Insurance Industry Is Top Donor to Wilson Campaign : Politics: Firms praise his anti-regulation stance. Some consumer advocates say he consistently sides with industry.

Devastated by losses from the Northridge earthquake, 20th Century Insurance Co. was on such shaky financial ground this summer that the company raised rates 17%, borrowed money and stopped selling some forms of insurance in a desperate attempt to stay afloat.

But even as it was pleading poverty, the Woodland Hills-based company scraped together $5,000 to give to the campaign of Republican Gov. Pete Wilson, who is running for reelection against state Treasurer Kathleen Brown.

The size of 20th Century’s contribution was modest in these days of multimillion-dollar political campaigns. But the fact that a company so down on its luck would make any donation at all illustrates the importance that one industry places on its participation in the state’s political process--and the kinship that industry feels with the incumbent governor.

Wilson expects to raise and spend more than $27 million before the Nov. 8 election, and most of that money will come from companies or individuals with a stake in the policies that a governor has a role in making. But the insurance industry, it appears, will spend more than any other single group trying to keep Wilson in power, by contributing more than $1.2 million.

The insurance business, perhaps more than any industry except utilities, depends on the whims of state regulators and lawmakers as it guards the bottom line. Even though the state has an independently elected insurance commissioner, the governor often is in the position of playing referee between the demands of the industry and the wishes of its customers.

Industry officials say they support Wilson because they share his general philosophy that less regulation of business will mean more jobs for California’s economy.

“His approach has been one of trying to help business stay in California and remain healthy,” said Ric Hill, vice president of corporate relations for 20th Century. “We support that.”

But consumer advocates say Wilson is the darling of insurers because he has sided with them time and again--and in so doing has cost customers money and left them vulnerable to losing their insurance policies after a natural disaster.

Harvey Rosenfield, the author of Proposition 103--the 1988 ballot initiative that strengthened regulation of the industry--describes Wilson as the insurance companies’ “lackey.”

“You can’t find one instance in his record as governor when he did not do what the insurance industry wanted him to do,” Rosenfield said. “Pete Wilson knows he will receive money from the insurance industry, and the insurance industry knows Pete Wilson will do what they want.”

Rosenfield’s initiative created an independent insurance commissioner elected by the voters to regulate the industry. But one of Wilson’s first acts as governor was to appoint his own insurance adviser to counter the clout of the elected commissioner. Wilson’s choice was Marjorie Berte, a former industry official who helped lead the campaign against Proposition 103.

Now Berte helps Wilson raise money from her former colleagues.

In June, she was among three Wilson aides who attended a fund-raiser with the governor hosted by the Assn. of California Insurance Cos., a Sacramento-based lobbying group that has contributed $162,000 to Wilson’s reelection campaign--one of the largest sums of any private-interest group.

Cathy A. Mudge, director of finance and administration for the association’s political action committee, said the group’s contributions are based on “wanting good government.” She added: “We want a healthy economic environment, and we look for fair and evenhanded regulation of the industry.”

In all, Wilson has collected more than $1.2 million from insurers, agents and brokers in this campaign, about 10 times the amount that Brown has received from these interests.

As governor, Wilson has compiled a record in support of the industry:

* Wilson last year signed legislation allowing insurance agents and brokers to keep commissions that they otherwise would have been required to return as part of a 20% rate rollback ordered by Proposition 103. The same year, he signed legislation undercutting the initiative’s provision making antitrust laws applicable to insurers.

* A Wilson appointee who headed the office of administrative law in 1992 ruled that Insurance Commissioner John Garamendi’s regulations for implementing the rollbacks were unconstitutional, and Wilson refused to overturn the decision. Two years later, the state Supreme Court ruled that Garamendi was right.

* The governor signed another measure forcing Garamendi to act on insurance company requests for rate hikes within six months or allow the higher premiums to take effect automatically. The new law made it harder for Garamendi to implement a freeze on rates that he had ordered.

