Full opinion text
Opinion BROUSSARD, J. In this case we consider various challenges to Proposition 103, an initiative measure enacted November 8, 1988, making numerous fundamental changes in the regulation of automobile and other types of insurance. Petitioners, seven insurers and the Association of California Insurance Companies, have filed an original petition for writ of mandate in this court, contending that Proposition 103 is unconstitutional on its face. They named as respondents Governor George Deukmejian, Attorney General John K. Van de Kamp, Insurance Commissioner Roxani Gillespie, and the State Board of Equalization. The Access to Justice Foundation and other supporters of Proposition 103 (hereafter proponents) have appeared as real parties in interest to oppose the petition. We have also received numerous amicus curiae briefs. In view of the obvious importance of the case, and the need for a prompt decision (since certain contested provisions are effective for only one year), we assumed original jurisdiction and issued an alternative writ. (See Brosnahan v. Brown (1982) 32 Cal.3d 236 [186 Cal.Rptr. 30, 651 P.2d 274]; Hardie v. Eu (1976) 18 Cal.3d 371 [134 Cal.Rptr. 201, 556 P.2d 301].) Before addressing individually the issues raised by petitioners, we will summarize the initiative’s provisions, the contentions raised in regard to those provisions, and our conclusions. The initiative begins with a statement of findings and purpose, asserting that “[e]normous increases in the cost of insurance have made it both unaffordable and unavailable to millions of Californians,” and that “the existing laws inadequately protect consumers and allow insurance companies to charge excessive, unjustified and arbitrary rates.” The initiative’s stated purpose is to ensure that “insurance is fair, available, and affordable for all Californians.” Insurance rates are to be immediately reduced to “at least 20 percent less” than those in effect on November 8, 1987 (approximately the date when the initiative was proposed, and one year prior to its enactment). (§ 1861.01, subd. (a); all statutory references are to the Insurance Code, unless otherwise stated.) All rate increases require the approval of the Insurance Commissioner, who may not approve rates which are “excessive, inadequate, unfairly discriminatory or otherwise in violation of [the initiative].” (§ 1861.05.) Prior to November 8, 1989, however, rates may be increased only if the commissioner finds “that an insurer is substantially threatened with insolvency.” (§ 1861.01, subd. (b).) Certain procedures are specified for hearing applications for rate approvals. (§§ 1861.04-1861.10.) The initiative prohibits an insurer from declining to renew a policy except for nonpayment of premium, fraud, or significant increase in the hazard insured against. (§ 1861.03, subd. (c).) Insurers are required to mail notices to policy holders informing them they may join a nonprofit corporation to be formed to represent their interests by persons appointed for this purpose by the Insurance Commissioner. (§ 1861.10.) The Board of Equalization is directed to adjust the tax rate on insurance premiums to avoid any loss of tax revenues as a result of decreases in the rates charged by insurers. (Rev. & Tax. Code, § 12202.1.) Finally, the initiative contains a severance provision stating that the invalidity of any portion of the initiative “shall not affect other provisions or applications of the act which can be given effect without the invalid portion . . . .” On November 10, 1988, we granted petitioners’ request to stay the initiative in its entirety. On December 7, 1988, after deciding to assume jurisdiction of the case, and after further study of the issues presented, we vacated the stay except as to the provisions requiring a rate reduction to 20 percent below 1987 rates, limiting relief to companies substantially threatened with insolvency, and requiring a mailing notifying insureds of the opportunity to join a nonprofit corporation to advocate their interests. Petitioners contend that the initiative’s rate regulation provisions violate the due process clauses of the United States and California Constitutions in that the initial reduction to 20 percent below 1987 levels is arbitrary, discriminatory and confiscatory, the rate adjustment mechanism during the first year does not permit relief from confiscatory rates, and adequate procedures have not been provided to ensure prompt rate relief. They challenge the provision limiting insurers’ power not to renew policies as impermissibly impairing existing contract rights. Petitioners maintain that the provision requiring notification of the formation of a nonprofit corporation violates the prohibition of article II, section 12 of the California Constitution against naming or identifying a private corporation in an initiative to perform any function or duty. Finally, they object to the provisions for adjustment of the tax rate on insurance premiums on several grounds: (a) that article XIII, section 28, of the California Constitution bars use of the initiative to change the premium tax rate; (b) that article XIII A, section 3 either bars the use of the initiative to increase taxes, or requires that such measures receive approval of two-thirds of the voters; and (c) that the provision impermissibly delegates legislative authority to the Board of Equalization. In addition, petitioners contend that the invalid portions of the initiative are nonseverable and therefore the entire initiative must be declared invalid. These contentions challenge the constitutional authority of the people to enact Proposition 103 and certain portions of that initiative. In adjudicating such constitutional issues, our duty is clear: “We do not consider or weigh the economic or social wisdom or general propriety of the initiative. Rather, our sole function is to evaluate [it] legally in the light of established constitutional standards.” (Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 219 [149 Cal.Rptr. 239, 583 P.2d 1281]; see Ferguson v. Skrupa (1963) 372 U.S. 726, 730 [10 L.Ed.2d 93, 97, 83 S.Ct. 1028, 95 A.L.R.2d 1347].) “[A]ll presumptions and intendments favor the validity of a statute and mere doubt does not afford sufficient reason for a judicial declaration of invalidity. Statutes must be upheld unless their unconstitutionality clearly, positively, and unmistakably appears.” (In re Ricky H. (1970) 2 Cal.3d 513, 519 [86 Cal.Rptr. 76, 468 P.2d 204]; In re Dennis M. (1969) 70 Cal.2d 444, 453 [75 Cal.Rptr. 1, 450 P.2d 296]; Lockheed Aircraft Corp. v. Superior Court (1946) 28 Cal.2d 481, 484 [171 P.2d 21, 166 A.L.R. 701].) If the validity of the measure is “fairly debatable,” it must be sustained. (Associated Home Builders etc., Inc. v. City of Livermore (1976) 18 Cal.3d 582, 605 [135 Cal.Rptr. 41, 557 P.2d 473, 92 A.L.R.3d 1038]; Hamer v. Town of Ross (1963) 59 Cal.2d 776, 783 [31 Cal.Rptr. 335, 382 P.2d 375] and cases there cited.) Applying these principles, we have reached the following conclusions: 1. Section 1861.01, subdivision (b), which provides that the commissioner cannot approve a rate increase before November of 1989 unless the insurer is substantially threatened with insolvency, is unconstitutional on its face, but severable from the other parts of the initiative. With the insolvency provision removed, the remaining regulatory provisions should afford insurers an effective means of relief from any confiscatory rate. Moreover, during the first year of the initiative, an insurer may apply for rate relief and upon making that application charge the rates it requests, but must refund with interest any premiums collected in excess of the rates ultimately approved. In view of these safeguards, we conclude that except for the insolvency standard the provisions of Proposition 103 relating to the setting of insurance rates, and procedures for the adjustment of rates, do not on their face deprive insurers of due process under the state or federal Constitutions. 