California’s Next Insurance Commissioner Faces Full Agenda

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OLDWICK, N.J. (BestWire) – California’s next insurance commissioner will have a full plate when he takes office in January, and that agenda will be on the minds of voters as they hit the polls March 5 to narrow the field of 11 candidates vying for the position.

One Democrat from the four on the primary ballot and one Republican from the three primary candidates will be chosen to face off in the November general election against four third-party candidates.

Workers’ compensation, the health of the insurance industry and the solvency of the state’s guaranty fund will be hot topics for the new commissioner, industry experts said. Also, mold, credit scoring and rate increases for insurers are likely to be important topics.

This year is the first time California has had a chance to elect a new insurance commissioner since Chuck Quackenbush stepped down in 2000 amid allegations of wrongdoing.

“The most important thing (for the commissioner) is to focus on managing the department and making sure laws are followed,” said Nicole Mahrt, a spokeswoman with the American Insurance Association. “That’s really all insurance companies want.” With the market hardening in the wake of Sept. 11 and Enron Corp.’s bankruptcies, plus the fall of the equity markets, many insurers have been seeking rate increases. Insurers want prompt approval of proposed rate changes, Mahrt said.

Doug Heller of the Foundation for Taxpayer and Consumer Rights said the biggest concern for the new commissioner should be “the spate of insurance rate increases in personal and commercial lines.” He said the foundation will continue to push the department to enact regulations to determine what an excessive rate is. “The law says the rates should not be inadequate or excessive, but they don’t have any formula in place to determine what that is,” Heller said. He also said the consumer group would fight insurers’ attempts to seek mold exclusions. “It’s typical and totally unacceptable for the industry to continue to take our premiums and provide less and less coverage,” Heller said. The group also will ask the commissioner to prohibit insurers from using credit scoring in setting rates, Heller said.

In commercial lines, California has seen a growing concern over its troubled workers’ comp market, Mahrt said. The leading writer of workers’ comp insurance is the state fund, which is supposed to be the “insurer of last resort,” Mahrt said. The list of 11 certified candidates includes four Democrats–Assemblyman Thomas M. Calderon of Los Angeles; former Insurance Commissioner John Garamendi, who was the state’s the first elected commissioner; former State Assemblyman Tom Umberg of Orange County; and Bill Winslow, an attorney/insurance consultant.

Three Republicans are certified to run for their party’s nomination: Wes Bannister, an insurance agent and two-time past candidate for the post; Gary Mendoza, who was the head of the Department of Corporations under Gov. Pete Wilson; and Stefan Stitch, an insurance auditor.

Four third-party candidates have been certified to be on the ballot: Steven A. Klein, a businessman, for the American Independent Party; David Ishmael Sheidlower, an underwriting systems director, for the Green Party; Dale F. Ogden, an insurance consultant/actuary, for the Libertarian party; and Raul Calderon Jr., health researcher and educator, for the Natural Law Party.

Calderon has come under fire by a consumer group for being the only candidate to accept campaign contributions from insurance companies (BestWire, Jan. 23, 2002). According to the Foundation for Taxpayer and Consumer Rights, Calderon has received $1.5 million from insurers, or 57.7% of his total fund-raising of $2.6 million.

The other large fund-raisers are Umberg, who has raised $2.4 million, and Garamendi, who has raised a total of $1.4 million, although neither candidate received money from insurers. As of Feb. 26, Calderon, Umberg and Garamendi were the only three candidates to have raised more than $250,000 for the race, the foundation said.

Calderon has said the contributions won’t affect his judgment as an independent commissioner. For instance, he said he is advocating banning insurers’ use of credit scoring, a position that insurers disagree with. The 2002 general election will be held Nov. 5th.

Consumer Watchdog
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