Assembly takes first step toward Quackenbush scandal reform, Advocates wary of details

Sacramento, CA–A measure that will limit the amount of campaign contributions that the Insurance Commissioner can receive from those that he regulates passed the Assembly Elections Committee today 5-0. The bill would allow insurers to give only $250 in the twelve months prior and six months after the companies have certain proceedings before the Department of Insurance.

“This bill could be a very effective shield to stop insurance companies from unfairly influencing the Insurance Commissioner,” stated Doug Heller, consumer advocate for the Foundation for Taxpayer and Consumer Rights, “but the legislation must be cleaned up to ensure that it doesn’t contain loopholes that would allow for another Quackenbush scandal.”

Consumer advocates express concerns that the legislation, as currently drafted, would only apply to “formal” regulatory actions. Many of the regulatory duties of the insurance commissioner, while not rising to that level, still have a direct impact on consumers, such as the approval of insurance plans and rate increases. Advocates argue that the bill must be expanded to ensure that it precludes contributions from those with any business before Commissioner, not just those subject to a “formal” proceeding.

In testimony before the Committee today, FTCR advocate Doug Heller additionally argued that the limit on contributions should be expanded to cover the twelve months (rather than six) following a proceeding. FTCR has called for a complete ban on contributions from insurance industry to the Insurance Commissioner as SB 953 originally proposed, but would support a $250 annual cap on contributions to a candidate for Insurance Commissioner from all persons and entities that are regulated by the Department of Insurance.