2. Proposition 103’s limitation upon the insurer’s power to refuse to renew policies (§ 1861.03, subd. (c)) applies to policies in effect when the initiative was enacted. Applying the nonrenewal provision to such policies does not unconstitutionally impair the obligation of contracts, but insurers retain the right to withdraw from the California market by complying with the statutory procedure for the surrender of their certificates. 3. Section 1861.10, subdivision (c), which provides for the creation of a consumer-advocacy corporation, and the mailing of notice to invite policyholders to become members of that corporation, violates article II, section 12, of the California Constitution, which forbids an initiative statute from identifying a private corporation to perform any function. The invalid subdivision is severable from the remainder of the initiative. 4. We do not decide the validity of Proposition 103’s provision authorizing the Board of Equalization to adjust the insurance premium tax. (Rev. & Tax. Code, § 12202.1.) Deciding that issue now would violate article XIII, section 32, of the California Constitution, which provides that courts should not prevent or enjoin the collection of any tax. Since the tax adjustment provision is severable, a later ruling on its validity will not affect the validity of other parts of the initiative. 5. Since all parts of Proposition 103 are reasonably germane to the subject of insurance rates and regulation, the initiative does not violate the single-subject rule (Cal. Const., art. II, § 8, subd. (d)). 1. Provisions relating to the reduction and subsequent adjustment of insurance rates. The constitutional test for the validity of state price controls was established in Nebbia v. New York (1934) 291 U.S. 502, 539 [78 L.Ed. 940, 958, 54 S.Ct. 505, 89 A.L.R. 1469]: “Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.” The United States Supreme Court reaffirmed this test in Pennell v. City of San Jose (1988) 485 U.S. 1, 13 [99 L.Ed.2d 1, 14, 108 S.Ct. 849, 857], We followed it in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129 [130 Cal.Rptr. 465, 550 P.2d 1001], a rent control case, and went on to explain that “[t]he provisions are within the police power if they are reasonably calculated to eliminate excessive rents and at the same time provide landlords with a just and reasonable return on their property.” (P. 165.) The state and federal Constitutions are concerned not so much with the way in which the initial rates are set as with whether the rates as finally set are confiscatory. “[I]t is the result reached not the method employed which is controlling.” (Power Comm’n v. Hope Gas Co. (1944) 320 U.S. 591, 602 [88 L.Ed. 333, 345, 64 S.Ct. 281]; see Dusquesne Light Co. v. Barasch (1989) 488 U.S. __ [102 L.Ed.2d 646, 658-659, 109 S.Ct. 609, 617].) In Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 683 [209 Cal.Rptr. 682, 693 P.2d 261], we reaffirmed the rule that “whether a regulation produces a return that is confiscatory or fair depends ultimately on the result, and . . . we will invalidate an ordinance on its face only if its terms preclude avoidance of confiscatory results.” Petitioners must show that the law is “so restrictive as to facially preclude any possibility of a just and reasonable return” (Hutton, supra, 350 A.2d 1, 16); that “its terms will not permit those who administer it to avoid confiscatory results” (Birkenfeld v. City of Berkeley, supra, 17 Cal.3d 129, 165). Consequently, we focus less on the rate specified in the statute than on the ability of the seller to obtain relief if that rate proves confiscatory. The face of a statute rarely reveals whether the rates it specifies are confiscatory or arbitrary, but necessarily discloses its provisions, if any, for rate adjustment. Recognizing that virtually any law which sets prices may prove confiscatory in practice, courts have carefully scrutinized such provisions to ensure that the sellers will have an adequate remedy for relief from confiscatory rates. In Birkenfeld v. City of Berkeley, supra, 17 Cal.3d 129, for example, we struck down a rent control law because its procedures were so cumbersome and time-consuming that landlords could not in reality obtain relief from confiscatory rates. We therefore begin our discussion by considering the provisions in Proposition 103 which would permit an insurer to seek relief from any rate it considers confiscatory. Section 1861.05 provides that “[ejvery insurer which desires to change any rate shall file a complete rate application with the commissioner.” Subdivision (a) of sections 1861.05 states that the commissioner may not approve or permit any rate “which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter”— language which makes it clear that the commissioner can grant relief from confiscatory rates. Section 1861.01, subdivision (b), however, qualifies section 1861.05 by limiting rate adjustments prior to November 1989 to insurers substantially threatened with insolvency. Petitioners attack the constitutionality of this limitation. Section 1861.01, subdivision (b), provides that “[b]etween November 8, 1988, and November 8, 1989, rates and premiums reduced pursuant to subdivision (a) may be only increased if the commissioner finds, after a hearing, that an insurer is substantially threatened with insolvency.” “Insolvency” has various meanings, but none will allow us to construe subdivision (b) to conform to the constitutional standard of a fair and reasonable return. A company may be insolvent because it has more liabilities than assets, or because it is unable to pay its obligations as they fall due. (See Maryland Casualty Co. v. Commissioner of Insurance (1977) 372 Mass. 554 [363 N.E.2d 1087, 1093-1094].) “Insolvency” is defined in the Insurance Code as “any impairment of minimum ‘paid-in capital’ ... as defined in Section 36” (§ 985, subd. (a).) (Section 36 defines “paid-in capital” or “capital paid in,” essentially as the excess of assets over liabilities. The statutory minimum for “paid-in capital” ranges from $500,000 to $1.3 million (§ 700.01).) But under all of these definitions, a rate may be confiscatory even though it does not threaten the insurer’s solvency. The insolvency standard of section 1861.01, subdivision (b) refers to the financial position of the company as a whole, not merely to the regulated lines of insurance. Many insurers do substantial business outside of California, or in lines of insurance within this state which are not regulated by Proposition 103. If an insurer had substantial net worth, or significant income from sources unregulated by Proposition 103, it might be able to sustain substantial and continuing losses on regulated insurance without danger