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FACTSHEET

Appointed Insurance Commissioner Bill Blames Voters for Quackenbush Scandal

This proposal has been defeated
Senator Speier's Proposal Blames Voters for the Quackenbush Scandal.

The following letter regarding SCA 19 was sent to Senator Jackie Speier, author of the Appointed Commissioner legislation, on May 15, 2000.

Dear Senator Speier:

We are writing to notify you formally of our strong opposition to SCA 19 and our profound disappointment in your decision to promote the legislation.

As Chair of the Senate Insurance Committee, you have jurisdiction over the activities of the Department of Insurance (CDI) and the insurance companies doing business in this state. As the Quackenbush scandal has shown, there is much to be done for Northridge policyholders who have fought the insurers all by themselves for six years, and for the voters of this state who have the right to believe that corruption in office will not be tolerated by elected officials.

In that context, SCA 19 is not only bad public policy, it is a dismaying rebuke to the voters. Put in the most favorable light, its message to the voters is: "you cannot be trusted to elect an honest commissioner."

You have said that there is no insult to the voters in giving them another opportunity to review their decision to make it an elected office. But there is no groundswell of support for the idea -- in fact, outside Sacramento, outside the insurance lobby and Mr. Quackenbush himself, there is no call at all for this legislation.
  • Insurers want it because it just turns the money-raising machine back over to the Governor, as it used to be. Not to mention that it will serve them nicely if it precludes any further scrutiny of their conduct or that of Mr. Quackenbush.

  • Mr. Quackenbush wants it because it will allow him to shift public attention from his conduct to the "flaws" in the "office" he holds.
And let's not pretend there will be any fair campaign around your proposal. Once the Legislature has done the insurers the favor of putting it on the ballot, they'll spend another $50 million to mislead the voters. (Remember how just two months ago, they barraged voters into repealing the compromise bad faith legislation?). How are you going to prevent insurance companies from corrupting the electoral debate over SCA 19 the same way they have corrupted the office of insurance commissioner and the debate over Props. 30 and 31?

The voters are angry about the Quackenbush scandal. They are wondering how it could happen. They are wondering why their elected representatives did nothing about this for years despite the many reports of misconduct and wrongdoing in the CDI. Now they are wondering why the Legislature isn't actively moving to remove this individual from office. Instead, the Legislature is moving to strip the rights of voters.

For the record, here are our objections to making the office an appointed position:
  • Insurance Rates Will Rise Under Your Proposal -- The average auto liability insurance premium has decreased 3.1% under California's two elected insurance commissioners, based on data from the National Association of Insurance Commissioners.1 Prior to Proposition 103's establishment of an elected insurance commissioner, California auto insurance premiums had risen sharply under appointed commissioners-- as much as 11% per year in 1988 under the last appointed commissioner, Roxani Gillespie. Nationwide, states with appointed commissioners, on average, have seen their average auto liability insurance premiums rise at a rate 21.4% higher than those with elected commissioners.2

  • Insurers Will Have More Leverage Over Consumers -- Proposition 103 created an elected commissioner's position because a gubernatorial appointee is never accountable to the electorate, only to the governor and, inevitably, the governor's campaign contributors.

  • California's Last Appointed Commissioner Is Now An Insurance Industry Lawyer -- The legislation could return California to the days of double-digit insurance premium rate hikes under Roxani Gillespie, California's last appointed insurance commissioner who is currently an insurance industry lawyer. Gillespie, an insurance company executive before being appointed as Commissioner, exempted 402 auto insurance companies from Proposition 103 rate rollbacks and stone-walled Proposition 103's implementation.
Like other political scandals, Mr. Quackenbush's conduct has exposed profound flaws in the democratic process. But when democracy doesn't work right, the answer is not to get rid of democracy. It's to strengthen it: in this case, by prohibiting elected officials from accepting money from the industries they regulate. SCA 19 is an insult to the voters, and to our democracy itself.
Sincerely,
The Foundation for Taxpayer and Consumer Rights




The following legislators will vote on SCA 19 on Wednesday, May 24, 2000 please contact them immediately:
Senator Debra Bowen (Marina Del Rey)
Senator John Burton (San Francisco)
Senator David Kelley (Idyllwild)
Senator Jack O'Connell (San Luis Obispo)
Senator Richard Rainey (Walnut Creek)
Senator Byron Sher (Palo Alto)
Senator Cathie Wright (Simi Valley)

Click here if you don't know your California State Senator

Click here to e-mail your Senator if not listed above

E-mail Senator Jackie Speier and urge her to drop the Appointed Commissioner legislation.





1. Based on data in State Average Expenditures & Premiums for Personal Automobile Insurancein 1997, National Association of Insurance Commissioners, March 1999.

2. Based on data in State Average Expenditures & Premiums for Personal Automobile Insurance in 1995, National Association of Insurance Commissioners, March 1997. States with appointed commissioners, on average, have seen their average auto liability insurance premium rise 20.4%, compared to 16.8% for states with elected commissioners, since 1991.







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