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Insurance Commissioner

January 23, 1991

Your editorial ("Superman? Quixote? Tilting at Tough Ones," Jan. 13) about Insurance Commissioner John Garamendi comes across as an unreasonable attack on the insurance industry. The California Supreme Court did not add a "whole new element of complexity to the controversy." The court simplified the issues by ruling that a legislative initiative cannot force a group of business enterprises to run at a loss.

The previous commissioner, Roxani Gillespie, had formerly been an insurance company executive, thus knew what she was doing. She did not dig in her heels against Proposition 103, but tried to find some way around the unconstitutional provision deleted by the Supreme Court. The "fair rate of return" concept seems logical. I'm sure The Times expects no less from its own operations.

Insurance furnishes a necessary service to society. This well-known mechanism for pooling risks is funded by the premiums of policyholders like me. The size of the premiums is determined by actuarial work which takes into account the probability, based on recorded facts, of a given event occurring.

Premium reserves of insurance companies prove to be inadequate when they are depleted by unpredictable and extravagant jury awards. Underlying the awards are recent court decisions which have generously expanded the scope of tort liability and damages.

My reaction to your misleading editorial is that California drivers would benefit if the state Legislature grappled with the lawsuit crisis. A step in the right direction: a bill like AB 354 (no-fault insurance) that died a shameful death in January, 1990, in the Assembly Ways and Means Committee.

ARTHUR M. GRAY

Santa Barbara

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