Insurers Say Garamendi Now Asks Their Donations

Insurance Commissioner John Garamendi, who has prospered politically by refusing to take a dime from the industry he regulates, is now actively soliciting insurance organizations to buy tickets to a $5,000-a-plate fund-raiser in Washington next month, industry officials say.

In personal phone calls over the last two weeks, Garamendi has told startled trade group officials that he is holding the Aug. 4 event to help defray the $1.4-million debt remaining from his unsuccessful campaign for governor.

“I was surprised by the phone call because on many issues I’ve tried to reach the commissioner and he’s never returned my call,” said Michael S. Cabot, executive director of the Western Assn. of Insurance Companies. He declined the invitation.

Soliciting contributions from the industry is not illegal--and other insurance commissioner candidates have taken such donations. For example, Wes Bannister, Garamendi’s Republican opponent in the 1990 race for commissioner, was an insurance agent who made no bones about accepting industry money.

Garamendi failed to return numerous telephone calls Friday to his Insurance Department office and his campaign headquarters in Sacramento. His department staff referred calls to his campaign headquarters.

Consumer advocates find Garamendi’s actions troubling, particularly because he is in the midst of tough negotiations with property-casualty insurers over the crisis in the homeowners insurance market triggered by the Northridge earthquake. Homeowner insurers are pressing for relief from the state law that requires them to also offer earthquake insurance.

“The obvious concern is that the insurance industry is going to want something in return,” Harvey Rosenfield, author of the Proposition 103 insurance rate-cutting initiative, said Friday.

“He shouldn’t do it. He’s still regulating them,” said Harry Snyder, co-director of Consumers Union in San Francisco.

Others find Garamendi’s action hypocritical in that he long made political capital out of his refusal to take industry money. In 1990, he was criticized for accepting personal donations from the wives of insurance executives. He later returned those contributions.

Several insurance organizations have turned down Garamendi’s solicitation, but at least one is considering accepting. It could not be determined whether any others have already contributed.

“We thought our money was dirty to him,” one trade group executive said Friday, adding that he was “kind of shocked” by the request.

Much of the industry regards Garamendi as adversarial, even hostile, to its interests. The commissioner has clashed with insurance carriers in the courtroom and in public forums on issues ranging from redlining, or sales discrimination, to unfair denials of catastrophe claims, to failure to pay Proposition 103 rebates.

The fund-raiser, to be held at the Washington Court Hotel, is billed as a “policy day.” It will feature such congressional and Clinton Administration luminaries as House Majority Leader Richard A. Gephardt (D-Mo.), Deputy Treasury Secretary Robert Altman and Sen. Thomas A. Daschle (D-S.D.).

Groups that say they received personal solicitations from Garamendi include the Assn. of California Insurance Companies; the Western Assn. of Insurance Brokers and its parent, the National Assn. of Insurance Brokers; the California Assn. of Life Underwriters; the Assn. of California Life Insurance Companies, and the Professional Insurance Agents of California and Nevada.

Law firms representing insurance companies also were invited to the fund-raiser. Garamendi has not previously refused contributions from such firms. Individual insurance companies apparently were not solicited.

Thomas F. Conneely, president of the Assn. of California Insurance Companies, the state’s largest insurance trade organization, said he turned Garamendi down. “I told him that at this point we have absolutely no discretion to spend any PAC (political action committee) money,” he said.

Conneely also found the solicitation jarring, given Garamendi’s past posture of refusing insurance industry funds. One of Conneely’s employees was once turned down by Garamendi’s political office when he tried to buy a $35 ticket to the commissioner’s annual barbecue at his ranch in Walnut Creek.

“We received the invitation (to next month’s event) and are considering it,” said Brad Wenger, president of the Assn. of California Life Insurance Companies, which represents 45 California life and health insurers.

Political consultant Darry Sragow, who managed Garamendi’s campaign for governor, said Friday that because he no longer works for Garamendi, he could not comment on the fund raising.

Sragow said, however, that after the June 7 Democratic primary for governor--in which state Treasurer Kathleen Brown defeated Garamendi--the debt totaled about $1.4 million. That included more than $500,000 in loans that Garamendi made to himself; $700,000 in loans from supporters, some of which may be forgiven; and $150,000 owed to consultants, advertising firms, printers and other vendors, Sragow said.

Michael Pinkerton, Sacramento lobbyist for the California Assn. of Life Underwriters, representing about 11,000 agents, described Garamendi’s pitch as “friendly--certainly not overbearing.”

Garamendi mentioned that he expects to land a job in Washington, involving “something related to health,” Pinkerton said.

Garamendi is a friend of President Clinton and chaired his California campaign. A Clinton aide, who spoke on background Friday, said of Garamendi: “The President and First Lady like him, and if he wanted a position I’m sure they would try to find him one.”

Would Garamendi’s solicitation of contributions from the insurance industry affect his chances for a job with Clinton?

“That depends on how it plays out,” the aide said.

Times staff writer Dan Morain contributed to this story.