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home / insurance / in the media

The San Francisco Chronicle
Feb 17, 2002

by Greg Lucas

STATE OFFICES; INSURANCE COMMISSIONER; Highly Charged Race in Wake of Quackenbush Debacle

Sacramento :
While disgraced former insurance commissioner Chuck Quackenbush basks on balmy Oahu, the campaign for his former job focuses on the same fight that dogged him -- whether state regulators do enough to protect policyholders.

Of the 10 candidates vying for the job, one of three Democrat contenders most likely will become the state's third elected insurance commissioner in November.

The winner will control a department that, under Quackenbush, was accused of coddling insurance companies, which contributed more than $3 million to keep Quackenbush in office.

"This race may become one of integrity and reforming. That usually happens following a scandal," said Mark DiCamillo, director of the Field Poll.

The insurance commissioner is like a one-person Public Utilities Commission, regulating nearly every aspect of California's more than $53 billion property, casualty and life insurance industry.
John Garamendi, the state's first elected insurance commissioner, wants to return to his old office and, he says, rebuild what Quackenbush ruined, restoring the Department of Insurance to a pro-consumer agency.

Garamendi's critics attack his 1991 seizure of Executive Life, an insolvent insurer. The purchase of the firm's investment portfolio, much of it junk bonds, by a French firm has been the subject of controversy and litigation for a decade.

Garamendi defends his handling of the matter, saying 92 percent of policyholders got back 100 percent, although at lower interest rates than those of junk bonds.

Former Assembly member Tom Umberg wants to restore confidence in the department through a wide-ranging code of conduct that bans insurer contributions and gifts, increases conflict-of-interest disclosure and makes public all significant meetings with insurers -- even ones held in the commissioner's private office.

"The goal is to make the department functional and trustworthy," Umberg said. "It should act as a consumer advocacy agency that investigates the bad-actor carriers."

Both Garamendi and Umberg refuse to take insurance industry contributions. Garamendi is heavily backed by developers, and Umberg is the favorite of trial lawyers.

The two don't attack each other: They blast Assemblyman Tom Calderon, a Montebello Democrat, for accepting more than $1 million from agents, brokers and insurers.

Garamendi and Umberg are helped in their criticism by the Foundation for taxpayer and Consumer Rights, headed by Harvey Rosenfield, the architect of 1988's Proposition 103, which mandated 20 percent rate rollbacks and made the commissioner's office an elected post.

"If we elect Tom Calderon, we're putting the insurance industry back into the office of commissioner," said Rosenfield. "The Quackenbush scandal showed that when the person the insurance industry elects takes office, everybody else is a loser except the industry."


For their part, insurers say all they want is a fair shake. They didn't get one under Garamendi, several insurance lobbyists said.
"We don't think Tom Calderon is going to be a lapdog," said Jeff Fuller, president of the Association of California Insurance Companies, which has given Calderon $50,000.

At an industry-sponsored debate attended by Garamendi but not Umberg, Calderon defended his accepting insurer contributions, saying he takes help wherever he can get it.

"I've got to raise money like every politician," Calderon said.
Calderon has more than $1.9 million in the bank. Garamendi has $1.2 million. Umberg has $1.9 million, much of it in loans from himself and his family.

A fourth Democrat, Bill Winslow, is a Santa Monica lawyer with experience in the insurance field. He shows a campaign kitty of $20,000 as of Sept. 30.

There are three GOP candidates. Two -- Wes Bannister and Stefan Stitch -- have not filed contribution reports. The third, Gary Mendoza, former head of the Department of Corporations under Gov. Pete Wilson, is slightly ahead in the polls and shows a campaign balance of $13,000.

In December, Stitch -- an insurance auditor for a defense contractor -- legally changed his middle name to "Watchdog," apparently in the hope of drawing attention to himself on the ballot.
------------------
JOHN GARAMENDI
Party: Democrat
Age: 56
Experience: Insurance commissioner, 1991-95; state senator, 1976-88; deputy secretary, U.S. Department of Interior, 1995-98.
Education: BA, UC Berkeley; MBA, Harvard University.
Information: Visit www.garamendi.org

TOM UMBERG
Party: Democrat
Age: 46
Experience: U.S. Army prosecutor 1981-85; assistant U.S. attorney 1987-90; assemblyman 1990-94; deputy director, White House Office of National Drug Control Policy, 1997-2000.
Education: BA, UCLA; JD, Hastings College of the Law.
Information: Visit www.tomumberg.com

TOM CALDERON
Party: Democrat
Age: 47
Experience: Member, Montebello Unified School District Board of Education 1993-97; assemblyman 1998-2002
Education: B.A. from UC Santa Barbara.
Information: Visit www.tomcalderon.com

WES BANNISTER
Party: Republican
Age: 65
Experience: Insurance agent; member, Huntington Beach City Council, 1986-90; candidate for insurance commissioner, 1990.
Education: B.S. from University of Houston.
Information: E-mail coinsure@aol.com

GARY MENDOZA
Party: Republican
Age: 46
Experience: Lawyer, Riordan & McKenzie, 1997-present; Los Angeles deputy mayor for Economic Development, 1996-97; director, Department of Corporations, 1993-96.
Education: B.A. from Claremont McKenna College; J.D., Yale Law School.
Information: E-mail mendozas@gte.net
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E-mail Greg Lucas at glucas@sfchronicle.com.

CORRECTION:
A story Sunday about the race for state insurance commissioner should have made clear that the comments of Harvey Rosenfield were his personal opinions as the author of the ballot measure that created the position and not those of the Foundation for Taxpayer and Consumer Rights, which Rosenfield heads. (02/20/02 P. A2)



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