of insolvency. In such a case the continued solvency of the insurer could not suffice to demonstrate that the regulated rate constitutes a fair return. The effect of section 1861.01, subdivision (b), is thus to bar safely solvent insurers from obtaining relief from “inadequate” rates until November 1989. Temporary rates which might be below a fair and reasonable level might compel insurers to return to their customers surpluses exacted through allegedly excessive past rates. But the concept that rates may be set at less than a fair rate of return in order to compel the return of past surpluses is not one supported by precedent. “The just compensation safeguarded to the utility by the Fourteenth Amendment is a reasonable return on the value of the property used at the time that it is being used for the public service. . . . [T]he law does not require the company to give up for the benefit of future subscribers any part of its accumulations from past operations. Profits of the past cannot be used to sustain confiscatory rates for the future.” (Board of Comm’rs v. N.Y. Tel. Co., supra, 271 U.S. 23, 31-32 [70 L.Ed. at p. 812]; accord, American Toll Bridge Co. v. Railroad Com. (1938) 12 Cal.2d 184, 203 [83 P.2d 1].) Hutton, supra, said that if past rents were excessive an ordinance could refuse to give landlords credit for current cost increases if the diminished rate of return was still just and reasonable. (350 A.2d at p. 16.) But no case supports an unreasonably low rate of return on the ground that past profits were excessive. Proponents urge that the insolvency standard can be sustained as a temporary or emergency measure. They point out that temporary freezes while administrative machinery is set up are commonly approved, even if they lack any method whereby a seller can get relief. (See, e.g., Trans Alaska Pipeline Rate Cases (1978) 436 U.S. 631 [56 L.Ed.2d 591, 98 S.Ct. 2053]; United States v. SCRAP (1973) 412 U.S. 669 [37 L.Ed.2d 254, 93 S.Ct. 2405]; Western States Meat Packers Assn., Inc. v. Dunlop (T.E.C.A. 1973) 482 F.2d 1401.) Most freezes are for periods of much less than one year, but courts have sustained freezes of a year or longer. (See, e.g., Mass. Med. Society v. Comm’r of Ins. (1988) 402 Mass. 44 [520 N.E.2d 1288] [two-year freeze on medical malpractice insurance rates].) The cases, however, proceed on the assumption that the frozen prices were those set by a seller in a competitive market, and thus were fair rates, so that the only concern is increased costs during the freeze. (See discussion in Birkenfeld v. City of Berkeley, supra, 17 Cal.3d 129, 166.) Here we have a law which mandates not maintenance of a rate set by the seller, but a reduction to at least 20 percent less than former rates. The risk that the rate set by the statute is confiscatory as to some insurers from its inception is high enough to require an adequate method for obtaining individualized relief. Proponents further argue that the insolvency standard in Proposition 103 was inserted to combat an emergency created by unavailable and unaffordable insurance. They assert that between 1983 and 1986 automobile insurance rates doubled, while commercial rates increased over 200 percent. They observe also that in 1984 the Legislature enacted the RobinsMcAlister Financial Responsibility Act (Stats. 1984, ch. 1322), requiring all motorists to purchase liability insurance and carry proof of financial responsibility. We recognize that emergency situations may require emergency measures. As the court explained in Hutton, a rent control case, “[t]he term ‘confiscatory’ must be understood in light of the surrounding circumstances. There are undoubtedly times of great public exigency during which landlords may temporarily be required to rent their property at rates which do not permit them to obtain what would ordinarily be considered a fair return.” (350 A.2d at p. 13.) Numerous cases confirm that measures enacted to combat an emergency of limited duration may be valid even though they do not guarantee a fair rate of return. (See Bowles v. Willingham (1944) 321 U.S. 503 [88 L.Ed. 892, 64 S.Ct. 641] [World War II rent control]; Block v. Hirsh (1921) 256 U.S. 135 [65 L.Ed. 865, 41 S.Ct. 458, 16 A.L.R. 165] [rent control after World War I]; Whitney v. Heckler, supra, 780 F.2d 963 [freeze on Medicare rates and rates charged non-Medicare patients, pursuant to Deficit Reduction Act of 1984]; Western States Meat Packers Assn., Inc. v. Dunlop, supra, 482 F.2d 1401 [price and wage controls under Economic Stabilization Act of 1970]; Wilson v. Brown (Emer.Ct.App. 1943) 137 F.2d 348 [price controls during World War II].) To justify a measure which deprives persons of a fair return, however, “an emergency would have to be a temporary situation of such enormity that all individuals might reasonably be required to make sacrifices for the common weal.” (Hutton, supra, 350 A.2d 1, 14.) We do not believe that the circumstances which inspired Proposition 103 meet this requirement. Our concern is not with the magnitude of the problem, but with its character. The asserted rise in insurance rates, rendering insurance unavailable or unaffordable to many, is not a temporary problem; it is a long term, chronic situation which will not be solved by compelling insurers to sell at less than a fair return for a year. Over the long term the state must permit insurers a fair return; we do not perceive any short term conditions that would require depriving them of a fair return. We therefore conclude that section 1861.01, subdivision (b) cannot be sustained as an emergency measure fashioned to meet a temporary exigency. Having determined that section 1861.01, subdivision (b), precludes adjustments necessary to achieve the constitutional standard of fair and reasonable rates, and that the subdivision cannot be sustained as a temporary or emergency measure, we hold it invalid under the due process clauses of the state and federal Constitutions. This holding requires us to determine whether the invalid provision is severable from the balance of the initiative. Proposition 103 contains a severability clause which provides that “If any provision of this act or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid portion or application, and to that end the provisions of this act are severable.” Our cases explain the effect of such a clause. “Although not conclusive, a severability clause normally calls for sustaining the valid part of the enactment, especially when the invalid part is mechanically severable. . . . Such a clause plus the ability to mechanically sever the invalid part while normally allowing severability, does not conclusively dictate it. The final determination depends on whether the remainder ... is complete in itself and would have been adopted by the legislative body had the latter foreseen the partial invalidity of the statute ... or constitutes a completely operative expression of the legislative intent . . . [and is not] so connected with the rest of the statute as to be inseparable.” (Santa Barbara Sch. Dist. v. Superior Court (1975) 13 Cal.3d 315, 331 [118 Cal.Rptr. 637, 530 P.2d 605]; Metromedia, Inc. v. City of San Diego (1982) 32 Cal.3d 180, 190 [185 Cal.Rptr. 260, 649 P.2d 902].) (Interior quotation marks and citations omitted.) The cases prescribe three criteria for severability: the invalid provision must be