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NEWS RELEASE
Nov 18, 2003


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

Schwarzenegger Should Return $100K From State's Largest Private Workers' Comp Insurer

American International Group IS a Special Interest, as Governor Opens Special Session on Workers Comp
Santa Monica, CA -- Governor Schwarzenegger should immediately return a $100,000 donation from American International Group (AIG), the state's largest (and nation's second largest) private workers' compensation insurance company, the Foundation for Taxpayer and Consumer Rights (FTCR) said today. The November 10, 2003 donation, which was reported last Friday, comes just ahead of the Governor's special session on worker's compensation. FTCR criticized former Governor Gray Davis for accepting $100,000 from Zenith Insurance prior to signing workers' compensation legislation earlier this year.

"You can't take $100,000 from the biggest workers' comp insurance company just days before hearings on workers' comp," said FTCR's senior consumer advocate Douglas Heller. "If Schwarzenegger wants Californians to believe that he is cleaning house in Sacramento, he needs to clean his own house of insurance company money before he opens these hearings, otherwise, instead of a special session this becomes a special interest session."

While Governor Schwarzenegger's policy papers argue for limits on medical providers and restricting workers' legal rights when a company fails to pay for on-the-job injuries, he does not address insurance company responsibility for the crisis, including investment losses and excessive pricing in recent years. At issue is whether to regulate workers' compensation insurance like other insurance products. Proposition 103, the insurance regulation initiative of 1988 that has kept premiums more stable in California than in the rest of the nation, does not apply to workers' compensation insurance. In 1993, workers' comp was deregulated in California, leading to wild swings in insurance rates for businesses and culminating in the current crisis, according to FTCR.

"Insurance companies want to protect themselves from any oversight of their premiums and profits. In other words, AIG has a special interest in the outcome of the workers' comp debates, so it is totally inappropriate for the governor to have accepted a contribution from this company last week," said Heller.

In addition to the conflict of interest created by the AIG contribution, FTCR questioned the appropriateness of accepting such a large contribution. Campaign finance rules, which do not apply to recall campaigns, limit donations to $21,200. Even though the donation went to Schwarzenegger's recall committee, the fact that it came more than a month after the recall, leaves the appearance that Schwarzenegger is using a loophole to get around the limits. More information about Schwarzenegger and special interests is available at www.ArnoldWatch.org.

"The governor who says he wants to do things differently accepted a special interest contribution that is almost five times above the campaign reform law limits just days before addressing that special interest's key policy issue. How is that not politics as usual?" concluded Heller.

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