Insurers seek to sway California’s pick of industry regulator

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Associated Press

SAN FRANCISCO: The last time Californians entrusted oversight of the state’s $86 billion insurance market to an industry-backed politician, it ended in a sordid influence-peddling scandal.

Insurers are betting voters are ready to wipe the slate clean and elect the industry’s latest choice for insurance commissioner, state Assemblyman Tom Calderon.

The industry’s robust support for Calderon is drawing comparisons to its backing of Chuck Quackenbush, who was twice elected to the office despite warnings that he would be more lapdog than watchdog.

Quackenbush made front page news when he resigned in June 2000 amid allegations that he waived up to $3 billion in fines in return for industry favors.

Insurers seem confident voters won’t dwell on the debacle as the industry pushes to elect Calderon, a Democrat who cultivated the industry connections as chairman of the Assembly Insurance Committee.

“We expect to get a fair shake with Calderon. We certainly don’t expect to get a lapdog,” said Jeff Fuller, president of the Association of California Insurance Companies, a trade group that has contributed more than $50,000 to the campaign.

The winner of the Democratic primary on March 5 will be favored to win November’s general election against one of three little-known and little-supported Republicans.

The new insurance commissioner will have final say over industry prices at a time when many carriers areon mulling significant rate increases to help cover rising claims.

With those stakes in mind, insurers are investing heavily in Calderon.

The industry has poured $1.53 million into his campaign, accounting for 58 percent of the $2.65 million he has raised so far, according to an analysis by the Foundation for Taxpayer and Consumer Rights, a Santa Monica activist group.

Meanwhile, all the other major candidates in the race are shunning industry contributions to avoid potential conflicts.

Some of Calderon’s campaign funds have come from auto repair shops who say they felt pressured to contribute or risk losing business referrals from Farmers Insurance. Los Angeles-based Farmers is among Calderon’s biggest contributors, providing his campaign with $229,000, including money donated by its employees and a political action committee.

During Quackenbush‘s six years in office, insurers contributed $9 million to his campaign, a legacy that prompted the Foundation for the Taxpayer and Consumer Rights to create a “Quack-O-Meter” to measure the industry’s influence on this year’s race.

Calderon says the comparisons to Quackenbush, a Republican, are unwarranted.

“Tom has proven he can build a firewall between politics and policy,” said Valerie Martinez, a Calderon spokeswoman. “He has taken industry contributions in the past and he has always voted pro-consumer across the board.”

As an example of his populist philosophy, Calderon cites his authorship of a new law that will raise the maximum workers’ compensation benefit by 71 percent, or $350 per week, during the next four years.

Calderon’s political dependence on the industry threatens the integrity of an office already tarnished by Quackenbush‘s alleged misconduct, said Harvey Rosenfield, who wrote a 1988 reform initiative that transformed insurance commissioner’s job into an elected office.

“If (Calderon) gets elected, anything that he does to benefit the industry will be blamed on his acceptance of industry contributions,” Rosenfield said.

In the last major survey of the insurance commissioner’s race, Calderon ranked second with support from 12 percent of likely Democratic voters in a Field Poll conducted from Jan. 23-27.

John Garamendi, who served as California’s first elected insurance commissioner from 1991-94, led the poll with support from 20 percent of the surveyed voters. Former Assemblyman Tom Umberg was third at 10 percent.

Fifty-two percent of the Field Poll respondents said they hadn’t made up their minds.

The voter indecision is a reflection of the scant media attention traditionally paid to all California primary races except the governor’s election, said Mark DiCamillo, director of the Field Institute.

The insurance industry’s support of Calderon figures to draw more scrutiny during the final week of the campaign as both Garamendi and Umberg hammer on the issue in television ads.

Garamendi’s campaign is drawing heavily on loans from himself and real estate interests while Umberg is banking on loans and large contributions from attorneys that sue insurance companies.

Insurers are hoping that consumers recognize that their support of Calderon isn’t necessarily a bad thing. “This is our business,” Fuller said, “so we are the ones that really understand and care about the market.”


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The Foundation for Taxpayer and Consumer Rights’ Quack-O-Meter:

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