Ban Sought on Insurers’ Contributions : Bill Wants to Establish Independence of Insurance Commissioner

Moving to prevent insurers from dominating their government regulator, a state senator introduced legislation Thursday that would prohibit the industry from contributing campaign funds to candidates for the new elective office of insurance commissioner.

Sen. Gary K. Hart (D-Santa Barbara) told a press conference he feared that, without the ban, insurance companies would use campaign contributions to control an office that had been created by Proposition 103 to protect consumers.

“Unless we have, I think, some very strict rules and regulations as it applies to contributions to this particular office, we run the risk that it . . . could in fact become basically an agent of the very industry it was established to regulate,” Hart said.

Among other things, including a 20% premium rate rollback, Proposition 103 calls for the election of a state insurance commissioner beginning in 1990. Currently, the insurance commissioner is appointed by the governor. However, the provisions of Proposition 103 are on hold, awaiting a review of its constitutionality by the state Supreme Court.

Steve Barrow of California Common Cause, a nonprofit group supporting campaign financing reform, said the insurance industry already has demonstrated its ability to invest huge sums in political issues and races by pouring at least $65 million into last fall’s insurance initiative campaigns.

Restrictions Unfair

However, David Fountain, public information director for the Assn. of California Insurance Cos., insisted the industry has not abused its right to make campaign donations and that it would be unfair to force restrictions on the industry.

Why not take similar action, he asked, against lawyers who contribute to judicial races or bankers and bond houses that pour campaign money into races for state treasurer and controller? “Right now it’s popular to jump on the bandwagon of whipping the insurance industry,” he said.

Fountain questioned the constitutionality of Hart’s bill because its prohibitions would apply to contributions from insurance agents and brokers as well as insurance companies and political action committees. “I don’t think you can stop individuals from participating in the election process,” he said.

But Barrow said similar bans had been successfully enacted in North Carolina, Delaware and Washington. In all, 11 states have elected insurance commissioners. In states without contribution restrictions, he said, industry donations tend to “overwhelm” the election process.

Both Hart and Fountain predicted the bill had a “good chance” of passing, particularly in the political climate created by the defeat of insurance industry-backed initiatives in November.

Besides the ban on contributions, Hart’s bill would prohibit the elected commissioner from accepting speaking fees and from taking a job in the insurance industry for two years after leaving office. The bill also would require candidates for insurance commissioner to disclose all income sources for the two years before filing for office.