California Insurance

The California Insurance Department acted today to force the insurance industry to pay $ 2.5 billion discounts to consumers. A spokesman for the industry has indicated that it would certainly take the fight to the courts.

In the latest efforts aimed at the introduction of the quota cut provisions in the insurance business anchored initiative of the revision by voters almost three years, the National Commissioner of Insurance John Garamendi outlined new rules, says it would lead to discounts of 20 million automobile owners, owners and fire-political, indeed, in 1989. A says Garamendi, discounts for auto insurance, average more than $ 100 for a car this year.

If it resists Court challenge, the rules are also as a basis for the division of insurance the future of the establishment of calculations and could lead to reductions in current prices of certain companies. Reserved on operating costs

The plans include a formula for determining the profit margin that insurers. And they set limits for the first time in the offices of insurance operating and labour costs by forcing companies, including the cost of certain shares of their income to pay for them from its profits, but rather by an increase in prices.

Harvey Rosenfield, president of the revolt of voters, a group defending the rights of consumers actively in the effort to revise insurance, the new rules say “a historic step for both consumers and insurance companies have indicated that they were inciting similar moves by other states.

But the regulations have been condemned by insurers are not feasible, and it would be unfair to the industry and trade group said it would challenge the plan in court. Such a challenge would likely lead to a revision imposed a state of the insurance sector in California, for a long time already run out of steam, drag for months if not years.

The plan is 35 pages of Alice in Wonderland regulator, “said Bob Gore, a spokesman for the Association of California Insurance Companies.” Insurance Pricing by the underlying costs of litigation , Medical care and fraud, and these provisions do about these problems. It is an attempt to paper over a problem that you will not. “Voter Initiative

The revision initiative known as Proposition 103, was closely supervised by voters in the year 1988. He asked for radical changes in regulating the insurance industry, including the creation of an Insurance Commissioner chosen Post and narrow restrictions increases.

But the most controversial provisions of its price on demand automotive and other experts and accident insurance are reset to zero across the board for one year, 1989, at a level 20 percent lower than the act in November 1987. A one analyst said restoration of this magnitude far greater than the restoration which was announced today, would have been $ 4 billion in rebates to consumers.

The passage of Proposition 103 was the highest expression of the dissatisfaction of consumers, nor with the automobile and other insurance rates, and has triggered similar measures in other countries. But it was a loser Gerangel legal and policy since its adoption. Not only have rates operation has not yet entered into force, but auto insurance in California, already among the highest in the nation, to stand for many people.

The California Supreme Court decided that the operation of the year 1989 would be admissible only if it allows insurers a “fair” performance. Always there, industry and the insurance sector in the department of litigation, which represents a fair return. 10 percent yield

Under the rules developed by Mr. Garamendi was elected during last year by a platform of consumers, the insurer would have the right to earn a return of 10 per cent of its capital. Mr. Garamendi’s predecessor as insurance commissioner, Roxani Gillespie, had proposed that returns allowed 11.2 per cent. Ms. Gillespie’s sub-plans, most insurers would not be taken off all performance reports for consumers.

In an interview, Mr. Garamendi said that new rules would be a single undertaking on the basis of next week and that the insurer would then, as I said, too many discounts to holders of 1989. He said that reductions ranging from 20 per cent for some companies to zero for others.