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Payment of Insurance Claims

June 27, 1986

California municipalities are suffering a financial crisis due to unprecedented increases, some unconscionable, of liability insurance premiums.

Many governments, small and large, are trying to exist without adequate insurance coverage. Some are deprived of any insurance because their carriers refuse to write liability coverage. These governments will be forced to go out of business. Some already have because of insurance litigation.

The solution? Establish a nonprofit insurance entity for the exclusive participation of the State of California and its villages, towns, cities and counties--any political body that wants to participate. This agency would be operated in the manner of private companies. However, the premium rates may very well be one-half or less than current available rates.

Most important, it would permit budget-strained governments to carry presently mostly unavailable liability insurance at rates that they can afford.

ALEX H. WINSBERG

Los Angeles

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