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NEWS RELEASE
May 16, 2000


CONTACT: Douglas Heller 310-392-0522 ext. 309

Legislators Blame Voters for Quackenbush Scandal

Quake Victims, Advocates Oppose Legislation to Bar Election of Insurance Commissioner
Sacramento -- Joining Chuck Quackenbush and the insurance industry, legislators appear inclined to vent their frustration with the Quackenbush scandal on California voters tomorrow. The Senate Elections Committee will debate SCA 19 (Speier), which would place a Constitutional Amendment on the November ballot to make the Insurance Commissioner an appointive, rather than elective, office. This measure is supported by the insurance industry; Mr. Quackenbush stated two weeks ago that the office should be appointed, saying the pressure to raise money led him to take the actions for which he is now under investigation.

Calling the legislation "a misguided, anti-democratic and cowardly response," consumer advocates said the proposal will only benefit the insurance companies, who supported the legislation three years ago. "As far as the public is concerned, the Legislature's job is to clean-up the mess caused by Mr. Quackenbush and the insurance companies over the last six years. The voters want Quackenbush out and new protections against insurance company abuses. Instead of taking on the insurance companies and passing new laws to protect the public, the legislators are voting to protect insurance companies," said Harvey Rosenfield, President of the Foundation for Taxpayer and Consumer Rights (FTCR).

"Making the insurance commissioner an appointed position now would simply reward the insurers for having corrupted the office," wrote advocates with the Foundation for Taxpayer and Consumer Rights (FTCR) in a letter to Senator Speier Tuesday. "Insurance companies would have just as much pernicious influence as they do today, only the money trail would be harder to follow: their donations would go to the Governor, who would then appoint an insurance executive loyal to the industry."

"And make no mistake about it: insurers will spend tens of millions of dollars at the ballot box to fool voters into passing this legislation, just as they did last March to trick voters into repealing legislation that would have held them accountable for mishandling insurance claims. This is a gift to the insurance industry that will dismay, astonish and anger the voters."

The post was made an elected position by voters in 1988 through Proposition 103. Similar legislation (SB 225-Kopp) to the current Speier proposal was defeated in 1998. Prior to 1990, when the voters elected John Garamendi, all the appointed commissioners came from the insurance industry, such as California's last appointed commissioner, Roxani Gillespie, who now works for a law firm connected to Farmers Insurance and other insurers.

Northridge Quake Victims Says Proposal Doesn't Help
Policyholders injured during the Northridge quake, which is at the center of the Quackenbush scandal, consider Senator Speier's proposal a distraction from the main issues of insurance company claims practices and a politicians wrongdoings.

"What kind of message does it send to still-suffering quake victims, when legislators meet with us in Northridge one week and the next week are in Sacramento pressing to take away our voice?" asked quake victim Sara Bacon.

In a letter to Senators, Community Assisting Recovery (CARe), a non-profit organization that formed in response to the Northridge quake, wrote that "SCA 19 does nothing to heal the injuries perpetrated on the victims of the Northridge earthquake by the abuses of Commissioner Quackenbush."

If SCA 19 is placed on the ballot, advocates predict that the insurance industry would spend lavishly to win approval of this retrograde proposal.

Television ads, FTCR suggests, sponsored by "Californians for Clean Politics," would accuse the elected Insurance Commissioner of being bought and paid for by the insurance companies, and urging that it become an appointed post. In fact, the ads will be financed by the insurance companies themselves.

"To tell the people of California -- as your bill does -- that the Commissioner should be appointed again is to blame them, as Mr. Quackenbush himself has, for the present scandal. It is an insult to the voters, and to our democracy itself," FTCR concluded.
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