Insurers Give Heavily to Initiative Campaign; $17.6 Million Gathered

The insurance industry on Friday reported contributions to its statewide initiative efforts through July 22, listing a total of $17.6 million so far in gifts and loans toward its goal of a $43-million overall campaign.

As expected, the report showed the major auto insurance sellers in the state giving huge amounts toward campaigns for a no-fault system and a slash in lawyers’ contingency fees, as well as efforts to defeat a competing initiative backed by the California Trial Lawyers Assn. and another supported by consumer advocate Ralph Nader.

State Farm, California’s largest seller, gave $1,476,680; the second-biggest seller, Farmers, gave $1,452,710, and nine other companies each gave more than $200,000. Virtually every company selling auto insurance in the state, with the exception of Coastal Insurance--which is supporting yet another competing initiative introduced by Assemblyman Richard Polanco (D-Los Angeles)--was on the list.

Insurance companies or trade associations gave 97% of the amount collected.

The report also showed that 45,168 individual contributors gave unspecified amounts averaging about $6.50. This was mainly in answer to a newspaper ad campaign to collect petition signatures that also included a solicitation for contributions.

Meanwhile, the state insurance commissioner, Roxani Gillespie, on Friday expressed concern over the escalation of spending in the battle over the five insurance initiatives. “It’s a crying shame that something so complex should be done in this fashion,” she said.

Gillespie added that she has been advised by the department’s lawyer that she does not have the authority to ban a company’s use of income from insurance premiums to make contributions to the insurers’ campaign. William Shernoff, a former president of the California Trial Lawyers Assn., had asked her to impose the ban.

Van de Kamp Opinion Asked

Gillespie invited Shernoff to cite anything he could find in state statutes that he thinks would permit her to act, and she also said she is asking Atty. Gen. John K. Van de Kamp whether he thinks she would have such authority.

A spokesman for Van de Kamp said later he has not yet received the request and would have to research the matter before making a statement.

Shernoff said Friday he would tell Gillespie that money paid by consumers in premiums “really is . . . to be used for insurance operations, for paying claims, for paying salaries and other expenses, and not for making political contributions.”

If the insurance commissioner does not act in accord with his request, he said he will file a lawsuit asking the courts to order such contributions to cease on grounds “they are a breach of constructive trust.”

‘Surplus’ Assets Used

A spokesman for the industry said, however, that the contributions are not coming from premiums but from assets the companies have accumulated as a surplus over the years, and would not affect rates charged policyholders.

Shernoff said that money lawyers such as himself may contribute to their initiative is not client money that is being held in trust, but amounts to private donations.

As the opposition tried to make an issue out of the insurers’ heavy spending plans, the coordinator of the industry’s campaign, Clint Reilly, said the $43-million total campaign spending figure includes more than $2 million from advertising the insurers undertook last year, before they knew they would field initiatives, and also about $5 million in expenses to qualify their initiatives for the ballot.

He also noted that some companies are undertaking their own promotional efforts, which will be valued at $6 million to $7 million.

He said that when all that is taken into account, plus the expenditures the insurers will make to fight the two other initiatives, and support the lawyer contingency fee limits, then the effort for no-fault this fall, about $17 million, will cost only a little more than the $13 million Gov. George Deukmejian or Sen. Alan Cranston spent in getting reelected in 1986.

Expenses Called Reasonable

In short, Reilly argued for putting the figures in context, calling the insurers’ expenses “reasonable.”

Spending figures released Friday by the insurers for the campaign thus far showed that Reilly’s firm had been paid $9.7 million for advertising, coordinating the campaign, polling and staff salaries.

Another $706,796 had been paid to American Petition Consultants of Sacramento for circulating petitions, $1,144,580 to Butcher Forde of Newport Beach, for mail and other petition circulation operations, $284,670 to the Sacramento and San Francisco law firm of Nielsen, Merksamer, Hodgson and $95,001 to the Los Angeles law firm of Munger, Tolles & Olson.

TOP CONTRIBUTORS TO INSURANCE CAMPAIGN

Insurance companies and industry associations gave nearly all of the $17.6 million in contributions raised, as of July 22, for the campaign to pass a no-fault initiative and another to slash lawyers’ contingency fees, as well as to oppose two competing insurance measures on the Nov. 8 ballot. Non-monetary contributions include such in-kind donations as providing staff and conducting mailings and survey research.

COMPANY MONETARY NON-MONETARY TOTAL 1. State Farm $1,466,043 $10,637 $1,476,680 2. Farmers Group 1,404,993 47,717 1,452,710 3. Allstate 960,154 188,753 1,148,907 4. American Insurance Assn. 693,069 34,577 727,646 5. Auto Club of Southern California -- 507,236 507,236 6. Insurance Information Institute 450,000 49,577 499,577 7. United Services Auto Assn. 63,558 373,542 437,100 8. Transamerica 401,366 -- 401,366 9. Natl. Assn. of Independent Insurers 125,000 111,710 236,710 10. Aetna 221,394 -- 221,394