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home / insurance / in the media

Los Angeles Times
May 09, 2003

by Editorial

Cashing In at the Capitol

In 1990, the authors of California's strict legislative term limits law promised voters that the measure would "put an end to the Sacramento web of special favors and patronage." In fact, now Sacramento insiders say lawmakers seem to base their votes more than ever on political factors and the sources of campaign funds. With every legislator's exit date known in advance, new lawmakers often start raising cash for their next office -- or fishing for a fat private job -- as soon as they arrive in town. Certainly the nexus between votes and campaign funds often is more visible.

Consider a meeting in the Capitol on Wednesday, when Senate and Assembly committees gave unanimous approval to two bills designed to help an insurance company skirt an insurance commissioner regulation and a court order. As reported by The Times' Virginia Ellis, one of the measures -- similar to a bill passed last year and vetoed by Gov. Gray Davis -- was sponsored by Mercury Insurance Group of Los Angeles, which has generously given to recent campaigns of all nine members of the Senate Insurance Committee, with contributions ranging from $2,000 to $35,000. The committee voted unanimously to approve SB 841, by Sen. Don Perata (D-Alameda).

The bill would allow insurers to offer discounts to lure customers away from competitors. Only Mercury has pushed this bill, which opponents say would force higher premiums on poorer people trying to buy new policies or reinstate lapsed policies.

The other measure, AB 1297 by Assemblyman Dario Frommer (D-Los Feliz), also sought by Mercury and by insurance agents, would allow insurance agents, who work for company commissions, to also call themselves brokers to qualify for a separate "finder's fee" from the consumer that might be added to the premium charge. Unaware consumers could get dinged twice. A unanimous Assembly Insurance Committee, 12 of whose 19 members have received Mercury contributions of up to $9,000 since 2001, approved it.

The state's Department of Insurance opposed both measures, arguing that they were inconsistent with basic state insurance regulations and insurance pricing law.

Legislators obviously know how bad this looks. During the Senate hearing, consumer activist Jamie Court questioned whether Perata's bill was about good policy or helping a company that happened to give generously and broadly to members of the Legislature.

"Mr. Court, you're done," snapped committee Chairwoman Jackie Speier (D-Hillsborough). A staffer took the microphone and Court was escorted to the back of the small room, packed tightly with insurance industry representatives. Perata huffed and puffed in outrage and insult. The question is whether the lawmakers are embarrassed enough now to kill both these bad bills.

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