SACRAMENTO, CA — As he campaigns to become California’s next governor, Republican Steve Poizner often proclaims that auto and homeowner insurance rates have fallen by $1.81 billion since he took over the state’s Department of Insurance in January 2007.
But one consumer group, which compiled statistics at the request of the Mercury News, argues that nearly half those reductions were the work of Poizner’s predecessor, Democrat John Garamendi.
And in the past year, many large insurers have actually raised rates after Poizner tweaked Garamendi’s rules to make them more flexible.
In addition, other claims Poizner has made on the stump namely, that he’s cut his department’s operating expenses by nearly 15 percent and his staff by 200 employees don’t add up as billed, according to a Mercury News analysis.
Taken together, those findings raise questions about Poizner’s rhetoric and whether he has, at times, exaggerated his achievements. And more and more, as Poizner works to sell himself to voters, that record as commissioner has become the central pillar of his last-place campaign.
“There’s no question that the regulations were amended to make it easier for insurance companies to raise their rates,” said Harvey Rosenfield, founder of Santa Monica-based Consumer Watchdog and the author of Proposition 103, the 1988 measure that empowered the commissioner to regulate California’s $160 billion insurance market.
In response, department officials say that no matter when the rate decreases took effect, it was still Poizner who approved them and that a nearly $2 billion net decrease in rates stands up to scrutiny.
“It’s like threading a needle,” said Poizner, a wealthy Silicon Valley entrepreneur. “If insurance companies were thrilled with me, that should be a huge red flag. And if Harvey was thrilled with me, that should be a huge red flag.”
With his power to influence rates and investigate fraud, the commissioner affects how much we pay to insure our cars and homes and how much businesses must pay to provide workers’ compensation insurance.
At campaign appearances, Poizner frequently talks about the times he’s held firm against the industry.
But for consumer advocates, the big numbers Poizner puts forth a net $1.81 billion reduction in auto and homeowners rate cuts, out of a $1.98 billion reduction overall raise eyebrows.
According to statistics compiled by Consumer Watchdog, at least $800 million of those cuts came under rate regulations put forward by Garamendi in late 2006.
What’s more, they argue, Poizner changed those rules in May 2008 making it easier for insurers to justify hikes by letting them cite the most favorable data possible. Since then, Consumer Watchdog found, major insurers have been permitted hikes worth $282 million.
Department officials who have worked for both Garamendi and Poizner say Poizner added some needed flexibility to Garamendi’s rules, which they contend were “rushed in” before he left office.
And they strongly disagree that Poizner has made it easier for insurers to raise rates.
That’s not a true statement,” said Woody Girion, the deputy commissioner who says he was tasked with “cleaning up” Garamendi’s rules. The department’s actuaries “don’t let a company come in and cherry-pick. They hold their feet to the fire.”
To be sure, even diehard consumer advocates won’t label Poizner avidly pro-insurer. His senior staff has included insurance lobbyists and consumer advocates alike. In interviews, department insiders, lobbyists and watchdogs
agreed Poizner has been both fair and collegial.
“Whenever he does something good, we’ve applauded him,” Rosenfield said. “Democrats and Republicans have one thing in common: They don’t want to be gouged by insurance companies.”
Indeed, many of Poizner’s efforts have won praise.
He’s cracked down on health insurers that illegally cancel sick patients’ policies. He’s worked to lower workers’ compensation rates, just last week refusing a 22.8 percent increase sought by insurers.
He’s also created a pay-as-you-drive auto insurance program. And the department has beefed up its fraud unit, piling up 1,900 arrests over 2007 and 2008.
“There are things we disagreed on,” said Sam Sorich, president of the Association of California Insurance Companies, which represents 300 insurers. “It’s not a walk in the park working with Commissioner Poizner.”
On the campaign trail, Poizner has worked to woo the conservatives who likely will decide the Republican primary in June. He proposes tax cuts, and he cites an overhaul of his department, begun in 2007, as proof he can trim spending and smartly.
Again, though, the rhetoric sometimes doesn’t match the record.
For example, what Poizner bills as a “nearly 15 percent” cut in expenses this year applied only to a $135 million subset of what was initially a $174.4 million operating budget.
In addition, about a third of that reduction was imposed by the governor and Legislature because of the state’s budget crisis.
Poizner acknowledged that not all the cuts were by his own volition. But he insists they followed his vision.
“We were heading for this 15 percent cut,” he said. “By having the review done, I was exactly in the position to optimize those changes” when the extra cuts were ordered.
Similarly, when claiming he’s cut personnel from roughly 1,300 to 1,100, Poizner is comparing oranges and tangerines budgeted positions three years ago vs. the number of employees now actually on the payroll. Department of Finance records show personnel has largely remained flat. (See accompanying chart.)
For now, Poizner is lagging behind his GOP rivals. In poll after poll, he has trailed billionaire Meg Whitman, the ex-eBay CEO, and Tom Campbell, a former congressman and state finance director.
“The polls right now reflect one thing: name ID,” Poizner said. “I’m the insurance commissioner. I wish more people were paying attention to the things I’m doing.”
Contact Denis C. Theriault at [email protected] or 408-920-5552.