Quake Bill Lacks Votes, Lockyer Says

The Democratic leader of the state Senate predicted Tuesday that a state-run earthquake insurance authority will not win approval in the Senate--at least immediately.

Senate President Pro Tem Bill Lockyer (D-Hayward) said through a spokesman that the bill cannot get the two-thirds vote necessary for passage this week.

“This has been discussed in the Senate Democratic caucus and almost all of our members are against it. That would seem to indicate that the proponents don’t have a chance of getting a two-thirds vote,” spokesman Sandy Harrison said.

But even as Lockyer reiterated his opposition to the measure as favoring the insurance industry at the expense of consumers, the Assembly Republican leadership set a vote in that chamber as early as today.

Some observers in Sacramento thought a two-thirds Assembly vote for the Earthquake Authority would create momentum that would help it in the Senate.

There also remained some question of how dedicated Lockyer was in his opposition.

Dan Dunmoyer of the Personal Insurance Federation, a leading industry lobbyist, said he had met with Lockyer, and he quoted him as saying: “I will be a low-profile no vote on this issue.”

That meant to Dunmoyer that the Senate leader would not try to invoke party discipline for the vote. The Democrats have a majority in the Senate.

Meanwhile, Bill Sirola, a spokesman for the state’s largest insurance seller, State Farm, said: “It looks pretty good in the Assembly, but the situation is extremely precarious in the Senate.

“The wild card is Lockyer,” Sirola said. “I just don’t know what the Democratic leadership is doing. I don’t think anybody is quite sure.”

As the crunch came on a measure that would cap insurer liability for earthquake damage and put quake insurance in the hands of the state, the West Coast co-chairman of Consumers Union, Harry Snyder, called for a delay in the vote.

In a letter to Lockyer and Assembly Speaker Curt Pringle (R-Garden Grove), Snyder said the matter should not be taken up until after the July 31 deadline for filing campaign contribution reports.

“The amount of insurance industry money flowing in close proximity to the legislative decisions being made on the $10-billion quake insurance bailout is extremely disturbing,” Snyder wrote.

“During the first three months of this year, one of the principal industry trade groups pumped more than $200,000 into the Legislature in $5,000 to $25,000 denominations,” he said.

A spokeswoman for Pringle said an Assembly vote will take place today.

The debate, following approval of the measure in a legislative conference committee last week, is taking place against a backdrop of reports that homeowners and earthquake insurance are shooting up in price and becoming very difficult to obtain.

The insurance industry believes that its $14.5 billion in Northridge earthquake losses, plus losses in major fires, showed it to be overexposed in California, and it has urged state-run quake insurance as relief. In the meantime, many insurers have stopped homeowners and earthquake insurance sales.

At a hearing on the Earthquake Authority bill Monday in the Senate Insurance Committee, several senators said that if the authority is not approved, the next step may be formal “de-linkage,” a dropping of the requirement that insurers offer quake insurance when they sell homeowners plans.

This, however, would be regarded in many quarters as a draconian step taken only to avert a dire availability crisis.

In another development this week, opposition to the Earthquake Authority has intensified among Bay Area officials on the grounds that the rates for the proposed state insurance would reach $5.70 per $1,000 in coverage in the Bay counties, while it would reach only $3.60 per $1,000 in Los Angeles.

Such regional arguments have been important influences in Sacramento in the past.

But a spokesman for Insurance Commissioner Chuck Quackenbush said Tuesday that one provision of the bill mandates that quake insurance prices be based on seismic risk.

Scientists agree, spokesman Richard Wiebe said, that seismic risk in the Bay Area is greater than in Los Angeles.