Attorney General No.


Secretary of State No.



MOTOR VEHICLE ACCIDENT CLAIMS AND INSURANCE RATES. INITIATIVE STATUTE. For accidents occurring from November 9, 1988 to December 31, 1992, limits motor vehicle accident claims for non-economic losses such as pain and suffering to 25 percent of economic losses; prohibits contingent fees greater than 25 percent of non-economic losses. Limitations not applicable to survival, wrongful death actions or actions involving serious and permanent injuries and/or disfigurement. Sets maximum rates for vehicle bodily injury and uninsured motorist insurance at 50% of insurer's premium in effect October 31, 1988 or rates of October 31, 1987, adjusted for inflation, whichever is lower. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Unknown effect on state revenues derived from the gross premiums tax paid by insurance companies. Fiscal effect depends on how insurance companies and consumers react to the measure's rate reductions. If supply and demand stay the same, it is estimated that state general fund revenues from the gross premiums tax could be reduced by about $70 million in 1988-89 (partial year) and $120 million in 1989-90 (first full year). If insurance companies increase other rates to compensate for the rate reductions, the revenue loss could be less. Also, the adoption would increase state administrative costs by about $2 million in the first year and about $1 million annually thereafter. Such administrative costs will be paid for by fees and assessments on the insurance industry. State and local court costs may be reduced by unknown amounts by the measure's specified limitations on legal actions.


Assemblyman Richard Polanco, State Capitol, Room 6011, Sacramento, California 95814 (916) 445-7587



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