SACRAMENTO, Calif. — California lawmakers are considering bills that would limit or end participation of intervenors in automobile insurance rate filings, urge Congress and the president to renew funding for the Terrorism Risk Insurance Program Reauthorization Act and call on interested parties to solve difficulties with medical malpractice compensation cap.

The American Insurance Association and the Association of California Insurance Companies did not offer any formal positions on the bills, but ACIC spokeswoman Nicole Mahrt Ganley and Steve Suchil, AIA vice president, Western region, said they would be watching the medical malpractice bill and the TRIPRA resolution.

Democrat Senate President pro Tempore Darrell Steinberg introduced the medical malpractice bill, SB 1429. It said current law, the Medical Injury Compensation Reform Act of 1975, limits damages for noneconomic losses in any professional negligence cases against health care providers to $250,000. The bill simply states the intent of lawmakers is to develop a legislative solution. Suchil said the bill represents Steinberg's attempt to foster discussions to reach a MICRA cap agreement among interested parties. SB 1429 follows efforts underway by trial lawyers to file a ballot initiative that would allow voters to determine whether the medical malpractice cap should be raised to $1 million.

The resolution asking Congress to reauthorize TRIPRA, Assembly Joint Resolution 34, is offered by Democrat Assembly member Ken Cooley and has AIA backing. The resolution said TRIPRA, which is set to expire on Dec. 31, is the principal reason stability exists in the terrorism insurance and reinsurance markets. TRIPRA provides up to $100 billion annually in coverage beyond the first $100 million in losses. "Failure by Congress to extend TRIPRA would likely result in insurers individually managing, and potentially reducing, their exposure to terrorism risk," the resolution said. Without terrorism insurance coverage, banks will not make loans for mortgages and commercial projects, the resolution said.

If California passes the resolution, it would follow states such as New York and South Dakota in doing so. Suchil said AIA would work hard for the resolution's passage. "The extension of TRIPRA is very important to our member companies and to the economy as a whole," he said.

ACIC also will be watching SB 1173 and SB 1331, offered by Sen. Ted Gaines, a 2014 Republican insurance commissioner candidate. Both bills would amend the controversial Proposition 103 that reformed auto insurance rates in the state more than 25 years ago.

SB 1173 would allow the commissioner to approve any proposed auto insurance rate decrease without changes, a review or a hearing. SB 1331 would allow voters to determine whether to amend Proposition 103 by eliminating advocacy and witness fees the insurance commissioner or a court currently can grant to anyone challenging a commissioner's actions.

The Consumer Federation of America, which is among the consumer groups that have defended Proposition 103, immediately opposed the bills. CFA Insurance Director J. Robert Hunter said SB 1173 requires two-thirds approval and most likely would be defeated. Rate decrease requests are uncommon, Hunter said, adding they also are not necessarily accurate. "You have to be able to test whether it's proper or not," Hunter said. Even if it passes, he said, Gov. Jerry Brown would probably veto it.

One of the insurance industry's concerns with Proposition 103 has been it allows intervenors to challenge any auto insurance rate filing. Industry officials have indicated that nonprofits intervene in many rate filings and drag out the approval process. The intervenor system in California has proven to hinder more aggressive pricing in the state, said Rex Frazier, president of the Personal Insurance Federation of California. He said recently that intervenors cause companies filing to seek higher rates than they should because they fear intervenors will drag the negotiation process out to get a lower price (Best's News Service, Feb. 19, 2014).

"One of the best deals consumers in California ever had was intervenor funding," Hunter said, claiming that intervenors as consumer representative must hire actuaries, accountants, economists and attorneys to fight them. He said SB 1331 would kill any consumer ability to intervene in rate filings. "They always try to chip away at [Proposition] 103," Hunter said of the insurance industry. "They don't like the fact that it works."

(By Thomas Harman, associate editor, BestWeek: [email protected])