Nader Attacks Quake Insurance Authority Plan

The state earthquake insurance authority proposed by Insurance Commissioner Chuck Quackenbush would not provide real insurance at all, but merely be a rip-off of future earthquake victims, consumer advocate Ralph Nader told an overflow crowd of several hundred on Saturday night.

Nader, a third-party candidate for president under the Green Party label, said the proposed new state agency for homeowners would offer average deductibles of a whopping $35,000, when the average damage claim for the 1994 Northridge earthquake was only about $20,000. This would mean most quake losses would go totally uncompensated, he said.

He also noted caustically that if a big quake exhausted the authority’s resources, those suffering heavy or total losses might get only a quarter of their claims paid and at the same time be forced to pay an annual 20% surcharge for an indefinite period on their premiums.

All this time, Wall Street investors in the state agency would be fully compensated, he said.

Nader called for defeat of the measure, which is now stalled in the state Senate, or, alternatively, putting an initiative on the ballot to undo most of its provisions.

Nader, repeatedly cheered by those attending the meeting of Community Assisting Recovery (CARe) at the Unitarian Universalist Society church, lambasted Quackenbush, a man he has long characterized as controlled by the insurance companies, which support the authority bill. CARe was formed to pressure insurance companies into fairer settlements of claims.

“Quackenbush is the best insurance commissioner money can buy,” Nader said, recalling that the industry had given more than $2.3 million to elect him in 1994. In the next election, Nader pleaded, California consumers must show the “stamina to defeat him.”

The earthquake authority bill has been written with one major aim in mind, he contended, and that is to relieve the companies of most of their responsibilities for paying quake damages.

“The companies have been collecting your earthquake premiums for year after year,” he said, “and investing them in long-term accounts. They would much rather keep earning the interest than paying your claims when the earthquake comes.”

Nader said it is a perversion of insurance principles to be reluctant to pay claims when they are needed to relieve victims of a disaster.

He declared that the benefits that would be written into law creating the new earthquake authority are paltry beyond most people’s imagination.

The $5,000 limit on household contents “would not even buy a Nintendo case,” he said.

So, he said, he had come to California to “lead consumers into revolt against Quackenbush and his insurance industry masters, and stop the bill cold.”

The earthquake authority, riding solid Republican support, passed the Assembly by one vote more than the necessary two-thirds when some Democrats voted for it, but it foundered in the Senate on July 11 when a bloc of 13 Democrats opposed it and a few others did not vote.

But negotiations go on, and, with some changes that the Senate’s Democratic leader, Bill Lockyer of Hayward, has insisted upon to make the bill more “consumer-friendly,” the measure is expected to be the subject of a revival attempt when the Legislature goes back into session Aug. 5.

Nader made stops in Southern California, Sacramento and the Bay Area on his latest California campaign swing.