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Key Issue Is Industry's Backing of Quackenbush

He says he is tough on insurers despite their financial support. Democratic challenger claims Republican incumbent has a conflict of interest.


SACRAMENTO — A year ago, Insurance Commissioner Chuck Quackenbush fined an Orange County insurer $325,000 for employing unlicensed agents to sell auto policies.

Two weeks ago, Quackenbush was the guest of honor at a small fund-raiser at the home of the company's founder and owner. The event attracted about $15,000 for the Republican's reelection campaign against Assemblywoman Diane Martinez (D-Monterey Park).

The executive has "always been a supporter of Chuck Quackenbush, way before the fine and now," said a spokeswoman for the company, Eastwood Insurance Services Inc., which previously had donated at least $1,100 to the commissioner's campaigns.

The episode points to a central issue in the Nov. 3 election: Is Quackenbush's relationship with the $65-billion-a-year industry so friendly that it has hurt his ability to safeguard the interests of the public he was elected to serve?

For the Record
Los Angeles Times Wednesday October 28, 1998 Home Edition Part A Page 3 Metro Desk 2 inches; 46 words Type of Material: Correction
Campaign donations--A chart in Tuesday's editions on the insurance commissioner's race misattributed a contribution to incumbent Chuck Quackenbush by the California Assn. of Life and Health Insurance Companies PAC. It donated $2,000. A $100,000 contribution was made by the California Assn. of Insurance Companies PAC.

"The conflict of interest is clear," said Martinez. Quackenbush taking donations from the industry "is like bribing a judge just before a trial," she said.

Quackenbush said there is no connection between the millions of dollars he has received from the industry and the way he handles his regulatory duties.

The recent fund-raising event, he said, shows how he can be tough on even his political supporters in the industry. His campaign said that since taking office in 1995, he has imposed $24.7 million in fines on 29 insurance companies that have donated more than $1 million to his campaigns or to campaigns controlled by him.

"Some continue to contribute [but] others are pretty sore at me," Quackenbush said.

Altogether, his office reports that it has fined insurance companies $36 million, a sixfold increase over his predecessor, Democrat John Garamendi.

"Voters created this office to be held by an elected official," Quackenbush said in an interview. "Elected officials have to raise money for their campaigns. Everyone has a right to make contributions, and that includes the insurance industry."

Critics, however, maintain that the fines are relatively small when measured against profits that companies made while breaking the rules.

Robert Fellmeth, director of the Center for Public Interest at the University of San Diego School of Law, said, "The amount of discipline being meted out by Quackenbush is virtually nil. Has he wounded them? Has he affected their profits even 1%?. . . . No."

While Quackenbush claims that premiums have dropped on his watch, Martinez charges that insurance industry prices and profits are too high and that its activities need to be more tightly monitored by the commissioner.

But this year, Martinez has raised about $125,000 to Quackenbush's $2.3 million and has struggled to press her challenge.

With campaigns so lopsided, she has been unable to force a showdown debate in the low-key, down-ballot contest that has been a study in contrasts.

Quackenbush, 44, is a crisply starched, Notre Dame-educated, former Army captain who maintained a low profile during eight years representing the Silicon Valley in the Assembly.

The commissioner and his wife, Chris, who is waging her own campaign for a Sacramento state Senate seat, both employ TV commercials and other costly campaign tactics to get their message out.

Low-Tech Campaign

On the other hand, Martinez, a former school board member from Monterey Park, is touring the state in a Ford station wagon with her husband.

As an example of her low-tech methods, Martinez said she once did a live radio interview from a roadside phone booth near Bishop.

"I kept getting interrupted by the operator: 'Another 75 cents, please,' " she said. "Then there was the clunk, clunk of me putting the money in, all of it being broadcast over the air."

Martinez, 45, uses campaign funds for gas, food and occasionally lodging, but she and her husband usually stay at the homes of local Democratic officials.

She is a community college-educated daughter of East Los Angeles, whose father is Democratic Rep. Matthew G. Martinez. One of the Assembly's most combative members and a harsh critic of the insurance industry, she defeated Marin County Supervisor Hal Brown last spring to win her party's nomination for commissioner.

If elected, Martinez said she would lower rates and be a consumer advocate. "My boss would be the people who voted for me," she said.

Also on the ballot are Natural Law Party hopeful Barbara Bourdette; Libertarian Dale Ogden; Peace and Freedom's Gary Ramos, and Merton Short of the American Independent Party.

Referendum on Policies

With the latest Los Angeles Times poll showing Quackenbush holding a 46%-38% lead over Martinez, the election is turning into a referendum on whether his policies have been good or bad for the pocketbooks of California insurance buyers.

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