Prop. 103 Chairman Enters Hostile Territory Before Insurance Agents

Proposition 103 campaign chairman Harvey Rosenfield said Tuesday that he fears that if insurance companies continue to oppose implementing his measure, “the alternative will be the elimination of the insurance industry as a private force” in California and the advent of a public insurance system.

Rosenfield, entering hostile territory in his first appearance before a group of insurance agents since the election, told the Orange County chapter of the Professional Insurance Agents Assn. meeting in Anaheim that he did not favor a public system in the past and that he believes it “would be a disaster” now.

“As far as I’m concerned, in the capitalist system, there’s no place for the government selling insurance,” he said. But there is “no doubt in my mind,” he added, that that could be the result if Californians “get tired of waiting” for a more progressive industry attitude toward “reform.”

Rosenfield’s talk drew 350 agents to a meeting room at the Quality Inn near Disneyland. The audience groaned and sighed when he made observations that many agents said showed ignorance of the way the insurance system operates.

Rosenfield drew hoots when he said that a person’s address, not his or her driving record, determines auto insurance prices and suggested that an Anaheim resident who has a good driving record pays just as much as one who has had five accidents.

Discuss Facts

“You’re wrong, you’re wrong,” cried one agent, and Rosenfield offered to discuss the facts with the audience. Agents said the driver with the five accidents would pay far more than the one with a good record, no matter where he lived.

Rosenfield drew groans from many in the audience when, suggesting that agents should take less in commissions than they take now, he added, “You don’t understand the marketplace.”

The exchange began when a questioner, noting that insurance rate rollbacks called for in Proposition 103 would be from 1987 levels and that the cuts would average about a third off present rates, asked Rosenfield how he thinks agents could stand such a large reduction in their sales commissions.

Rosenfield first suggested that lower prices would mean more insurance sales, so agents could recoup some of their losses that way. This drew sighs of apparent disbelief from the audience.

‘Have to Sacrifice’

He then told the agents, as the atmosphere in the room grew tense, that they were “going to have to sacrifice something (of their income) for one year (under the rollback provisions) to those consumers who pay too much.”

Bruce A. Broadwater, a Garden Grove agent who had been reading audience questions to the Proposition 103 chairman, suggested that Rosenfield does not understand the situation.

Many companies will leave the state if the state Supreme Court allows Proposition 103 to go into full effect, Broadwater said, and agents will not sell insurance if all they can earn is a 5% commission.

Another uproar ensued when Rosenfield, answering a critical question about the provision in Proposition 103 that allows banks into the insurance business, suggested that if banks tried to tie loans to a borrower’s willingness to buy insurance from the bank, they would run afoul of antitrust laws.

The agent who questioned him said he believes that it is unlikely that such laws would be enforced.

Much of Rosenfield’s speech was devoted to suggestions that insurance agents divorce themselves from the interests of insurance companies and join the Proposition 103 sponsors in becoming “consumer advocates.”

‘Back Up Consumers’

“Help consumers do more comparison shopping between companies,” he urged. “Join us in fighting against cancellations and non-renewals. Back up consumers. . . . Demand support for changes by companies, not no-fault, which has not been successful except in one or two states, but stronger drunk- driving laws, regulations against fraud and more auto safety programs.”

The agents applauded politely at the end of the speech and again at the end of the question-answer period, but many were muttering to colleagues that Rosenfield seemed uninformed.

Rosenfield told the agents when he was introduced that he had accepted the invitation to appear because he believed that the setting would give him a chance “to explain matters” to a significant group that occupies a position between the companies and the consumers and because he believes that agents have a responsibility to “protect the integrity of the insurance industry” by urging it to adopt a friendlier attitude toward the public.