Combatants in State Insurance Battles Gather for Peace Talk

At a private dinner hosted by state Senate Democratic leader Bill Lockyer at the Ritz-Carlton hotel in Marina del Rey, a dozen of California’s leading insurer and trial lawyer representatives agreed this week on a truce in their long conflict over insurance and legal policy.

As part of the agreement forged at the Tuesday night dinner, the lawyers gave the green light for putting in the inactive file a legislative bill that would have restored a wider right to sue insurers for bad faith.

The two sides also agreed that in the next several weeks each will draft concept statements on a compromise measure to make auto insurance more affordable for millions of motorists who have been uninsured.

After that, said Lockyer (D-Hayward), the insurers and lawyers will try to negotiate the detailed language of such a measure. The Senate leader said he hopes it will come together by next year’s legislative session. Lockyer’s plans, however, face several hurdles, not least of which is that two of the most powerful players in the state’s insurance wars--a key lobbyist and consumer advocate Harvey Rosenfield--were excluded.

The meeting was the first of its kind between leading representatives of insurance companies and trial lawyers in nearly a decade. Lockyer said he had called the session at the request of both sides.

“What tends to happen is that people usually meet with their friends from the same industry, and there is a tendency to whip each other up into a fighting mood,” Lockyer said.

“Part of our goal is to avoid a new round of initiatives” on insurance, Lockyer said. “I view my role as to encourage working through these problems by traditional negotiating rather than engaging in expensive, inflammatory initiative efforts.”

In recent years, both the insurance companies and the trial lawyers have sponsored frequent dueling initiatives that have led to polarizing debates over insurance policy as well as continued expensive litigation.

Assemblywoman Martha Escutia (D-Bell), the author of the right-to-sue bill, said Thursday that after receiving a call from Lockyer about the discussions, she had decided to pull her bill for now.

“I just felt that if there was a good faith negotiation going on, we could not ignore it, and as a sign of good faith on my part, I decided to put my bill on an inactive status,” she said.

At the same time, Assemblywoman Sheila Kuehl (D-Santa Monica) announced she was putting a bill of hers in the inactive file that would have raised or erased current limits on how much plaintiffs can collect in malpractice suits. Kuehl’s move came at the same time as the dinner discussions but was not a result of them.

Attending the dinner at the Ritz-Carlton were many leading financial contributors to politics--both to campaigns for political office and those for initiatives.

Among those present on the trial lawyer side were David Casey of San Diego, president of the Consumer Attorneys of California, Rick Simons of Castro Valley, the group’s president-elect, and attorneys Mark Robinson Jr. of Laguna Niguel, Bob Steinberg of Los Angeles and Wayne McClean of Woodland Hills, and two lobbyists, Nancy Drabble and Don Green.

Attending on the insurer side were George Joseph, chief of Mercury Insurance, Stanley Zax, chief of Zenith Insurance, William Mellick, chief of 20th Century, Bob Pike, general counsel of Allstate, Guy Main and Barry Carmody, chairman and president respectively of the Assn. of California Insurance Companies, and lobbyist Kathleen Snodgrass.

Zax called the meeting “the beginning of a process. We’ve agreed to talk, but whether it goes anyplace or won’t depends on whether there is good faith.”

Casey, meantime, said there is “almost a paranoia” on both sides about another round of costly initiatives.”

“I would hope that both sides would really approach this seriously and it will be an open dialogue,” he said.

But two notable personalities were missing from the meeting--Dan Dunmoyer, a lobbyist who represents two of the insurance giants, State Farm and Farmers--and Rosenfield, the state’s best-known insurance consumer advocate.

It was “appropriate to start with representatives of the more moderate, less ideological companies,” Lockyer said, explaining Dunmoyer’s exclusion.

“There are always some within groups of this sort who would rather resolve things less confrontationally. We invited those to the dinner.”

Once the compromise efforts show some progress, Lockyer said, he hopes Dunmoyer and Rosenfield will join them.

But Dunmoyer, who says he represents close to half the market share of auto and homeowner insurance sellers in the state, issued a caustic reply:

“A misguided minority of the industry sat down with the trial lawyers in an effort to cut a deal,” he said. “We see no room to negotiate . . . period” on the types of lawsuits covered by Escutia’s bill, he said.

No successful agreement will be reached without State Farm and Farmers, Dunmoyer said, adding that the concessions the lawyers made were of limited significance because the bills they were backing had insufficient support to pass this year.

Rosenfield, meanwhile, said he did not wish to be at the dinner--although he was not informed of it in advance.

“We don’t want to be at any back-room meetings,” he asserted. “The public policy of this state should be determined in the open by elected officials, with the public having the opportunity to monitor those officials and participate directly.”