Insurance Campaign Spends $44 Million

The insurance industry wasn’t fooling when it promised to pull out all the stops this spring to undo a new California law expanding citizens’ rights to sue them.

Campaign finance statements filed this week show the industry has already poured a staggering $44 million into two March ballot measures that would prevent the law, approved last year by the Legislature and signed by Gov. Gray Davis, from being implemented.

The measures, propositions 30 and 31, pit two of California’s most well-heeled interest groups--the insurance industry and trial lawyers--against one another, and are expected to dominate radio and TV airwaves as the election nears.

In doing so, they could challenge last year’s Indian gambling initiative as the costliest ballot measure campaign in California’s long history of pricey direct democracy. Gambling interests spent nearly $100 million in the fight.

The reports, which covered 1999, were still trickling in Tuesday but the attorneys, who raised less than $2 million, appeared to be left in the dust by the insurers.

“[The insurers have] been bombarding the airwaves for several months now already, and there is nothing we can do to compete with that,” said Democratic political consultant Bill Carrick, who is working with the attorneys. “This is a consultant’s fantasy, a total pigout.”

State Farm contributed $16.7 million and Farmers Insurance $15.8 million to bankroll a campaign to persuade voters that the law should not be allowed.

“For the companies and their customers, the stakes really are huge,” said the co-chairman of the opposition campaign, John H. Sullivan of the Civil Justice Assn. of California, a consumer group. “The increase in premiums that we could see if these measures pass would dwarf what is being spent in these campaigns.”

Insurers contend that the law, the Fair Insurance Responsibility Act, will usher in a tidal wave of frivolous lawsuits, driving up insurance premiums for most Californians.

“If these laws are allowed to stand, the primary impact will fall on policyholders,” said State Farm spokesman Bill Sirola. “There is absolutely no question that this would drive claims higher, and claims determine our costs.”

Consumer attorneys and advocates contend that accident settlements in California have been significantly lower than the national average, and that insurance companies are concerned about the law because it will force them to finally pay up.

“I’m not surprised they are ponying up this kind of [campaign] cash,” said Kelly Hayes-Raitt, a consultant whose clients favor the law. “But I’m outraged that insurance companies are spending my premiums on a campaign to mislead their customers. We are talking about letting good drivers sue bad drivers.”

“We will not raise $44 million,” she added, “but we will raise enough to mount our campaign.”

The disclosure statements also shed light on an intensifying battle between California’s top teachers union and a taxpayer group over Proposition 26, which would lower the current two-thirds requirement for passing local school bonds to a simple majority vote.

The campaign to lower the bond requirement raised $10.4 million, with most coming from the powerful California Teachers Assn., which contributed $5.36 million, and Silicon Valley entrepreneur Reed Hastings, who loaned it $2.3 million.

The campaign to maintain the two-thirds standard raised $920,000. The most vocal opponent of the measure, the Howard Jarvis Taxpayers Assn., loaned the campaign $248,000, but most of the money came in small donations from individual property and apartment building owners.

Ron Unz, the wealthy Silicon Valley political activist who promoted the initiative to revamp bilingual education in 1998, and his company loaned $915,000 to his latest initiative, Proposition 25, to limit campaign contributions. The campaign reports a debt of $824,000.

Organized labor and big business are opposing the measure. The opposition raised $682,000, drawing contributions of $275,000 from the California Teachers Assn., $250,000 from Service Employees International, $50,000 from the California Chamber of Commerce, and $25,000 from Boeing.

The March ballot will include five bond measures placed on the ballot by the Legislature and Davis. One, Proposition 13, seeks to sell almost $2 billion in bonds to finance construction of various water projects in California.

Its backers include major landowners, including Cadiz Land Co., which gave $25,000, and the J.G. Boswell Co., which gave $10,000. Cadiz and Boswell are major California’s landowners and farming companies. Pacific Gas & Electric Co. donated $50,000.

Campaign finance reports on the plethora of committees formed to support Proposition 1A, a constitutional amendment granting native Americans a monopoly over casino gambling in California, were still unavailable Tuesday afternoon. The reports had to be in the mail by Monday.

But the disclosure from the sole committee formed to oppose the measure suggested a lopsided fight. The committee, Stop 1A--No Casinos, had raised just $2,237.

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Times staff writer Dan Morain contributed to this report.