grammatically, functionally, and volitionally separable. (See Santa Barbara Sch. Dist. v. Superior Court, supra, 13 Cal.3d 315; People’s Advocate, Inc. v. Superior Court (1986) 181 Cal.App.3d 316, 332 [226 Cal.Rptr. 640].) Section 1861.01, subdivision (b), is clearly severable under these criteria. First, the subdivision is mechanically and grammatically severable. It constitutes a distinct and separate provision of Proposition 103 which can be removed as a whole without affecting the wording of any other provision. Second, the subdivision is functionally severable. Because it provides an exception to the more general rate-setting standard of section 1861.05, its removal merely eliminates the exception, permitting the general standard to operate from the effective date of the initiative. Third, the remainder of the initiative, after deleting the insolvency standard, would likely have been adopted by the people had they foreseen the invalidity of the insolvency standard. The voters who enacted Proposition 103 would presumably prefer rate setting and regulation under the balance of the initiative to the method of setting insurance rates which existed before the initiative was enacted. There is no persuasive reason to suppose the insolvency standard was so critical to the enactment of Proposition 103 that the measure would not have been enacted in its absence. We therefore conclude that section 1861.01, subdivision (b), although invalid, is severable. The invalidation of this subdivision leaves untouched the general standard for rate adjustment set out in section 1861.05, subdivision (a). That provision states that “[n]o rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter. In considering whether a rate is excessive, inadequate or unfairly discriminatory, no consideration shall be given to the degree of competition and the commissioner shall consider whether the rate mathematically reflects the insurance company’s investment income.” Petitioners raise no question of the constitutionality of rates set pursuant to that section. Its prohibition on excessive or inadequate rates echoes similar language in the laws of most states, as well as former section 1852 which it replaces. Since a confiscatory rate is necessarily an “inadequate” rate under the statutory language, section 1861.05 requires rates within that range which can be described as fair and reasonable and prohibits approval or maintenance of confiscatory rates. As stated above, we have concluded that the standards set by section 1861.05, subdivision (a), govern rate regulation during the first year of the initiative’s operation. We reach this conclusion because section 1861.05 contains no language limiting its operation to rates after November of 1989. Because such language appears in the good-driver provision (§ 1861.02), we infer from its absence from section 1861.05 that the latter section is not so limited. Many other provisions also contain no language delaying their effective date, and as to all of them the parties assume that they took effect November 8, 1988. Additionally, the general rate-standard provision replaces a similar statute, former section 1852, which was repealed by Proposition 103. The former statute also prohibited inadequate, excessive, or unfairly discriminatory rates, but said that a rate in a competitive market could not be held excessive. When a statute replaces a prior statute, filling its function and adopting much of its wording, we would normally assume the new law takes effect upon the demise of its predecessor. This seems especially likely to have been the intent here, as otherwise there would be a one-year period in which no effective statute prohibited unfairly discriminatory rates. Petitioners argue, however, that even if section 1861.05 provides a constitutionally valid standard for rate adjustment, insurers will be compelled to charge confiscatory rates pending administrative relief. They compare the procedures established by Proposition 103 with those in Birkenfeld v. City of Berkeley, supra, 17 Cal.3d 129, where we invalidated a rent control ordinance because “the inexcusably cumbersome rent adjustment procedure” was “not reasonably related to [its] stated purpose of preventing excessive rents.” (P. 173.) The city ordinance at issue in Birkenfeld governed rents for about 22,000 units. (17 Cal.3d at p. 169.) No landlord could apply for a rent increase for any unit until he had obtained a certificate of compliance from the city building inspector. (P. 170.) Every application required a hearing, regardless of the size of the increase, the reason for the request, or the consent of the tenant. (P. 171.) The rent control board was required to hear each application personally; it could not consolidate applications or delegate the task to a hearing officer. (Ibid.) “In short, [the board was] denied the means of reducing its job to manageable proportions through the formulation and application of general rules, the appropriate delegation of responsibility, and the focusing of the adjudicative process upon issues which cannot fairly be resolved in any other way.” (Ibid.) We find no similar barriers to efficient decision making in Proposition 103. It does not establish a detailed method of processing and deciding rate applications. It contains a few provisions relating to public notice and participation (i.e., §§ 1861.05, subd. (c), 1861.06, 1861.07 & 1861.10), but hearings are generally held in accordance with provisions of the Administrative Procedure Act. (See § 1861.08, which provides generally that “[h]earings shall be conducted pursuant to Sections 11500 through 11528 of the Government Code.”) Much is necessarily left to the Insurance Commissioner, who has broad discretion to adopt rules and regulations as necessary to promote the public welfare. (Credit Ins. Gen. Agents Assn. v. Payne (1976) 16 Cal.3d 651, 656 [128 Cal.Rptr. 881, 547 P.2d 993]; see Garris v. Carpenter (1939) 33 Cal.App.2d 649, 653 [92 P.2d 688].) Unlike Birkenfeld, supra, 17 Cal.3d 129, there are no prerequisites to the filing of an application for an increase. Increases of no more than 7 percent for personal lines, or 15 percent for commercial lines, are automatically granted without a hearing unless one is requested. The commissioner is expressly authorized to delegate hearings to administrative law judges. (§ 1861.08.) No provision bars the commissioner from consolidating cases or issuing regulations of general applicability. Thus there is nothing here which prevents the commissioner from taking whatever steps are necessary to reduce the job to manageable size. It “is to be presumed that the [administrative agency] will exercise its power in conformity with the requirements of the Constitution; and if it does act unfairly, the fault lies with the [agency] and not the statute.” (Fisher v. City of Berkeley, supra, 37 Cal.3d 644, 684, quoting Butterworth v. Boyd (1938) 12 Cal.2d 140, 149 [82 P.2d 434, 126 A.L.R. 838].) Moreover, the commissioner has the power to grant interim relief from plainly invalid rates. Her powers are not limited to those expressly conferred by statute; “rather, ‘[i]t is well settled in this state that [administrative] officials may exercise such additional powers as are necessary for the due and efficient administration of powers expressly granted by statute, or as may fairly be implied from the statute granting the powers.’ ” (Rich Vision Centers, Inc. v. Board of Medical Examiners (1983) 144 Cal.App.3d 110, 114 [192 Cal.Rptr. 455], quoting Dickey v. Raisin Proration Zone No. 1 (1944) 24 Cal.2d 796, 810 [151 P.2d 505, 157 A.L.R. 324].) The power to grant interim relief is necessary for the due and efficient administration of Proposition 103, and may fairly be implied from its command that “[n]o rate shall . . . remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter.” (§ 1861.05, subd. (a).) (Italics added.) In short, any insurer who believes the rates set by section 1861.01, subdivision (a), are confiscatory may file an application with the Insurance Commissioner for approval of a higher rate. If that application is filed before November 8, 1989, the insurer may immediately begin charging that higher rate pending approval from the commissioner. After that date insurance rates subject to Proposition 103 must be approved by the commissioner prior to their use, but, as we have explained, the commissioner can approve an interim rate pending her final decision. If the commissioner finds the initiative’s rate, or some other rate less than the insurer charged, is fair and reasonable, the insurer must refund excess premiums collected with interest. No insurer, however, will be compelled to charge the rates set by the initiative unless it either acquiesces in that rate or is unable to prove that a higher rate is constitutionally required. In view of these safeguards we conclude that the initiative provision requiring a reduction in rate to at least 20 percent below 1987 rates does not, on its face, violate the due process rights of insurers. In summary, we have concluded (a) that section 1861.01, subdivision (b), limiting first-year-rate adjustments to insurers substantially threatened with insolvency, is facially invalid, but severable, and does not invalidate the remainder of the initiative; (b) that the procedures for adjustment of insurance rates—including application to the commissioner, the opportunity to seek interim relief, a hearing in accordance with the Administrative Procedure Act, and judicial review—meet constitutional standards; and (c) that in view of the safeguards described in this opinion, the rate rollback and reduction of Proposition 103 is not invalid on its face, but the rates thereby established are necessarily subject to the right of an insurer to demonstrate that a particular rate is, as applied to it, a confiscatory rate. 2. Restrictions upon the insurers’ right to refuse to renew policies. Proposition 103, in section 1861.03, subdivision (c) [hereafter nonrenewal provision], provides: “Notwithstanding any other provision of law, a notice of cancellation or non-renewal of a policy for automobile insurance shall be effective only if it is based on one or more of the following reasons: (1) nonpayment of premiums; (2) fraud or material misrepresentation affected the policy or insured; (3) a substantial increase in the hazard insured against.” Before enactment of Proposition 103 insurers had an unfettered right to refuse to renew policies (see Greene v. Safeco Ins. Co. (1983) 140 Cal.App.3d 535, 538 [189 Cal.Rptr. 616]). Respondent Attorney General and proponents contend that the nonrenewal provision applies to policies issued before enactment of Proposition 103. Petitioners agree that the provision was intended to apply to policies in force when Proposition 103 was enacted but maintain that the application of this provision to such policies would in effect alter their terms, and thereby violate the constitutional prohibition against a “law impairing the obligation of contracts.” (U.S. Const., art. I, § 10; see Cal. Const., art. I, § 9.) They do not contend that this subdivision is invalid as applied to policies voluntarily issued or renewed after November 8, 1988. Amicus curiae Travelers Indemnity Company argues that the nonrenewal provision was not intended to apply to policies in force before enactment of Proposition 103, pointing to the well-established principle that regardless of considerations of constitutionality, “statutes are not to be given a retrospective operation unless it is clearly made to appear that such was the legislative intent.” (Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1207 [246 Cal.Rptr. 629, 753 P.2d 585]; Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 393 [182 P.2d 159].) Amicus curiae also contends that we should apply the well-established principle “ ‘that a court, when faced with an ambiguous statute that raises serious constitutional questions, should endeavor to construe the statute in a manner which avoids any doubt concerning its validity.’ ” (Young v. Haines, supra, 41 Cal.3d 883, 898; Carlos v. Superior Court (1983) 35 Cal.3d 131, 147, 152 [197 Cal.Rptr. 79, 672 P.2d 862]; San Francisco Unified School Dist. v. Johnson (1971) 3 Cal.3d 937, 948 [92 Cal.Rptr. 309, 479 P.2d 669].) We recognize the validity of these precepts, but conclude that the initiative’s nonrenewal provision was intended to apply to existing contracts and that such application does not raise a substantial doubt respecting its constitutionality. The nonrenewal provision contains no language limiting its effect to policies issued or renewed after November 8, 1988. The omission is significant, because section 1861.01 (the rate-rollback provision) expressly states that it applies only to policies “issued or renewed on or after November 8, 1988.” The necessary inference is that the nonrenewal provision was not so limited. The evident purpose of the nonrenewal provision, moreover, mandates its application to existing policies. The provision is obviously designed to give policyholders a measure of assurance that their coverage would continue, and to prevent widespread refusals to renew in response to the initiative’s enactment. Accordingly, the conclusion is inescapable that the nonrenewal provision was intended to apply to policies in force on the effective date of Proposition 103. We therefore turn to the question whether section 1861.03, if applied to existing policies, unconstitutionally impairs the obligation of contracts. Three relatively recent United States Supreme Court decisions have considered the impairment-of-contract clause. In Allied Structural Steel Co. v. Spannaus (1978) 438 U.S. 234 [57 L.Ed.2d 727, 98 S.Ct. 2716], the court struck down a Minnesota statute which required a company terminating operations in Minnesota to transfer to the state a sum sufficient to fund pension obligations to local workers. (Under prior law the company had the right to terminate the pension by refunding the trust amounts.) The court emphasized the narrow focus of the legislation—it was apparently aimed at only a few companies—and the fact that it concerned a subject not previously regulated. Energy Reserves Group v. Kansas Power & Light, supra, 459 U.S. 400, upheld a Kansas law which established rates for natural gas sales and prohibited rate increases based on certain escalator clauses in existing contracts between gas sellers and public utilities. The court distinguished Allied Structural Steel, supra, 438 U.S. 234, primarily on the ground that the parties were operating in a heavily regulated industry. The most recent decision, Exxon Corp. v. Eagerton (1983) 462 U.S. 176 [76 L.Ed.2d 497, 103 S.Ct. 2296], upheld an Alabama law which imposed a severance tax on oil and gas and prohibited price increases which would pass on the burden of the tax even though some sellers had contracts which expressly authorized such price increases. The decision explained that “[although the language of the Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State ‘to safeguard the vital interests of its people.’ [Citations.] This Court has long recognized that a statute does not violate the Contract Clause simply because it has the effect of restricting, or even barring altogether, the performance of duties created by contracts entered into prior to its enactment. [Citation.] . . . Thus, a state prohibition law may be applied to contracts for the sale of beer that were valid when entered into [citation], a law barring lotteries may be applied to lottery tickets that were valid when issued [citation], and workmen’s compensation law may be applied to employers and employees operating under pre-existing contracts of employment that made no provision for work-related injuries. [Citation.] [j|] Like the laws upheld in these cases, the pass-through prohibition did not prescribe a rule limited in effect to contractual obligations or remedies, but instead imposed a generally applicable rule of conduct designed to advance ‘a broad societal interest,’ [citation]: protecting consumers from excessive prices. The prohibition applied to all oil and gas producers, regardless of whether they happened to be parties to sale contracts that contained a provision permitting them to pass tax increases through to their purchasers. The effect of the pass-through prohibition . . . was incidental to its main effect of shielding consumers from the burden of the tax increase.” (462 U.S. at pp. 190-192 [76 L.Ed.2d at pp. 510-511].) None of the United States Supreme Court cases has considered the contract clause in connection with insurance regulation, but a number of lower court decisions have discussed this matter. Hinckley v. Bechtel Corp. (1974) 41 Cal.App.3d 206 [116 Cal.Rptr. 33] involved a law which limited the period during which a retiring employee could exercise his right to convert a group life insurance policy to an individual policy without proof of insurability. Holding that the law could be applied to existing policies, the Court of Appeal stated: “The cases are legion which hold that the police power of the state to regulate insurance business cannot be contracted away, and the economic interest of the state may justify the exercise of its continuing protective power notwithstanding interference with existing contracts.” (P. 215.) Decisions of other states also offer an analogy. Smith v. Department of Insurance, supra, 507 So.2d 1080, offers something for both sides. Florida passed a law which limited noneconomic tort damages, froze insurance rates, required a partial rebate of premiums on existing policies, and prohibited insurers from cancelling or refusing to renew existing policies in order to avoid the rate freeze or rebate. The court held the rebate provision unconstitutional, applying a Florida rule that “virtually no degree of contract impairment is tolerable in this state.” (Pomponio v. Claridge of Pompano Condominium, Inc. (Fla. 1979) 378 So.2d 774, 780, cited in. Smith, supra, 507 So.2d at p. 1094.) But it upheld without discussion all other provisions relating to insurance policies, including the section limiting the insurers’ right to refuse to renew policies. The State of Massachusetts, after regulating insurance rates for many years, discontinued rate regulation as of January 1, 1977. When insurance rates rose rapidly, the state legislature reimposed regulation retroactive to January 1, directed that all policies written since January 1 be rewritten at reduced rates, and excess premiums rebated. In American Mfrs. Mut. Ins. Co. v. Comm'r of Ins., supra, 372 N.E.2d 520, the Supreme Judicial Court of Massachusetts upheld the statute. The court relied on the urgent need for immediate correction of insurance rates, and reasoned that insurers, as part of an intensely regulated industry, “were on notice that the premiums received were not firm against legislative adjustment.” (P. 528.) When New York enacted no-fault insurance in 1973, it required insurers to offer that coverage to existing policyholders, and imposed a three-year restriction on nonrenewal of policies. In County-Wide Ins. Co. v. Harnett (S.D.N.Y. 1977) 426 F.Supp. 1030, 1035, a three-judge federal court upheld a law extending the restriction for an additional three years, stating that “[t]he law accomplishes a legitimate public goal and any contract rights must yield to it.” We now apply these principles and precedents to the renewal provision of Proposition 103. We begin by assessing the severity of the impairment, since that assessment “measures the height of the hurdle the state legislation must clear” (Allied Structural Steel v. Spannaus, supra, 438 U.S. 234, 245 [57 L.Ed.2d at p. 737]), then examine the public interest advanced to justify the impairment. In the present case the impairment, while not so low as to escape constitutional scrutiny, is relatively moderate and restrained, and the hurdle correspondingly low. The insurer may still refuse to renew policies for nonpayment of premium, fraud or misrepresentation, or substantial increase in the hazard insured against. And when it renews pursuant to Proposition 103 it is guaranteed fair and reasonable rates. Insurance, moreover, is a highly regulated industry, and one in which further regulation can reasonably be anticipated. As we said in Carpenter v. Pacific Mut. Life Ins. Co. (1937) 10 Cal.2d 307 [74 P.2d 761]: “It is no longer open to question that the business of insurance is affected with a public interest. . . . Neither the company nor a policyholder has the inviolate rights that characterize private contracts. The contract of the policyholder is subject to the reasonable exercise of the state’s police power.” (P. 329; see People v. United National Life Ins. Co. (1967) 66 Cal.2d 577, 595 [58 Cal.Rptr. 599, 427 P.2d 199] and cases there cited.) Indeed it is clear that during the year prior to November 8, 1988—a year during which almost all automobile insurance policies in effect on that date were issued or renewed—insurers were well aware of the possibility that initiatives or ordinary legislation might be enacted that would affect existing polices. Finally, Proposition 103 does not prevent an insurer from discontinuing its California business. Sections 1070 through 1076 spell out the procedure by which an insurer may withdraw from California by surrendering its certificate of authority. The initiative did not repeal those sections, and indeed recognizes the possibility that insurers may withdraw from some insurance markets by authorizing the commissioner to establish a joint underwriting authority to serve such markets. (§ 1861.11, quoted in fn. 21, ante.) We turn now to examine the public interest to determine whether it justifies the impairment. As we noted earlier, the drafters and the voters were evidently concerned that the enactment of Proposition 103 might cause some insurers not to renew some or all of their existing policies, an action which would undermine Proposition 103’s goal of making insurance “available” for all Californians. Indeed if many insurers refused to renew the state could face a crisis in which many of its residents would be unable to obtain insurance and thus could not legally drive, and others would be forced to accept inadequate protection. We conclude that the public interest in averting this danger, when measured against the relatively low degree of impairment of contract rights involved, is sufficient to justify Proposition 103’s nonrenewal provision, and accordingly that this provision can be applied to existing policies without violating the state or federal Constitutions. 