Deukmejian’s Chief of Staff Defends Record on Insurance

In a letter to the regional director of the Consumers Union, Gov. George Deukmejian’s chief of staff, Steven A. Merksamer, has denounced as “irresponsible” the group’s allegation that the Deukmejian Administration has failed to deal with the insurance crisis.

“To say, as you did, that the Administration has ‘done nothing to protect the public’ from the insurance industry is irresponsible and misstates the truth,” Merksamer wrote to Harry Snyder. “The governor is proud of his record on behalf of consumers. It is a positive record--your public comments notwithstanding.”

On May 13, the Consumers Union issued a 47-page report accusing the state Department of Insurance under Deukmejian of failing to adequately police the industry and thereby giving “insurance companies a green light to engage in deceptive practices, terminate policies and impose extortionate increases without good cause.”

Surprised and Disappointed

Merksamer wrote that he “was surprised and very disappointed” to read about the criticisms, especially because they followed almost immediately what he termed “a very constructive and worthwhile meeting” between Deukmejian and consumer representatives.

“As you know, under the Deukmejian Administration, the Department of Insurance has set up the first-ever Consumer Advisory Council to hear complaints, and make recommendations on insurance industry practices,” the chief of staff told Snyder in his May 19 letter.

“The Department of Insurance has given consumers in the Los Angeles area a useful tool by releasing numbers pertaining to the volume of complaints that have been directed toward various insurance companies there,” he wrote. “The department has reorganized its divisions dealing with consumer and rate examination activities so that they can be run more efficiently, and become more responsive to the needs of consumers. New publications have been developed to aid consumers in their search for accessible and affordable insurance.

“Under this Administration, we have aggressively discouraged the insurance industry’s practice of canceling policies or raising premiums mid-term. (Insurance) Commissioner (Bruce) Bunner last year issued a directive to all insurance companies warning them to end the practice of surcharging first-time buyers of automobile insurance. In addition, the governor last year vetoed bills that would have increased health insurance premiums and given tax breaks to life insurance companies.”

Snyder, in a May 23 letter responding to Merksamer, stuck by the Consumers Union’s criticisms.

“The governor’s Department of Insurance has not taken a single step to solve the insurance crisis,” the Consumers Union regional director wrote. “The steps that the department has taken to help consumers are illusory and ineffective.

“The advisory council was formed only after a bill was introduced by consumer groups to establish a council,” he said. “And the governor’s appointees under the direction of the department intended to meet in secret until consumer groups once again stepped in. The information on complaints left out companies with fewer than three complaints so that consumers were not made aware of what may be the best insurance companies . . . .”