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Jan 18, 2000

CONTACT: Doug Heller - 310-392-0522 x309

Insurers' Campaign To Block Consumer Legislation A Bonanza For PR Firms/Spokespeople

99.87% of Anti-30/31 Money From Out-of-State Insurance Companies
The campaign by out-of-state insurance companies to block consumer protection legislation has become a financial bonanza for political consultants, paid spokespeople and television stations, state disclosure reports show. Insurers have already collected $44 million in their campaign to defeat Props. 30 and 31 on the March ballot, showering big bucks around the state at a level which may exceed the combined spending of $96 million in 1988's insurance wars, in which only Proposition 103 passed.

Although television advertisements do not indicate the involvement of insurance companies in the NO campaign, of the $44.06 million contributed, every dollar has, according to state documents, come from insurance companies. Only $58,734.63, or .13% (thirteen hundredths of one percent) of the NO campaign money has come from California-owned companies. By contrast, supporters of the legislation have collected $1,323,839.98 (all from California contributors), which is less than 3% of the amount brought in by insurance companies.

Props. 30 and 31 are laws signed by Gov. Gray Davis that require insurance companies to pay the legitimate claims of accident victims. The laws are the result of a legislative compromise that came after years of Sacramento hearings on the issue of insurance company accountability. A YES vote on the initiatives will enact the laws, a NO vote will undo the laws. The insurance industry seeks a NO vote.

The reports show that the insurers paid people who signed the ballot argument for the NO campaign, as illustrated below. None of ballot signers in support of the legislation have received any payments from the YES campaign, according to campaign disclosures.

Among the beneficiaries of the insurance industry's largesse:

Goddard Clausen -- This little known Malibu political consulting firm has been paid $415,357.60 so far to run the media campaign. Their strategy: put phony citizen organizations in front to hide the insurers involvement.

Progressive Campaigns/Voter Revolt -- This professional signature gathering firm, which often uses the non-profit name Voter Revolt to collect signatures from unsuspecting voters, got $1,230,500. Insurers gave another $20,000 directly to ballot signer Voter Revolt, the once legitimate advocacy group that now fronts for insurance and other business interests.

Consumers First -- This is the name used by Jim Conran, a former Wilson appointee who lost to Chuck Quackenbush in the 1994 Republican primary race for Insurance Commissioner. Conran, a ballot signer, has been paid $22,500 as of 12/31/99.

Both "Consumers First" and "Voter Revolt" were used by Goddard Claussen in the $40 million campaign by California's private electric utilities in their effort to defeat utility reform measure Proposition 9, which was spearheaded by The Foundation for Taxpayer and Consumer Rights in 1998.

John Sullivan -- This ballot signer and president of the Civil Justice Association of California (formerly known as the Association for California Tort Reform) has been paid $30,000.

Kirk West -- The initiative proponent and former President of the California Chamber of Commerce has been paid $30,000.

Television stations -- Over $9.7 million has been paid so far to television stations for advertising. However, there has been virtually no news coverage by these stations that would provide viewers with information by which to assess the initiatives.

Radio stations -- Over $2 million has been paid to purchase radio advertising.

Newspapers -- $466,000 of advertising space was purchased prior to December 31.

Consumer Advocates See Attack on Democracy

"It's all about money: the insurance industry trying to stop legislation that will protect consumers' pocketbooks; shadowy political consultants who profit from defrauding the voters; phony spokespeople who are paid to masquerade as consumer advocates; television stations that make millions broadcasting the lies but refuse to cover the issues. It is difficult to see how democracy can survive in an environment in which everyone is unabashedly feeding at the insurance industry's trough," said Doug Heller of the non-profit Foundation for Taxpayer and Consumer Rights.

97.18% of the NO on 30/31 contributions is from the following six out-of-state companies:

CompanyParent CompanyHeadquartersContributions through 12/31/99
State FarmState FarmBloomington, Illinois$16,724,843.21
FarmersZurich Financial ServicesZurich, Switzerland$15,750,394.31
AllstateAllstateNorthbrook, Illinois$3,878,711.78
USAAUSAASan Antonio, Texas$3,478,604.15
Interstate Fire & Casualty/Fireman's FundAllianz AGMunich Germany$1,591,922.10
Liberty Mutual Liberty Mutual GroupBoston, Massachusetts$1,402,043.70

$17.34 million has been contributed to the NO on 30/31 campaign by two European insurers, Allianz AG and Zurich Financial Services, each of whom have been exposed in recent months for failing to pay the legitimate insurance claims of Nazi-era Holocaust victims.

"We are seeing a continuation of the trend in California in which powerful international business interests have taken over the initiative process. Insurance, HMO, utility and other business interests groups combine to destroy democracy simply by outspending their opponents to such a degree that differing views are entirely muted. The new threat, presented by the insurance companies this year, is that when big business disagrees with the Legislature they will spend millions to undo laws at the polls," said Heller.

In contrast to the NO campaign, the YES campaign has raised its money from much smaller contributions, mostly from attorneys and law firms that represent consumers in cases against insurance companies and other corporate interests. The top six contributors to the YES on 30 campaign are:

ContributorBusiness/OccupationLocationContributions through 12/31/99
Greene, Broillet, Taylor, Wheeler & PanishLaw FirmSanta Monica, CA$67,500
Agnew & BrusavichLaw FirmTorrance, CA$45,000
Walkup, Melodia, Kelly & EcheverriaLaw FirmSan Francisco, CA$40,500
Thomas BrandiAttorneySan Francisco, CA$37,500
Casey, Gerry, Reed & SchenkLaw FirmSan Diego, CA$37,500
Rose, Klein & MariasLaw FirmLos Angeles, CA$37,500

"No institution can match what the insurance industry is willing to spend. Consumer groups have few resources to put towards a campaign and, with such a short time frame, even the powerful consumer attorneys' organization cannot compete in dollars with the multi-national insurance industry monolith," said Heller.


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