Commissioner Enjoyed Fine Dining, ‘Relationship Building’ With Insurance Executives Before Donations, Action In Their Favor

Published on


September 19, 2019

Within weeks of Ricardo Lara’s swearing in as California insurance commissioner, a key figure began turning up at meetings between the new insurance chief and industry executives: Eric Serna, a New Mexico lobbyist who more than a decade ago resigned in disgrace as that state’s most senior insurance regulator.

According to recently released calendars and other documents from the California Department of Insurance, Lara first met with Serna on Jan. 30.

“Meeting w/ Eric Serna re regarding Short Term Medical and also a meet and greet with Commissioner Lara,” states the commissioner’s calendar, 200-plus pages of which were recently released months after public records requests were first submitted.

In February, Lara traveled to Santa Fe, N.M., at public expense to speak at two events, travel records from his office show.

Those records do not mention Serna, but photographs of one event posted online show Lara meeting with him at a reception hosted by Somos un Pueblo Unido, an immigrant rights nonprofit that presented Lara with an award.

Two weeks after the Santa Fe meeting, which cost California taxpayers $1,624, Lara met with Serna again. The second meeting included the proposed buyer and seller of Applied Underwriters, a workers’ compensation insurer owned by Berkshire Hathaway that has been the subject of dozens of complaints to the Department of Insurance.

The pending sale requires the approval of the California insurance commissioner.

The March 12 gathering, one of at least four meetings Lara has had with Serna this year, was described in records as a political event.

“Eric Serna & Berkshire Hathaway will be joining you for a relationship building lunch in support of your Ricardo Lara for Insurance Commissioner campaign at Camden, Spit & Larder,” a memo released by the Department of Insurance states.

The same memo shows the luncheon also was attended by Jamie Sahara, chief executive of Cayman Islands-based United Specialty Insurance, the proposed buyer of Applied Underwriters.

The meetings raise questions about Lara’s statements in July, when he told The San Diego Union-Tribune he was unaware that donors with ties to Applied Underwriters had contributed some $54,000 to his reelection campaign.

Hours after the Union-Tribune disclosed the donations, Lara issued a statement apologizing for what he called an oversight and pledged to return the contributions.

A spokesman for Lara recently addressed the March lunch by saying Lara has promised to recuse himself from decisions affected Applied Underwriters.

“Commissioner Lara has said this was a casual meeting and referred any questions to appropriate staff,” spokesman Michael Soller wrote in an email. “He has previously announced on July 10 that he will have no role in the proposed sale of this company.”

Soller declined to comment on the appropriateness of Lara agreeing to meet with the planned buyer and seller of Applied Underwriters at the same time, although he did say that Lara has met with a variety of people, including disaster survivors, business owners and consumers.

Neither Serna nor Sahara responded to messages seeking comment about the meeting.

By the end of July, campaign disclosures show that Lara returned $83,000 in donations related to Applied Underwriters and other insurers.

Last month, the Union-Tribune reported that the commissioner’s campaign reports included more donations from entities with business before the Department of Insurance than Lara had returned — at least $270,000.

Among those supporters were Serna’s lobbying firm, NTG Consultants, and his son, Marco Serna, who is running for Congress in New Mexico next year. Combined, they donated at least $23,000 to Lara ahead of his narrow election victory last November.

Claremont McKenna College political science professor Jack Pitney said it is unlikely that Lara did not know about the contributions — or the business interests of those who made them.

“Mr. Lara would be a most unusual politician if he never peeked at his donor list,” he said by email. “And he would be a most unusual insurance commissioner if he didn’t recognize the business connections of those donors.”

Similar to Quackenbush

The state insurance commissioner was made an elective office after 1988, when a winning ballot measure made the post directly accountable to voters. The position is a powerful one; the commissioner oversees a $310 billion market affecting virtually every California resident.

In the late 1990s, then-commissioner Chuck Quackenbush began accepting money from insurance companies to promote himself and his political career. He resigned amid a flurry of criticism in 2000.

Since then, every California commissioner — and candidate for the job — has publicly pledged not to accept donations from insurers. Lara made the same promise when running for the post.

Serna’s record is similar to Quackenbush’s, in that he had been a long-time public official in New Mexico when he became the state’s insurance superintendent in 2001.

By 2006, Serna was under investigation by New Mexico’s state attorney general for his dealings with a bank that did business with the state Insurance Division. The bank donated $129,000 to a foundation Serna helped found and served as board president.

Serna also was named in a lawsuit alleging that title insurance companies donated to the same foundation in order to win rate hikes, the Associated Press reported. The New Mexico regulator denied all of the accusations.

Now Serna works as a lawyer and lobbyist for the insurance industry.

“Our contacts and our trusted relationships make NTG the nation’s premier choice for insurance industry representation and consultation,” the company website states.

Serna was listed as the primary contact on the memo announcing the “relationship building” lunch with Lara.

‘Pattern of behavior’

On the same day in March that Lara met with Serna and the parties to the Applied Underwriters sale, the company’s lawyer emailed Department of Insurance officials thanking them for “taking the time to visit,” emails show.

“We look forward to working with you and your staff to meet the September 30 deadline,” attorney Jeffrey Silver wrote.

Lara then traveled to the East Coast in April, first to attend the National Association of Insurance Commissioners spring conference in Orlando, Fla. and then to New York, where he met with a series of insurance executives and lobbyists, department calendars show.

On April 10, Lara dined with Serna and officials from the Association of California Life and Health Insurance Companies and the American Council of Life Insurers at The Clocktower, a Michelin-starred restaurant inside The New York Edition luxury hotel.

The balance of the New York trip was dedicated to climate-change policy discussions and meetings with environmental groups and philanthropic organizations, the public calendar indicates.

Days after the New York dinner with Serna, insurance executives related to Applied Underwriters began donating tens of thousands of dollars to Lara’s 2022 reelection campaign, his campaign disclosures show.

By May, according to Lara’s calendar, the insurance commissioner was meeting a second time with Sahara and Steven Menzies, the Applied Underwriter executive who also attended the March lunch in Sacramento.

The following month, Lara’s department began intervening in Applied Underwriters proceedings before the Department of Insurance. The Union-Tribune reported in July that the insurance commissioner’s office intervened at least four times in cases to the company’s benefit.

Neither Soller nor Lara’s campaign staff answered questions about possible connections between the meetings and campaign donations.

“Commissioner Lara has acknowledged that his campaign staff solicited campaign contributions that did not fall in line with his commitments,” campaign spokeswoman Robin Swanson wrote in an email this week. “Once he became aware of them, he returned them and apologized.”

Pitney, the Claremont McKenna College political science professor, said the state’s most senior insurance regulator has more questions to answer.

“Perhaps there is an innocent explanation for this pattern of behavior, but he has a lot of explaining to do,” Pitney said. “And the old saying applies: if you’re explaining, you’re losing.”

No decision has yet been made about the proposed sale of Applied Underwriters. Soller said the application to complete the sale is under department review.

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