CALIFORNIA GOVERNOR TO RULE ON RATE CUTS

CALIFORNIA GOVERNOR TO RULE ON RATE CUTS

California Gov. Pete Wilson is expected to issue an opinion today on insurance rate-setting regulations issued by John Garamendi, insurance commissioner.

The California Assembly has asked the governor to overrule the state's office of Administrative Law, which refused to certify a series of rate- setting regulations Mr. Garamendi issued over the past year.These temporary and permanent regulations were the result of California Proposition 103. This is the voter-approved initiative that called for prior approval of rate increases and roll-back of property and casualty rates to 1987 levels. The state Supreme Court said such roll-backs were legal where they did not prevent insurers from earning a fair rate of return.

The office of Marz Garcia, Administrative Law Director, said Tuesday that Mr. Garamendi's regulations continued to fail to meet standards of clarity under state law. "To satisfy the clarity standard a regulation must be easily understandable by those who are directly affected by it," said Mr. Garcia, whose office has an obligation to review all regulations issued by any administrative agency for clarity.

"These regulations do not contain enough information to make them easy to understand," he said. "If only the commissioner knows what they are intended to mean, they cannot satisfy the clarity standard."

He added that his office has "consistently performed its duty in a professional manner, but has refused to be bullied into submission for refusing to play ball with the commissioner."

The remarks followed a blistering attack against the administrative law director by Harvey Rosenfield, author of Prop. 103, who sent a letter to Gov. Wilson demanding the governor fire Mr. Garcia.

"Garcia's reason for invalidating the regulations are so frivolous, so utterly unfounded and absurd, and so obviously flout the intended scope of its legal authority, that his decision is revealed for what it truly is, a clumsy attempt to dress up a purely political decision in legalese," according to Mr. Rosenfield.

Mr. Garcia maintained that Mr. Garamendi has failed to provide sufficient clarity in rate-setting definitions to make it possible for insurers to provide evidence for rate setting requests.

"The Office of Administrative Law has a statutory duty to call 'em as it sees 'em and an obligation to defer to the rule-making agency, unless the rule-making agency is clearly wrong," said Mr. Garcia.

The California Assembly passed a Concurrent Resolution Tuesday calling on Gov. Wilson to overrule Mr. Garcia on the regulation. The same resolution failed to obtain enough votes to reach the Senate floor Wednesday.

Bill Packer, spokesman for the Association of California Insurance Cos. challenged Mr. Rosenfield's stand in an interview Thursday.

"We find it interesting that Mr. Rosenfield, a consumer advocate, is so critical of an agency which was established as a consumer watch dog," said Mr. Packer.

He added that the Office of Administrative Law has reversed Department of Insurance regulations "at least five times in recent years."