Plan to Bar Insurer Gifts in Commissioner Race Defeated

In an important indicator of legislative will to reform election campaign financing, the Senate on Thursday crushed a bill to prohibit candidates for insurance commissioner from taking contributions from the insurance industry.

The state insurance commissioner currently is appointed by the governor. But under voter-approved Proposition 103, the post will become an elective office starting next year and take on vast new regulatory powers.

Sen. Gary K. Hart (D-Santa Barbara), author of the measure, told the Senate that it was important to Californians that “this office not be a captive of the industry it is to regulate.”

However, the proposal flew into a buzz saw of opposition and failed on a bipartisan vote of 15 to 19. It needed at least 27 favorable votes.

Opponents charged, among other things, that the bill perpetuated what they said is the false notion that legislators and other public officers are “for sale” and that such legislation unfairly singled out one office and exempted others.

Insurance companies and their chief political adversaries, personal injury lawyers, are among the biggest contributors to election campaigns in California. Life, property and casualty insurance interests and trial attorneys donated nearly $10 million from 1985 through 1988 alone.

The Hart bill would prohibit insurance companies, agencies and brokerages from making contributions to candidates for insurance commissioner. Additionally, the insurance commissioner could accept no speaking fees or other “rewards” for services rendered.

Individual insurance agents, brokers and lawyers involved in insurance-related litigation would, however, be allowed to contribute a maximum $250 to a candidate for insurance commissioner.

The fate of the Hart measure had been closely watched as a key indicator of the willingness of lawmakers to carry through on repeated promises to take steps to remove at least the perception that campaign contributions wielded undue influence on officeholders.

Although no one expected legislators to enact reforms that would disadvantage themselves, the newly elective office of state insurance commissioner was regarded by some reform-minded activists as an ideal clean slate from which to start.

Sees It as Sale Sign

One leading opponent, Sen. Larry Stirling (R-San Diego), told his Senate colleagues that an inaccurate and “unstated premise of this and other measures is that you, ladies and gentlemen, are for sale.” He termed the bill unnecessary and suggested that if the contribution prohibition was extended to teachers, for example, they no longer could make political donations to candidates for elected education offices.

“Where does this stop?” he asked.

“Where does (reform) start?” Hart shot back.

A supporter of the bill, Sen. Ed Davis (R-Valencia), argued that “it may be that special interests cannot buy the Legislature, but they can paralyze it” as the insurance lobbies and trial lawyers did in a couple of years preceding passage of the Proposition 103 ballot initiative.

He asserted that an insurance commissioner unburdened by insurance company contributions could “balance the interests of the insurance industry and the trial lawyers, which we have been unable to do.”

Sens. Herschel Rosenthal (D-Los Angeles) and Dan McCorquodale (D-San Jose) suggested that the prohibition should be applied to other elective positions as well. “I don’t know why this office should be any different than any other office that is elective,” Rosenthal said.

Power of the Office

“We are talking about a regulatory agency and one person who has the power to make or break literally thousands of (insurance) companies in California,” Hart said.

Sen. Alan Robbins (D-Tarzana), chairman of the Senate Insurance Committee, noted that the elected commissioner would have an immense amount of regulatory power over insurance companies and “obviously those companies are going out to do everything they can to elect someone favorable to them and to curry favor.”

Robbins has flirted with the idea of running for insurance commissioner himself but formally told the Senate on Thursday that “I’m not going to be a candidate for insurance commissioner in the election next year.”

On Wednesday, Roxani Gillespie, the current appointed insurance commissioner who is a candidate for the elected office, announced she would accept no campaign contributions from the insurance industry.