Negotiations to avert a "war of initiatives" on auto insurance by reaching a compromise acceptable to the Legislature and Gov. George Deukmejian have gotten nowhere, and major efforts to qualify at least five ballot initiatives on insurance for the November election are already under way or shortly to begin.
Insurance industry representatives have announced plans to begin within the next 10 days a major advertising campaign on behalf of a proposed insurers initiative instituting a no-fault system, banning most lawsuits over auto accidents, limiting trial lawyers' contingency fees and giving policyholders an average 20% rollback in liability premiums.
"The eyes of the insurance industry are focused on California this year," said industry lobbyist George Tye last week, "and the outcome of this battle is very important to the industry nationally."
Meeting of Lawyers
The board of the California Trial Lawyers Assn., meanwhile, is scheduled to meet Tuesday amid strong indications it will throw its weight behind an initiative offered by Steven Miller of the Insurance Consumer Action Network. This measure would establish limited rate regulation of the insurance industry, give "good drivers" a 20% discount and preserve lawsuits and the trial lawyers' prerogatives.
Under the scenario being considered, the trial lawyers would abandon an initiative of their own in favor of the Miller initiative, backed also by the California Bankers Assn. and, probably, Atty. Gen. John K. Van de Kamp.
The insurers and the trial lawyers over the years have been persistent antagonists. As insurance prices have increased, leading to public unhappiness, the two groups have quarreled over which should sacrifice income to stop the increases.
About half of the trial lawyers' cases relate to auto accidents, and this is a major source of their income, as well as being a major cost to insurers. In general, the insurers argue that a cutback in litigation is the way to reduce premiums, while the lawyers say insurers are making plenty of money and should be forced, through regulation, to hold down their rates.
Besides the initiatives backed by the big rivals, ballot qualification efforts have also gotten under way for three so-called "independent" initiatives. Despite that label, all three have leanings toward either the insurers or the trial lawyers.
Supported by Nader
The "independent" effort that is getting the most notice at present is one being advanced by the Access to Justice organization under the name "Voter Revolt to Cut Insurance Rates." Supported by national consumer advocate Ralph Nader, it would cut all liability insurance rates, for homeowners and commercial insurance as well as auto insurance, by 20%, give another 20% discount for "good drivers," mandate stiff rate regulation of the insurance industry and remove the industry's antitrust exemptions.
While the "revolt" initiative leans toward trial lawyer positions, the trial lawyers say it is too extreme. Trial lawyer president Gary Gwilliam met last week with its coordinator, Harvey Rosenfield, and reportedly complained sharply that Rosenfield, who used to be supported by the trial lawyers, has strayed off the reservation. Rosenfield, for his part, now says he doesn't want trial lawyer money. His campaign manager, Bill Zimmerman, however, doesn't sound so sure on that point.
The other "independent" efforts are being mounted by Assemblyman Richard Polanco (D-Los Angeles) and Adam Burton, a former aide to Rep. Augustus F. Hawkins (D-Los Angeles) and Los Angeles County Supervisor Kenneth Hahn.
The Polanco initiative leans toward the insurers' positions against the trial lawyers but goes further with rate cutbacks than the industry would like. It mandates a 50% reduction in auto bodily injury liability rates in exchange for limiting the amount of damages that can be collected for some kinds of losses and discouraging lawsuits by limiting lawyers' fees.
The Burton initiative is focused primarily on doing away with the territorial rating system under which drivers living in inner-city areas often have to pay the highest insurance rates. Although, in most respects it leans with the trial lawyers against the insurers, this initiative basically sides with people with low incomes and the urban dwellers who under state law are required to carry auto insurance but often cannot afford it.
A sixth initiative, being sponsored by the Consumers Union and the Center for Public Interest Law, has been struggling to win financial backers, and may not go forward even so far as collecting signatures on qualifying petitions. Ironically, this initiative, with its combination of "good driver" discounts, rate regulation, a no-fault system and limits on damage recoveries, is the only one that is balanced against both the insurers and trial lawyers.