No Yellow-Brick Road to Insurance Reform : California: The race for state commissioner draws few incumbents; they see it as a ‘lose-lose’ job. A ‘people’s czar’ is unlikely to make change.

If you liked “The Wizard of Oz,” you’ll love the race for California insurance commissioner.

That’s doesn’t mean the sweeping insurance reform approved by voters last year is the stuff of children’s fiction. The public’s frustration over soaring premiums was real. That is why Proposition 103 passed--to cut rates, crack down on insurers and require that the state’s insurance commissioner be elected.

The initiative’s proponents argued that neither the Deukmejian Administration nor the Legislature could be trusted to clean up the insurance mess. Special interests--particularly the insurers and attorneys whose contributions finance political campaigns--would continue to block relief.

Electing the insurance commissioner, supporters promised, would make that office more accountable and responsive to policyholders’ concerns and help “ensure that insurance is fair, available and affordable for all Californians.”

Skeptics worried that an elected commissioner “would be a politician first and a regulator second,” because of the need to raise campaign money from the same interests the office regulates.

The voters opted for change. But more than a year after passage of Proposition 103, full implementation is still stalled, the 20% rollback requirement has been overturned by the state Supreme Court and few people have seen rate reductions. Roxani Gillespie, Gov. George Deukmejian’s appointed insurance commissioner, has been agonizingly slow in putting a new insurance system into place. So the focus of reformers, the media and ambitious politicians has turned toward election of a “people’s insurance czar” in 1990. Will this be the magic formula to bring about elusive reform? Or will that office fall prey to the temptations of “business as usual”? Early dynamics of the race for commissioner offer clues.

Three things have become readily apparent. Among the active potential candidates, traditional politicians are scarce. There appears to be a dearth of Republicans vying for the office. And candidates are making promises that should be carefully examined by California voters.

In the wake of the 1988 election, Gillespie firmly asserted, “I have no intention of running. I am not a politician.” Smart move. She had become the focus of the voters’ frustration.

But the new powers of her office and the siren song of incumbency seemed to have had an effect. She attempted to shake her foot-dragging, pro-industry image and established an exploratory campaign committee to raise funds. Then last week she abruptly announced her withdrawal from the race, in the face of discouraging public-opinion polls.

Former Huntington Beach Mayor Wes Bannister, an insurance broker who promises to order a 20% rate rollback, is now the most visible GOP candidate for nomination. In the wake of Gillespie’s departure, it remains to be seen whether a “name” Republican challenger will emerge.

On the Democratic side, State Board of Equalization member Conway Collis, the only formally declared candidate, has flatly declared, “I will lower insurance rates.” That may not be enough.

Despite his endorsement by Proposition 103 author Harvey Rosenfield, Collis suffers from being “the politician” in the current Democratic pack. Rosenfield’s support and grass-roots organization should help any Democratic candidate. But Collis has found it difficult to overcome the public perception that Rosenfield traded his support for Collis’ fund-raising assistance.

Although Los Angeles television commentator Bill Press mounted an abortive campaign for the Democratic nomination for U.S. Senate and served in the Edmund G. Brown Jr. Administration, the public doesn’t seem to perceive him as a politician. And Press has important name recognition, particularly in Southern California. These are pluses.

Press has vowed to abolish the “territorial system” of basing insurance rates on where drivers live (Gillespie last week directed that the territorial system not be the prime determinant of insurance rates). Press’ promise could backfire when voters in other areas of California learn that their rates could rise to compensate for the loss of insurance revenue from currently redlined urban areas.

Democrat Walter Zelman is also moving closer to a formal declaration of candidacy. Zelman suffers from low name-recognition but fares better when linked with Common Cause, the reform-oriented public interest group he served as California director. Using Common Cause on his ballot designation could give Zelman significant credibility.

But Zelman’s candidacy may promote a split among various consumer groups, and he must share with Press and Collis the traditional Democratic fund-raising founts of San Francisco and Los Angeles.

Zelman may have other problems. He has criticized the influence of money in politics, yet he refused to abide by his suggested limit on campaign expenditures unless the other candidates agreed--not likely. He would hold government to rigid standards, but his proposal restricting contributions from trial lawyers would exempt friends who do “a little ambulance chasing once in a while.” (Most potential candidates have already forsworn insurance-industry money as the electoral kiss of death.)

Then there is the “phantom candidate,” Voter Revolt’s own Harvey Rosenfield. He won’t run for insurance commissioner himself--perhaps he fully comprehends the pitfalls of direct accountability. But, dissatisfied with the implementation of Proposition 103, he has proposed yet another initiative--to establish a state-run automobile insurance system.

The job of insurance commissioner has not attracted high-profile candidates. Many officeholders view it as a “lose-lose” race. Politicians--particularly legislators--have been identified as part of the problem. The public does not trust them to become part of the solution.

Some incumbents fear that this springboard to higher office could easily become a slide to ignominious retirement. Anyone who does the necessary job, bringing rationality to the insurance system, will alienate everybody--insurers, consumers, attorneys. That’s political suicide.

Traditionally, the commissioner’s role has been to ensure the solvency of companies and require a reserve adequate to protect policyholders’ claims. As the post becomes more political, there will be pressure to “play to the crowd,” to focus on lowering prices without acknowledging the dangers.

A meat-ax approach to lowering insurance rates might lead to the collapse of weaker insurance companies, drive big insurers out of California and reduce competition. That would leave California policyholders as vulnerable as the victims of the savings-and-loan crisis.

To duck that issue is demagoguery. It wouldn’t be the first time that demagoguery provided the winning formula, but it won’t solve the long-term problem. There are few incumbents willing to risk that failure and end their careers.

And what about the dearth of Republicans? Deukmejian, and most other Republican officeholders, opposed Proposition 103; the public perceives them as too cozy with big business. Gillespie’s departure only underscores the GOP problem.

The events of the past year indicate that hopes that an elected commissioner would cut through the Gordian knot of insurance reform will not be realized, despite the candidates’ pledges.

In “The Wizard of Oz,” Dorothy and her friends return to the wizard, having done everything he demanded. But he still stalls about keeping his promises. An angry Cowardly Lion roars, exposing--behind all the special effects--a little, old man.

It was all just make-believe, the Wizard confesses: “I’m just a common man.” But, wails the Scarecrow, “you’re more than that--you’re a humbug!”

No matter how sincere the candidates for the new post of California insurance commissioner are in their promises to bring the big, bad insurance companies to their knees, it’s all humbug. Californians are likely to be as disappointed as Dorothy and her friends: Life’s problems are not resolved as easily as a wizard--or political candidate--promises.