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Fire Victims Feel Burned by Lawmakers Tied to Insurers

February 27, 2006|Jordan Rau | Times Staff Writer

SACRAMENTO — Karen Reimus' San Diego house was obliterated by the 2003 wildfires, leaving nothing recognizable except a charred jogging stroller and her daughter's burned bicycle.

Yet her insurer insisted that she catalog each of her family's destroyed personal items -- down to pens and tampons -- if she wanted to be reimbursed.

"When insurance companies are selling peace of mind the way they do in their advertisements, nobody has any inkling of the hoops you are going to have to jump through," said Reimus, a 39-year-old lawyer and mother of two. She reached a settlement with her insurer after months of wrangling.

Dozens of similarly frustrating experiences prompted Reimus and other survivors of one of the worst wildfire seasons in California history to urge that new rules be imposed on insurers. But the most far-reaching efforts were derailed by a panel of state lawmakers that is closely aligned with the insurance industry, offering an unusually clear window on how Sacramento works and how legislation can be determined by a handful of well-placed politicians.

For The Record
Los Angeles Times Tuesday February 28, 2006 Home Edition Main News Part A Page 2 National Desk 2 inches; 66 words Type of Material: Correction
Insurance money -- An article in Monday's Section A about California lawmakers' ties to insurance companies incorrectly identified the sponsor of a free golf game provided to the brother of Assemblyman Juan Vargas (D-San Diego), chairman of the Assembly Insurance Committee. The game was paid for by Prudential Financial, a company that sells insurance, not by the Personal Insurance Federation of California, an industry trade group.

Insurers have spent $25 million on lobbyists, campaign contributions and perks for lawmakers -- even some who regularly cross them -- since 2003. Their money shows up particularly prominently in the campaign coffers of members of the Assembly Insurance Committee, a pro-business, relatively conservative bastion within the generally liberal Legislature.

Insurance money -- more than $1 million in 2003-04 -- makes up nearly a fifth of some of those members' war chests. And members, their spouses and their aides routinely accept expensive meals, free golf games, hotel rooms, tickets to Laker and Clipper basketball games and other gifts from insurers and their lobbyists.

In the wake of the Southern California wildfires, lawmakers proposed six bills that, among other provisions, would have forced insurers to provide consumers with more information about policy choices, made it harder for companies to raise rates or cancel coverage and reduced the documentation that homeowners must provide to collect on a claim.

Those provisions, like others strongly opposed by the insurance industry, never made it to the Assembly floor. The less ambitious bills that passed into law, with insurers' consent, extended living expenses for those awaiting rebuilt homes, gave homeowners more options for mediation as an alternative to lawsuits and prevented insurers from canceling coverage while a home's reconstruction was underway.

"What happened to the homeowners bill of rights is certainly an example of the power of this industry," said state Insurance Commissioner John Garamendi, referring to a package of legislation that his office helped write in response to the wildfires.

The committee's members and insurers alike said donations and gifts had no influence on legislative decisions. Insurers praised the panel for understanding that the proposed rules would have cost them so much that they would have raised premiums on all California homeowners.

"A lot of the bills were written because a natural disaster had happened, and people were writing bills that weren't fully thought out," said Juan Vargas (D-San Diego), chairman of the Assembly panel.

Insurers, he said in an interview, "have to be held accountable, but at the same time you have to look at the whole picture: These guys are going to make money no matter what, so you have to keep the prices down."

Rex Frazier, general counsel for the Personal Insurance Federation of California, commended the panel for finding compromises that produced "better bills."

"A number of the bills that were introduced were well-intended," Frazier said, "but were not good policy."

The industry does not rely solely on the force of its arguments to sway lawmakers.

Vargas has received more than $325,377 in campaign contributions from the industry, most of it since he took over the panel in 2003. Insurance donations were 17% of the money he raised for his two Assembly races. He is now making his third run for Congress, trying to unseat U.S. Rep. Bob Filner (D-Chula Vista) in the June Democratic primary.

In addition to the campaign donations, insurers with interests before the committee bought Vargas 13 meals, including one for $181 at Morton's steakhouse in 2004. They paid for his flight to Boston to attend an industry conference and for rounds of golf.

Such events provided the industry with opportunities to present its perspective on legislation. Vargas said his legislative decisions derived not from the gifts and donations, all of which were legal, but from his moderate, pro-business views.

Wildfire survivors who came to Sacramento to press for changes said the committee's position rarely deviated from that of the industry.

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