SACRAMENTO — Insurance Commissioner John Garamendi accused California insurers Monday of trying to blackmail him in an attempt to block new regulations and said he planned to ask federal and state law enforcement authorities to investigate the matter.
Garamendi, who is running for lieutenant governor in a three-way Democratic primary election June 6, said the insurance industry offered to drop a planned $2-million "political attack" campaign against him if he agreed to postpone proposed auto insurance rate regulations opposed by the industry.
The commissioner said he learned of the alleged offer April 24 through an intermediary -- Los Angeles lawyer and longtime Democratic strategist Darry Sragow.
Garamendi said he told Sragow that he "would not give in to political extortion under any circumstances" and hoped to put the new rate plan into effect by late June.
Monday morning, an industry-backed coalition officially launched a statewide television and direct-mail advertising campaign to urge motorists to tell Garamendi "to drop this unfair plan now." The campaign is being funded by five of the state's largest auto insurance providers: State Farm Mutual Insurance Co., Allstate Corp., Farmers Insurance Group, Safeco Corp. and 21st Century Insurance Group.
Insurance industry executives acknowledged warning Garamendi that the campaign was in the works, but denied seeking a quid pro quo under which the media blitz would be axed if the commissioner shelved the new regulations.
Sragow said Monday he talked on two occasions last month with an insurance industry representative about the alleged offer to cancel the media campaign.
He declined to identify the industry representative.
Sragow, who worked for Garamendi on two previous political campaigns and served as deputy insurance commissioner in the early '90s, didn't characterize the industry overture as attempted blackmail.
"This kind of dialogue is not unusual when it comes to affecting politics and government policy, but the approach the insurance industry is taking is unusually blatant," he said.
However, Garamendi said he interpreted the industry's overture as an effort to get him to back off the regulations and let the next commissioner do the job," Garamendi said.
The commissioner is making "baseless and inflammatory accusations that are completely untrue," said Rick Claussen, a political consultant representing the insurer-backed coalition, Californians to Stop Unfair Rate Increases.
