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NEWS RELEASE
Jul 16, 2003


CONTACT: Doug Heller - 310-392-0522 x309

Insurance Lobbyist's Memo Intentionally Misleads Lawmakers; Falsely Claims Reasons for Veto "No Longer Exist"

Consumer Group Calls for Investigation Into Firm's Tactics By Committee on Lobbying Practices
Santa Monica, CA -- Consumer advocates called on Assembly Speaker Wesson to investigate a memo circulated by Mercury Insurance's lobbying firm Carpenter Snodgrass & Associates for intentionally lying to lawmakers in order to pass legislation (SB 841 -- Perata) that was vetoed by Governor Davis last year. In a letter to Assembly Speaker Herb Wesson, the Foundation for Taxpayer and Consumer Rights (FTCR) calls on the speaker to address the "threat of unrestrained deception by corporate lobbyists" as part of the recently created Assembly Taskforce on Protocol, established to investigate aggressive lobbying.

The lobbyist's memo, sent to Assembly Insurance Committee Members on June 19, 2003 states:
"This bill passed both the Senate and the Assembly by a 2/3 vote last year. It was vetoed by the Governor because of reasons that no longer exist. He is aware that last year's bill with a modification is being resubmitted." [Emphasis in original]

Governor Davis explicitly vetoed the bill in 2002 because the insurance commissioner "has asked me to veto this measure because he believes it violates the intent of Proposition 103 and undermines the Department of Insurance's (DOI) pending regulations which cover the issue of persistency." SB 841, like its predecessor violates Proposition 103, as Commissioner Garamendi and DOI staff have noted in their opposition to the bill this year. The amendments to this year's version of the bill do not relate to and do not mitigate the reasons that the bill was previous vetoed.

"The Governor already vetoed this bill and lawmakers should not waste taxpayer resources on a bill that should be vetoed again, so Mercury has resorted to unadulterated deception in order to keep this legislation alive," said FTCR consumer advocate Douglas Heller. "This is exactly the kind of inappropriate lobbying tactic that must be investigated in order to protect policymakers from serious subversions of the legislative process."

SB 841 would allow insurance companies to surcharge drivers who have not maintained continuous insurance, regardless of the reason (with an exception for members of the armed services). This directly contradicts Proposition 103, which bars insurers from charging different rates to consumers who have do not have current insurance coverage. The bill is opposed by the insurance commissioner, consumer groups and low-income advocates.

The letter to Speaker Wesson follows
-30-

July 16, 2003

Honorable Herb Wesson
Speaker, California Assembly
State Capitol, Room 219
Sacramento, CA 95814

RE: Lobbyist's intentionally misleading memo concerning SB 841

Dear Speaker Wesson:

We write to ask that you investigate a memo circulated by Mercury Insurance's lobbying firm Carpenter Snodgrass & Associates, in which, we believe, the company has intentionally misled lawmakers into believing that SB 841 (Perata) has been amended to address the reasons that Governor Davis vetoed a similar bill last year.

According to the memo, sent to Assembly Insurance Committee Members on June 19, 2003:
"This bill passed both the Senate and the Assembly by a 2/3 vote last year. It was vetoed by the Governor because of reasons that no longer exist. He is aware that last year's bill with a modification is being resubmitted." [Emphasis in original]

Those reasons, in fact, still exist. The Governor explicitly vetoed the bill in 2002 because the insurance commissioner "has asked me to veto this measure because he believes it violates the intent of Proposition 103 and undermines the Department of Insurance's (DOI) pending regulations which cover the issue of persistency." SB 841, like its predecessor SB 689, violates Proposition 103, as Commissioner Garamendi and DOI staff have noted in their opposition to the bill this year. The amendments to this year's version of the bill do not relate to and do not mitigate the reasons that the bill was previously vetoed.

In other words, Mercury appears to be using fabrication in pursuit of its legislation. The attempt to mislead lawmakers with this memo is deserving of your attention. You must work to curb the threat of unrestrained deception by corporate lobbyists. You have created the Assembly Taskforce on Protocol to investigate "aggressive" lobbying tactics. This is exactly the kind of inappropriate lobbying tactic that must be investigated in order to protect policymakers from serious subversions of the legislative process.

SB 841 is sponsored by Mercury insurance and opposed by the Department of Insurance as well as California consumer groups and low-income advocates.

A copy of the aforementioned memo is attached along with Governor Davis' veto message of last year. Please contact us with any further questions concerning this issue.

Sincerely,


Douglas Heller

cc: Honorable Wilma Chan, Chair Assembly Taskforce on Protocol
Members of the California Assembly




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