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To the editor: Although California Insurance Commissioner Charles Quackenbush merits recognition for launching the California Earthquake authority-for it took a great deal of ingenuity and persistence on his part-he also deserves the condemnation agents and homeowners are directing his way.

For more than a year I fought the CEA, in the press and in the state Senate. What I feared has occurred: Millions of Californians with low levels of equity will be better off not buying the inadequate mini-policy now on the market. Worse yet, the rating has been skewed politically, so many northern Californians will pay higher rates than those in other heavily populated, high-risk areas, such as the Los Angeles basin.

Former Commissioner John Garamendi refused to have the Legislature abolish compulsory quake insurance for homeowners who asked for it, so capacity got chewed up. Despite that, there was another solution.

Portfolios could have been re-underwritten, existing, "safe" area policies could have been renewed, and mini-policies with 10% (not 15%) deductibles offered to the others. Capacity among insurers and reinsurers would have been divided, just as it is in excess underwriting. Those who like to be "safe" take the high layers (the renewed policies); those who like premium volume take the more risky low layers (the mini-policies).

Fletcher Phelan


Phelan International Consulting

Larkspur, Calif.