3. Notice of formation of a consumer-advocacy corporation. Section 1861.10, subdivision (c), provides for the creation of a consumer-advocacy corporation, and notice to all California policyholders of their opportunity to become members of the corporation. It reads in full as follows: “(1) The commissioner shall require every insurer to enclose notices in every policy or renewal premium bill informing policyholders of the opportunity to join an independent, non-profit corporation which shall advocate the interests of insurance consumers in any forum. This organization shall be established by an interim board of public members designated by the commissioner and operated by individuals who are democratically elected from its membership. The corporation shall proportionately reimburse insurers for any additional costs incurred by insertion of the enclosure, except no postage shall be charged for any enclosure weighing less than Vs of an ounce. (2) The commissioner shall by regulation determine the content of the enclosures and other procedures necessary for implementation of this provision. The legislature shall make no appropriation for this subdivision.” Petitioners contend that the foregoing provision violates article II, section 12 of the California Constitution, which states: “No amendment to the Constitution, and no statute proposed to the electors by the Legislature or by initiative, that names an individual to hold any office, or names or identifies any private corporation to perform any function or to have any power or duty, may be submitted to the electors or have any effect.” Petitioners further argue that since the constitutional provision says that no statute which violates it “may . . . have any effect,” the invalid language is nonseverable and invalidates the whole of Proposition 103. We hold that the consumer-advocacy provision of Proposition 103 does violate article II, section 12, but is severable and does not affect the balance of the initiative. The explicit terms of article II, section 12, demonstrate that the consumer advocacy provision of Proposition 103 is invalid. The constitutional prohibition bars naming or identifying a private corporation to perform any function. The consumer-advocacy provision “identifies” a particular corporation—that one which is to be formed by an interim board of public members appointed by the Insurance Commissioner. As we explain later in this opinion, the corporation to be formed is a private corporation. Finally, that corporation is identified to perform a “function,” to “advocate the interests of insurance consumers in any forum.” (§ 1861.10, subd. (c).) We see no escape from the clear and explicit language of the state Constitution. In arguing to the contrary, the proponents of the initiative and the Attorney General rely on the history and purpose of article II, section 12. That section is an amalgam of two constitutional provisions enacted to prevent the initiative from being used to confer special privilege or advantage on specific persons or organizations. The first such provision, enacted in 1950, was a response to two initiatives on the 1948 ballot. One proposed, among many other things, to establish a California Pension Commission of five commissioners with six-year terms of office, and to name the persons to hold those offices. The other designated a specific individual to be Director of the State Department of Social Welfare. Seeking to exclude such provisions from future initiatives, the Legislature submitted to the voters a proposed constitutional amendment providing that any initiative statute or constitutional amendment “which names any individual ... to hold any office” shall have no effect. (Former art. IV, § Id.) The voters adopted the measure at the 1950 election. The second provision was enacted in 1964. In that year a private corporation, the American Sweepstakes Corporation, financed a proposed constitutional amendment establishing a state lottery and designating the sponsoring corporation as administrator of the lottery. The Legislature countered by putting a constitutional amendment on the same ballot specifying that any amendment “which names any private corporation ... to have any power or duty” shall have no effect. (Former art. IV, § Id, subd. (b).) Significantly the Legislature considered, but rejected, limiting this prohibition to profit-making corporations. (See Assem. Const. Amend. No. 12 (1964 First Ex. Sess.).) The voters defeated the lottery, but approved the prohibition on amendments which name private corporations. In 1966 the Constitution Revision Commission combined the two measures into a single provision which prohibited the naming or identifying of a person or private corporation in a constitutional amendment or initiative. The 1966 revision made two significant changes: it added a prohibition against “identifying” as well as “naming” persons or corporations, and it extended the prohibition on naming or identifying corporations (which under the 1964 enactment applied only to constitutional amendments) to encompass initiative legislation. The voters approved the 1966 revision, adopted as article IV, section 26, and since renumbered as article II, section 12. Citing this historical record, proponents and the Attorney General contend that the constitutional prohibition applies only to existing corporations. To be sure, the American Sweepstakes Corporation, whose actions provoked the 1964 amendment, was an existing corporation. The evil which the constitutional prohibition seeks to prevent—the conferring of special privilege upon some organization sponsoring the initiative—is most easily perpetrated by referring to an existing entity. But if the prohibition were limited to existing entities, it could readily be evaded by conferring a privilege upon some future corporation, describing its formation and governance so as to ensure its control by the proponents of the initiative. It is further contended that the proposed consumer-advocacy corporation would not be a “private” corporation within the meaning of article II, section 12. The parties agree that the corporation envisioned by Proposition 103 would probably be classified as a “nonprofit public benefit corporation” under Corporations Code section 5110 et seq. This category covers nonreligious corporations whose assets are irrevocably dedicated to charitable or public purposes and which, upon dissolution, must be distributed to some other person or corporation carrying on similar purposes. To hold that a “nonprofit public benefit corporation” is generally exempt from the prohibition of article II, section 12 would confine that prohibition primarily to corporations organized for profit, contrary to the intent of the 1964 Legislature in proposing the predecessor of the present constitutional prohibition. We recognize that Proposition 103’s consumer-advocacy corporation differs