Capitol: The measure is backed by Mercury firm, a heavy contributor to lawmakers. Insurance chief opposes it.
The Los Angeles Times
SACRAMENTO — Lawmakers have revived legislation that would undermine the authority of the state’s insurance commissioner and benefit a company that has contributed generously to lawmakers from both parties.
The measure, SB 689, would allow automobile insurers to offer discounts to customers who have continuously purchased insurance. A similar bill was voted down by a Senate committee earlier this month.
Pushing to bring it back to life was Mercury Insurance Group, a Los Angeles-based carrier that has donated to two-thirds of the Legislature in the last two years, including contributions of $174,000 to Assembly Insurance Committee Chairman Thomas Calderon (D-Montebello).
At an impromptu hearing Monday night, the measure passed the committee 14-2 despite a warning from the committee’s lawyer that it would probably violate the provisions of Proposition 103, the voter-approved initiative establishing regulation of the insurance industry.
The legislation would stop a move by Insurance Commissioner Harry Low to outlaw the discount on grounds that it requires customers who are not eligible for the price break to pay higher rates.
In a memo circulated to lawmakers, Low asked for defeat of the bill, arguing that it “circumvents the commissioner’s authority,” undermines the new regulations and would discourage uninsured motorists from buying coverage.
“Those without prior insurance would end up paying significantly more in premiums to offset the discount,” Low wrote the Legislature.
Kathleen Snodgrass, a lobbyist for Mercury, told lawmakers her company had been offering the discount for years and it now needed their help to stop Low from acting.
“Our bill allows you to shop for prices and allows you choices in the marketplace,” she said.
Sen. Don Perata (D-Alameda), author of the legislation, argued that lawmakers had a greater prerogative to make rules that were typically reserved for the commissioner because Low was not elected to his post.
Quackenbush was accused of allowing insurance companies to avoid fines for mishandling Northridge earthquake claims by paying into a foundation that then spent the money for his political benefit.
Assemblyman Fred Keeley (D-Boulder Creek) disagreed with Perata, saying that as a former appellate court justice, Low was better-suited than an elected commissioner to make a deliberative decision not influenced by politics.
While most insurance groups supported the bill, it had strong opposition from consumer groups, which argued that it would disproportionately affect the poor.
“Only an insurer who’s given to a vast majority of the politicians could push a controversial anti-consumer bill like this through the Legislature in the final week of its session,” said Douglas Heller, a lobbyist for the Foundation for Taxpayer and Consumer Rights. “It’s impossible for poor people and all California consumers to stop this kind of a juggernaut.”
Heller noted that all 14 members of the committee who voted for the measure had received contributions from Mercury in the last two years.
The legislation surfaced on Sunday afternoon–six days before the end of the legislative session–when a measure by Perata dealing with prostate cancer was amended to become a bill that allowed insurance companies to offer the discount.
It is expected to come up in the Assembly today.