Quake Insurance Bill Stalls in State Senate

Efforts to pass a bill creating a state earthquake insurance authority stalled in the state Senate on Thursday as a half-dozen Democrats pleaded on the floor for a more consumer-friendly bill.

But as evening fell, proponents had not quite given up on getting the two-thirds margin--or 27 votes--required.

“I think we can still do it,” said state Sen. Charles M. Calderon (D-Whittier), floor manager for the bill.

The first vote, taken after an hour’s spirited debate, showed 20 senators for, 13 against, two absent and five not voting.

Among those voting no were Senate President Pro Tem Bill Lockyer (D-Hayward), the Democratic leader, and Herschel Rosenthal (D-Los Angeles), chairman of the Insurance Committee.

The proposed California Earthquake Authority would set rates, provide a uniform earthquake insurance policy for homeowners and oversee payouts for earthquake damage. Insurers would still sell the policies, but they would remit the premiums to the state.

Lockyer called for reopening negotiations over details of the bill, “tweaking it one more time to make it better for consumers.” As it stood, he said, it represented “a bailout for the Big Three” companies selling homeowner and earthquake insurance, State Farm, Farmers and Allstate.

Rosenthal called the bill--approved 5-1 by an Assembly-Senate conference committee--”a bad deal for consumers” and said he saw a considerable danger that in a big quake the state agency would not have sufficient resources to pay all claims.

Championing the measure, Calderon, who chairs the conference committee, pleaded that while he knows the proposal is not perfect, it is the best solution presently available to a state facing the refusal of many insurers to sell earthquake policies in the wake of the devastating Northridge quake.

The first Senate vote seemed to mean the bill--supported by Insurance Commissioner Chuck Quackenbush and the insurance industry--would fall short, necessitating new and possibly protracted negotiations in the conference committee.

But Calderon said he still hoped to get the necessary votes. Calderon said some of the five senators not voting had told him they would vote yes, and he knew of one senator who would switch from a no to a yes vote. A second senator who had voted no, he said, had told him he would provide the 27th yes vote, if he could get 26.

Just outside the Senate chamber were about 20 lobbyists for the bill. One of the most influential, Dan Dunmoyer of the Personal Insurance Federation, said that even if the proponents failed to secure passage Thursday, he remained optimistic that they would win as early as next week.

The Consumers Union, a leading opponent of the bill, called earlier this week for delaying the vote until after the July 31 deadline for reporting the latest campaign contributions.

Its West Coast co-chairman, Harry Snyder, said he believes the insurers and other business and banking interests are pouring thousands of dollars in contributions to induce recalcitrant legislators to change their position.