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home / insurance / in the media

Associated Press
Aug 18, 2000

by John Howard

Assembly panel approves campaign contribution limits to insurance commissioner

Inspired by the scandal that engulfed former Insurance Commissioner Charles Quackenbush, an Assembly committee Friday approved drastically limiting campaign donations from the $80 billion insurance industry to the commissioner.

The proposal by Sen. Jackie Speier, D-San Francisco, would bar insurers with formal proceedings before the commissioner from making contributions of more than $250.

Her measure was approved by the Assembly elections committee and sent to the Assembly floor.

Currently, there are no limits on the commissioner's contributions. Quackenbush, who on occasion received individual donations of $50,000 from insurers, raised some $9 million from insurers during his six years in office.

The $250 limit would apply for a year prior to the proceeding -- such as the commissioner's announcement of an investigation or decision to consider a company's request to increase rates -- and remain in effect for six months after the commissioner decided the issue.

If the commissioner received contributions beyond the $250 limit from those companies during the 18-month window, they would have to be returned. Insurers without any pending action before the commissioner would be limited to $5,000 per donation per election -- a limit contained in Proposition 34 on the November ballot that applies to all statewide officers other than the governor, whose donations are limited to $20,000 each.

The limits in Speier's bill, if approved and ultimately signed by the governor, would remain in effect regardless of the fate of Proposition 34.

Speier said the bill was needed to bar insurers from dominating the arm of government that is intended to police them.
"Insurers have been able to contribute to their regulators as other industries have not," Speier said, noting that banks, managed care providers and utilities are not able to directly contribute to the agencies that regulate them. We are putting them (insurers) back on a level playing field," she said.

"I've never seen the insurance industry so interested in making campaign contributions as they have been before this committee," she added.
But insurers said Speier's bill targets them unfairly.

"It singles out insurance companies in what we think is a discriminatory fashion," said Jeff Fuller of the Association of California Insurance Companies.Alister McAlister, a lobbyist for the American Insurance Association, said Speier's bill was a "subterfuge" with "cute sophisticated language" that would ultimately be circumvented by political consultants and donors.

"It's unrealistic and ultimately unworkable. Political parties and independent committees will get around these limitations," he said.
But the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based consumer group, supported Speier's bill.

"It is going in the right direction, quite dramatically so. It's a very powerful, appropriate tool, a tool that the public wants," said Doug Heller, a representative of the Foundation.

Quackenbush left office July 10 under threat of impeachment for his handling of insurer settlements.

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