State Agency Rejects Quackenbush Regulations For Low Cost Auto Insurance Program

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FTCR Called on Office of Administrative Law to Refuse Regulations Which Would Have Created Unfair Barriers to the Poor

The regulations proposed by Insurance Commissioner Chuck Quackenbush to implement California’s historic “Lifeline” auto insurance program for the poor were rejected late yesterday by the state’s Office of Administrative Law (OAL). The Foundation for Taxpayer and Consumer Rights (FTCR), sponsors of the 1999 law, had asked OAL to strike specific sections of the regulations because they would have made the program less accessible and less affordable to low-income drivers than the Legislature intended. The regulations were proposed by the California Department of Insurance (CDI) on February 18 on an emergency basis.

FTCR urged the OAL, CDI and Governor Davis to correct the regulations before they were issued. Because CDI submitted the proposals on a Friday before a long weekend, the public had little time to respond (there were only two full business days in which the public could comment). The disapproved regulations were developed by a Commissioner Quackenbush-appointed Advisory Board, which is dominated by executives of some of the nation’s largest insurers. Both the Chairman and Vice Chair of the board represent out-of state companies and neither live in California themselves.

“When regulations are drafted by the insurance industry to implement a law that the industry wants to kill, it is no wonder that they are found to be unfair,” said consumer advocate Doug Heller of FTCR. “The industry and Mr. Quackenbush tried to undermine the will of the Legislature and they were rightly rebuffed; we must now ensure that the Department develops appropriate regulations in a timely manner. It is also time that Commissioner Quackenbush appoints a new Advisory Board which is not dominated by insurance companies.”

In a letter to Governor Davis, FTCR noted in the letter that anti-consumer regulations will continue until the board that advises the Insurance Commissioner reflects a broader public interest rather than the narrow special interest of insurance companies.

FTCR cited two sections of the Quackenbush regulations as unnecessary and unfair

The proposed regulations included rules that would deny insurance to low-income motorists if someone else in the household carries a regular insurance policy and another that would force low-income drivers to pay a non-refundable $100 down-payment on the policy. According to FTCR these proposals were unfair and at least one of them is illegal..

A third suggestion by FTCR, which will be presented to the CDI as they develop the new regulations would allow Lifeline Insurance policyholders to pay on a bi-monthly basis. Since policyholders will be poor, spreading out payments over the course of the year, rather than loading them on the front end of the policy term, will make this policy more accessible to the low-income motorists for whom it is intended.

In its initial disapproval of the regulations, OAL cites a failure to comply with the “necessity” standard as well as the “clarity” and “consistency” standards of regulatory law. OAL will issue a detailed decision explaining the reasons for disapproval no later than March 6, 2000. Thereafter, CDI will have to rewrite the regulations. FTCR will ask CDI to consider the recommendations of FTCR in its next set of proposals.


A copy of the OAL order is available from FTCR.

Click here to read the letter to Governor Davis.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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