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GOP Moves to Unsnarl Quake Insurance Issue

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TIMES STAFF WRITER

Assembly Republicans, saying they were compromising to speed creation of a state-run quake insurance agency, agreed Monday to abandon efforts to abolish the requirement that all policyholders who are sold homeowner insurance also be offered earthquake coverage.

Assembly Speaker Curt Pringle (R-Garden Grove) and Assembly Insurance Committee Chairman David Knowles (R-Placerville) expressed hope at a Sacramento news conference that by dropping what is called “delinkage,” they would end a two-month stalemate over the proposed California Earthquake Authority.

Pringle said he hoped that the Legislature could complete action on the authority by next Monday, although actual operation of the agency would still hinge on a federal tax exemption granted by the Internal Revenue Service.

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But immediate action by a legislative conference committee to send the earthquake authority bill to the Assembly and Senate floors was stymied Monday when the committee chairman, Democratic state Sen. Charles M. Calderon (D-Whittier), had reservations.

Calderon has been negotiating in recent days with Knowles and others behind closed doors, but a source close to him said that he was not really prepared for Knowles to release the language of the compromise yet. He was reported to be considering releasing somewhat different language.

No precise language was made public Monday on either side. Calderon was closeted with Knowles and a Pringle aide through much of the day negotiating over it.

At their news conference, Pringle and Knowles said one feature of the compromise would allow small insurance companies to delay for five years any capital contribution to the earthquake authority, as an incentive for their participation. Large companies would still have to contribute at the outset.

The key step that the Republican lawmakers reported taking Monday, however, was to stop what had been months of GOP efforts to end linkage between homeowner and quake insurance sales. Democratic leaders in the Legislature had said they could never accept this.

The concept of the new earthquake authority is that the state would take over operation of quake insurance. Although it would still be marketed by the companies, premiums would be transmitted to the agency to pay claims. The companies also would have a cap on total liability for quake losses.

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Consumer group representatives said Monday that they were worried by any deal being made behind closed doors, expressing fears that it would benefit the insurance industry more than consumers.

Times staff writer Max Vanzi contributed to this story.

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