchase it with a homeowner policy.

Singled out for criticism was SB 58, a bill by state Sen. John Lewis (R-Orange), which would drop the requirement that insurance companies offer earthquake policies along with regular homeowners coverage.

Insurers sponsored the so-called “de-linkage” measure in the wake of monumental losses suffered in the January, 1994, Northridge earthquake.

According to estimates from the Insurance Information Institute, companies paid out $11.7 billion in claims from that disaster. As a result, some insurance firms have stopped offering quake policies and others say they are preparing to withdraw from the market.

The consumer groups’ warning comes as a series of earthquake insurance bills advanced through the Assembly and Senate on Tuesday and headed to a joint conference committee, where consumer advocates fear that compromises will limit quake coverage availability.

Harry Snyder of the Consumers Union said he fears that, by its very nature, the conference committee process will favor insurers over policyholders because the industry carries more clout in Sacramento. Consequently, he said, consumers may face the prospect of no earthquake insurance availability at all.

“Homeowners are at great risk in the conference committee unless the issues are clearly laid out,” Snyder said. “The great fear would be they’d [the lawmakers] take one from the A column, one from the B column and try to . . . mix and match and come up with a proposal. It’s not going to work.”

Such an attempt to appease all sides, Snyder said, tends to weight proceedings toward insurers who are unbending in their opposition to the requirement that they continue to provide earthquake coverage.

Joining Snyder at the news conference was a coalition of Democratic Assembly members--former Speaker Willie Brown of San Francisco, Barbara Lee of Oakland and Richard Katz of Sylmar, all of whom pledged to seek seats on the conference committee.

Barry F. Carmody, president of the Assn. of California Insurance Cos., responded that, “we are delighted to see that the Assembly Democratic leadership is concerned about the issue of earthquake availability.”

Carmody said his group supports the “de-linkage” bill to reduce financial burdens on insurers. At the same time, however, he said the industry supports finding some other way of continuing to provide quake policies for consumers.

Brown contended that selling homeowners policies without earthquake coverage amounted to a sham because residences in seismically active areas would not be fully covered without earthquake insurance.

“It’s a bogus sell of a bogus product without the linkage between quakes and homeowners insurance,” he said, noting that “for many people, the only real asset they have is their home.”

Snyder accused insurance companies of collecting earthquake insurance premiums for years, and then trying to abandon their responsibility when the time comes to pay out. “To put it in a nutshell, the insurance industry likes to treat our premium dollars like a roach motel--they go in but they don’t come out,” he said.

The bills destined for conference committee are:

* SB 58, the measure to dissolve the requirement that sellers of homeowners policies offer quake insurance as well.

* SB 266, by state Sen. Herschel Rosenthal (D-Los Angeles), requiring insurance companies to offer quake coverage of up to $400,000.

* AB 1366, by Assemblyman David Knowles (R-Placerville), requiring insurers to offer a no-frills, bare-bones earthquake policy covering residential structures but few contents.

* AB 13, by Assemblywoman Juanita McDonald (D-Carson), allowing de-linkage but developing other forms of quake coverage for homeowners.