Probably no executive of California government, except the governor, is under more pressure to develop solutions to long-festering problems than the state's first elected insurance commissioner, John Garamendi.
In auto insurance, Garamendi must try to implement Proposition 103 over the resistance of the insurance companies, and do what he can to break the long deadlock in the Legislature over relief for low-income Californians unable to afford the state's required minimum coverage. In health insurance, he and his staff are struggling to write proposals in an era of fiscal constraint. In the Executive Life conservatorship, he must try to avoid liquidation of the company with all the losses to policyholders that step would entail.
Garamendi, 46, a Democrat, was born in the Sierra foothills to a family of Basque, Italian and Irish heritage. He attended the University of California at Berkeley, where he was a star football lineman, and later graduated from Harvard Business School. After marrying, he and his wife, Patti, worked two years with the Peace Corps in Ethiopia. He was elected, in 1974, to the state Assembly and, in 1976, to the state Senate, where he served 14 years. Last November, after unsuccessful tries for governor and state controller, Garamendi was elected insurance commissioner. He and his wife have six children, aged 4 to 21.
Though some colleagues have accused him of arrogance, Garamendi is generally respected for his intelligence and hard work. Often intense and easy to anger, he also can display a sense of caustic humor.
An advocate of no-fault insurance in his early years in the Legislature, Garamendi has now shifted position and, with Assembly Speaker Willie Brown, has been resisting a bill by his successor in the Senate, Patrick Johnston, that would provide a $220-a-year basic no-fault policy for everyone in the state. In response, Gov. Pete Wilson--whom many believe Garamendi may challenge in 1994--recently tried to put him on the spot, calling the Johnston bill an opportunity to impress policyholders that he is working in their interest.
Question: There's probably nothing you could do that would impress voters more than getting those rate rollbacks. Is Prop. 103 ever going to happen?
Answer: . . . . The process we have under way, I think, will get us there in very short order. The court has affirmed our power to rewrite the regulations, which was a crucial hurdle . . . . It is really an important step, allowing us to take the remaining steps, and we're well on our schedule to accomplish that. Our regulations, we think, are correct in that they lead to the maximum rollback possible . . . .
Q: Last month, the representative of a leading seller said the insurers would be in court next fall testing the rollbacks. Do you expect that?
A: We expect that the insurance industry will do what it has done the last two years--and that is try to thwart the will of the people, try to stop 103 from ever becoming reality . . . . However, we think that we're on track . . . . We expect lawsuits. We don't think they will stop us. They may delay us . . . .
Q: Some political analysts say the reason for political gridlock in Sacramento over auto-insurance reform is that big insurance companies help bankroll Republican politicians, while trial lawyers help bankroll Democrats. Do you buy that?
A: I think there has been political gridlock. That's obvious. No-fault has been on the table for 20 years, and nothing has transpired . . . . What to do about it is the thing that's of great interest to me . . . .
I've attempted to develop a strategy that would produce what is needed by the public. And what they need is a low-cost auto-insurance policy that covers their basic insurance needs and delivers a payment on a claim in a timely manner . . . . That requires more than tort reform. I think a comprehensive reform of the auto-insurance system is essential--that you cannot take one factor and solve the problem, but rather you have to take all the major cost factors at one time and change or reform each . . . . The overhead and profit of insurance companies, reserves, accounting, all of that . . . . The issues of fraud in a broad context . . . the repair of automobiles . . . including automobile safety, drunk driving, seat-belt use--all these things will reduce the costs in a very significant way . . . . Medical costs . . . .
And the fifth, or sixth, depending how you want to count, is tort. Tort is a major element . . . . There are several ways that have been suggested, over time, to deal with tort costs. No-fault is one. The focus of the debate has been on no-fault all these years, and the result is zip. Nothing has been accomplished . . . .