Shernoff, Hunter and Miller all take a similar position on proposed tort reforms: They are willing to accept them only if the insurance companies commit themselves in advance to a specific reduction in their rates in exchange for anticipated savings in legal costs.
"I don't think anybody wants to vote for a tort reform, only to find that the money saved went to the insurance companies to build their profits rather than to premium holders to reduce their premiums," Shernoff explained.
Even as the insurance industry insists that reforms come at the expense of the lawyers and the lawyers say they should come at the expense of the insurance companies, it may be significant that in Canada--where far broader reforms have been adopted than any in the United States--the changes have come at the expense of both professional groups.
Public Insurance Systems
Four of the 11 Canadian provinces--Saskatchewan, Manitoba, British Columbia and Quebec--have adopted public auto insurance systems. The object has most often been to cut the price of insurance by reducing the percentage of premium dollars going to the middlemen on both sides.
Some Canadian authorities said they think auto coverage in the United States is headed toward a public insurance system. They point out that some industry representatives in the United States are already talking about having government assume the worst risks.
But California seems very far from enacting a Canadian-style system. Legislative committees have already rejected far less sweeping bills that would in one case have established state rate-making authority over the companies and in another have done away with the territorial rating system of pricing insurance.
Both of these pieces of legislation were aimed at the industry. But the general assessment in Sacramento is that nothing of substance will pass against the lawyers' interests either.
Assembly Speaker Willie Brown (D-San Francisco) declared in June after passage by the electorate of Proposition 51, the "deep-pockets" initiative, that he would see to it that no legal, or tort, reforms were approved by the Legislature unless there were insurance reforms at the same time. His position hardly came as a surprise. After all, in private life, Brown is a trial lawyer himself.
Brown, in the recent legislative session, offered a plan that would have established a bare bones liability policy, perhaps priced at a maximum of about $400 a year, to satisfy the state's mandatory insurance requirements. The cost would have been kept comparatively low because the policy would have paid victims' economic losses up to the policy limits but no damages for emotional losses such as pain and suffering.
The bill was defeated amid questioning by some legislative aides whether the Speaker was really serious about its passage. It was not favored by the trial lawyers' lobby.
Trial Lawyers' Opposition
Stan DiOrio, an aide to Assemblywoman Maxine Waters (D-Los Angeles) and an insurance expert, noted that the trial lawyers can be counted on to strongly oppose any bill that would restrict pain and suffering awards, particularly since such awards often go mostly to satisfy lawyer's contingency fees that may amount to about 30% of the total recovery. At the same time that the Brown proposal was being advanced, some industry representatives were working on an auto liability policy that would have been sold at a reduced premium but would only take care of the injured party at the expense of his policy, with no right to recover through the legal system.
Meanwhile, the state Insurance Department was also discussing a bare bones auto liability policy that would be offered at a low, flat rate. But its consumer affairs chief, Everett Brookhart, said later that he had been told the trouble would be that everyone in high territorially rated areas would buy such a policy, while those in low rated areas would not need it.
He said he feared this would leave the issuers of such a policy liable for large pay-outs in areas of the highest risk. So, he indicated the department felt the idea was unworkable.
In any event, as the legislative session drew to a close, none of the ideas for a bare bones policy had come to fruition, and even a more limited effort by Robbins to give some relief to senior citizens was finally defeated.
Another Robbins proposal that failed would have mandated premium reductions of up to 25% for people with good driving records and safety equipment on their cars. One trouble with this was that the insurance companies might simply have jacked up other premiums to compensate for the reductions.