in one respect from a typical nonprofit public benefit corporation; it will be established by “an interim board of public members designated by the commissioner.” (§ 1861.10, subd. (c).) The Insurance Commissioner is a public officer and a corporation managed by persons she selects is arguably a public corporation. The authority of the commissioner’s appointees, however, is limited to the establishment of the corporation; it is governed thereafter by “individuals who are democratically elected from its membership.” {Ibid.) Thus in operation the consumer-advocacy corporation will be governed by its members, much like other nonprofit corporations. We conclude that it must be classified as a private corporation under article II, section 12. We reject the contention that the inclusion of nonprofit corporations is inconsistent with the purpose of the constitutional prohibition. It may be less likely that promoters seeking self-aggrandizement would employ a nonprofit corporation as a vehicle, but we still perceive a danger that supporters of a particular nonprofit organization might seek to obtain through the initiative some special privilege not afforded other organizations. One might even perceive this danger in the present case. There are several consumer-advocacy corporations, and others could be formed. But Proposition 103 gives a kind of state imprimatur to one particular corporation—the one formed pursuant to section 1861.10, subdivision (c)—and gives that organization alone the benefit of a low-cost or free statewide mailing to solicit memberships. Finally, proponents and the Attorney General contend that article II, section 12, was intended to prevent private persons or corporations from being granted a constitutional right to a public office or function. They therefore claim that section 12 of article II should be construed to prohibit identifying a corporation only if the initiative describes that corporation as performing a public function. We find no such limiting language in the constitutional provision itself. Moreover, the function to be performed by the consumer-advocacy corporation is in a sense a public function, that of representing consumers in ratemaking proceedings before the Insurance Commissioner, thereby assuring that the commissioner’s decisions are based upon a truly adversary process in which the interests of both insurers and consumers are presented. We conclude that Proposition 103, in section 1861.10, subdivision (c), impermissibly identifies a private corporation to perform a function, in violation of article II, section 12, of the California Constitution. We therefore turn to petitioners’ contention that because article II, section 12, provides that “no statute proposed to the electors ... by initiative” that identifies a private corporation to perform a function “may be submitted to the electors or have any effect,” the consumer-advocacy provision is not severable, and the entire initiative invalid. Petitioners compare article II, section 12, to the single-subject rule (art. II, § 8), which states in subdivision (d) that “[a]n initiative measure embracing more than one subject may not be submitted to the electors or have any effect.” In California Trial Lawyers Assn. v. Eu (1988) 200 Cal.App.3d 351, 362 [245 Cal.Rptr. 916], the court held that this language “preclude[s] judicial surgery to cure single-subject violations. . . . [I]t unambiguously states that an initiative encompassing more than one subject shall have no effect. Its wording defies a construction that only some parts shall be denied effect.” The single-subject rule, however, differs critically in both language and purpose from article II, section 12. Article II, section 8, says that “[a]n initiative measure” which violates the single-subject rule may not be submitted to the voters or have any effect. Article II, section 12, says that a “statute” which violates that provision may not be submitted to the voters or have any effect. The term “initiative measure” is the broader term, for an initiative measure may, and commonly will, contain more than one statute. Proposition 103 itself adds numerous statutes to the Insurance Code, one section to the Revenue and Taxation Code, and repeals other statutes. Thus the language of article II, section 12 requires us only to invalidate the offending statute, that is, section 1861.10, subdivision (c), and not the balance of the initiative. The difference in purpose of the two provisions leads to the same conclusion. An initiative which violates the single-subject rule contains two or more portions which could be separately enacted, but cannot be combined in one measure. A court finding such a violation has no method of deciding which part of the initiative shall take effect. In contrast, when a part of an initiative violates article II, section 12, the rule is clear: the offending part must be stricken from the initiative, and the remainder may take effect. We conclude that article II, section 12, precludes severability only within the confines of the particular statute which impermissibly names or identifies a person or private corporation. The question whether the statute can be severed from the balance of the initiative must be determined by the general principles of severability set out earlier in this opinion (see ante, pp. 821-822). Under these principles it is clear that the consumer-advocacy provision is severable. Section 1861.10, subdivision (c) is mechanically and functionally independent of the balance of the measure. The only question is whether that subdivision meets the third criterion for severance: whether the initiative would have been adopted had the voters foreseen the invalidity of the consumer-advocacy provision. The consumer-advocacy provision is clearly not essential to the initiative’s purpose and structure. Petitioners, however, maintain that Proposition 103 might not have been enacted without such a provision. They point to proponents’ ballot argument which said that Proposition 103 “specifies that a permanent, independent consumer watchdog system will champion the interests of insurance consumers.” The ballot argument went on to distinguish rival Proposition 100 on the ground that it did not “enable consumers to permanently unite to fight against insurance abuse.” Petitioners suggest that this argument may have led the voters to adopt Proposition 103 instead of Proposition 100, and thus that Proposition 103 might not have been enacted without a consumer-advocacy provision. But we are in no position to undertake a factual inquiry into whether this portion of the ballot argument persuaded any voter to support Proposition 103 instead of Proposition 100. (Some voters undoubtedly supported both.) The test of severability is one based on reason, and it stands to reason that voters who favored a measure that provides for public regulatory hearings with consumer participation would still favor that measure had they foreseen the invalidity of the provision creating a particular corporation to represent the consumers. (See Santa Barbara Sch. Dist. v. Superior Court, supra, 13 Cal.3d 315, 331.) 4. Board of Equalization adjustment of premium tax rates. California imposes a gross premium tax upon insurers in lieu of most other taxes. (Cal. Const., art. XIII, § 28.) The Constitution sets a rate of 2.35 percent {id., subd. (d)), subject to l