The insurance showdown
INSURANCE Commissioner John Garamendi's allegation Monday that the insurance industry attempted to blackmail him could change California politics. Finally, an official of statewide stature has blown the whistle on the corporate pollution of democracy.
Money buys votes and vetoes every day in the cesspool of Sacramento politics, but the corruption is cloaked in an elaborate charade of gifts, banquets and junkets. It's even harder to detect when it involves state agencies.
After two terms as a pro-consumer commissioner, Garamendi is in a tight race for the Democratic nomination for lieutenant governor. By purportedly threatening to finance a multimillion-dollar attack-ad campaign against him unless he derailed an important consumer-protection regulation, the state's largest insurance companies gambled that Garamendi would acquiesce.
Garamendi's rejection of such a dirty deal is expected to save good drivers tens of millions of dollars on their auto insurance. Proposition 103, the 1988 insurance reform initiative, among other things requires insurance companies to base premiums on motorists' driving records rather than on where they live. In December, after studying the issue for three years, Garamendi announced a regulation ordering insurers to finally obey the voters' mandate by the end of this year. The insurers responded by recruiting several Assembly members, with $300,000 of industry contributions in their pockets, to sponsor a bill to delay the regulation with another duplicative, pointless study.
The true purpose of the legislation, AB 2840, is to postpone the reforms until next year, when a new commissioner takes office. The major Democratic candidate for the post, Lt. Gov. Cruz Bustamante, is raking in insurance industry money for his campaign. The Republican candidate, Steve Poizner, is independently wealthy and has sworn off insurer dollars, but he is considered an opponent of regulation. The insurers were confident that either of the candidates would reverse Garamendi's order if elected.
Garamendi's whistle-blowing almost guarantees that the new rule will take effect. A lawmaker thinking about voting to delay the reforms would have to choose between lining his pockets with industry money and losing his job once voters learn of the betrayal. Bustamante and Poizner are going to have to promise that they will not meddle with the rule, or risk being seen as shills. If Bustamante doesn't also give back the $120,000 he has taken from the insurance industry, he's finished.
