Assembly OKs State-Run Quake Insurance

Hoping to ease an “availability crisis” for residential earthquake insurance, the Assembly approved a state-run earthquake insurance authority Wednesday.

By a 55-17 vote, one more than the two-thirds required, the bill moved to the Senate, where lawmakers are being lobbied heavily in advance of a key vote likely to come today.

“The Senate will be an uphill battle. Nothing’s been easy with the California Earthquake Authority,” said supporter Dan Dunmoyer of the Personal Insurance Federation, a leading insurance lobbyist in the capital.

As proposed, earthquake insurance policies for California homeowners would be sold by private companies but administered by the state. The bill would create a California Earthquake Authority that would set rates, provide a uniform policy and oversee payouts for earthquake damage.

The Assembly vote Wednesday seemed to create a momentum that had proponents--such as Dunmoyer--more optimistic about Senate passage, while opponents, including some consumerrights groups, more pessimistic than they had been just a day before.

Gov. Pete Wilson’s signature on the earthquake authority bill would be considered a sure thing, so the climax of the battle appears at hand in the Senate, which has long been regarded, with its Democratic majority, as the greatest obstacle to approval.

In the Republican-controlled Assembly, Democratic votes were required to reach the two-thirds margin and a sizable number were forthcoming.

Fourteen Democrats voted for the measure, while 17 opposed it. All 41 other yes votes came from Republicans.

Assembly Minority Leader Richard Katz (D-Sylmar) took the same position as Bill Lockyer (D-Hayward), the Democratic leader in the Senate. Both oppose the bill, but neither insist on making it a matter of party discipline.

“Members have different points of view based on the needs of their districts, and members should vote the needs of their districts,” Katz said Wednesday.

In the wake of the Assembly vote, Lockyer softened his previous strong view that two-thirds was not obtainable in the Senate.

“Bill feels it’s now a little closer call,” said his spokesman, Sandy Harrison. “The insurers, the Realtors and the bankers are all putting on a big press today to get people to see it their way.”

A leading outside opponent, Harry Snyder, the West Coast co-chairman of Consumers Union, conceded that the momentum may have passed to proponents, which include the state’s Republican insurance commissioner, Chuck Quackenbush.

“There’s tremendous pressure up here, from Realtors, developers, builders, contractors, savings and loans and banks and mortgage brokers,” Snyder said. “They’ve all joined with the insurance companies and together it provides tremendous leverage to push this out. . . . There is a panic in the capital to do something.”

Proponents claim that by capping private insurer liability in earthquakes, the authority will greatly ease a building crisis of availability of homeowners and quake insurance in the state. Opponents say it is an inadequate solution.

“If there is no earthquake for the next 75 years, this plan will work,” said Assemblyman Phillip Isenberg (D-Sacramento).

But, he added, he fears that the next quake will come sooner, and that the resources of the state insurance plan will be insufficient to pay claims under the more limited coverage being offered.

On the other hand, Assemblyman David Knowles (R-Placerville) said most legislators felt that the only alternatives to the authority would be no earthquake insurance at all or a probable crisis in availability of homeowners insurance.

Technically, it is up to the chairman of the legislative conference committee that fashioned the final version of the bill, Sen. Charles M. Calderon (D-Whittier), to make the final call on bringing up the bill today in the Senate before a month-long adjournment begins.

Most observers expect him to do so. Calderon said late Wednesday that he would, “unless unexpected absences of members occur.”