* He vetoed a bill giving the governor authority to prevent insurers from canceling policies within a year after a disaster. The bill was backed by consumers who found themselves scrambling to replace their insurance after the Oakland Hills fire, the Southern California firestorm and the Northridge earthquake.

* Wilson also vetoed the so-called Homeowners Bill of Rights, a comprehensive measure aimed at protecting disaster victims from unscrupulous insurers. He argued that the bill’s provisions giving claimants new rights when being questioned under oath by insurers would prompt increased fraud.

Wilson also has consistently sided with insurers in seeking to limit accident victims’ right to sue. He has proposed no-fault automobile insurance, backed limits on medical malpractice judgments and vetoed legislation allowing insurance customers to sue for punitive damages when companies act in bad faith to wrongly deny their claims.

Assemblyman Burt Margolin (D-Los Angeles), former chairman of the Assembly Insurance Committee, said he is not surprised that insurers are Wilson’s most generous contributors.

“With Pete Wilson they have a rubber stamp, and they obviously want to have that rubber stamp for four more years,” Margolin said.

But Berte, Wilson’s insurance adviser, said the governor is proud of his efforts to promote a healthy business environment for insurance companies. By doing so, she argued, he is helping consumers.

“We are not afraid to suggest that you need to work with insurers to help them fight fraudulent claims and excessive legal costs,” Berte said. “The benefit of that goes to people buying insurance. . . . We really need a competitive, viable insurance market. Anything else doesn’t really serve consumers very well.”

Berte said Wilson worked with the industry and lawmakers from both parties to enact reforms after the 1991 Oakland Hills fire, when many homeowners complained that they had been misled about how much their insurance would pay to replace their homes.

The resulting legislation, she said, was the most significant reform in fire insurance since the standard policy was put into statute 60 years ago.

This year, Wilson signed legislation requiring health maintenance organizations to allow women to designate their gynecologist as their primary physician, and another measure that makes it easier for patients to get emergency care without checking with a doctor designated by their insurer. Both bills, Berte said, were opposed by insurers.

Critics say those bills are the exception, not the rule. They say Wilson has more often bowed to insurers’ wishes, sometimes at the expense of the broader business community.

One example that they cite is the governor’s handling of the workers’ compensation issue.

In 1991, Wilson held up passage of the state budget while demanding major changes in the costly and much criticized system. But when Democrats suggested in negotiations that the state allow free-market competition to play a greater role in setting rates--a concept that the industry opposed--Wilson dropped the idea.

Later, after the industry split on the issue, Wilson supported repealing the so-called minimum rate law, which had inhibited competition by preventing companies from offering rates below a level set by the insurance commissioner. But at the same time, as Wilson offered another set of proposals to overhaul the system, he sided with the insurance industry and rejected several ideas that employers had put forward to give them more leverage in their relations with insurance companies.

The reforms that were eventually passed by the Legislature, along with market pressures and a crackdown on fraud, have reduced rates on employers by nearly a third over the past year.

Clayton Jackson, a powerful insurance industry lobbyist who later was convicted of political corruption charges, was secretly taped by a state senator boasting of his access to Wilson’s office during the first round of negotiations over the workers’ compensation reform.

Jackson told state Sen. Alan Robbins, who had turned federal informant before pleading guilty to corruption charges himself, that Wilson was willing to back the insurers, but not openly.

“The governor’s attitude toward insurance companies is that they’re, politically, they’re pariahs,” Jackson told Robbins. “So what his unspoken message is, you insurance companies get behind your customers. And that way, I can talk about how I’m helping the employers, the doctors, the Indian chiefs. And that just happens to help you.”

Wilson has said Jackson, in the secret tape-recording, was overstating his influence. Citing the former lobbyist’s conviction on federal charges, the governor says Jackson has no credibility. Federal investigators, moreover, have never suggested improper behavior by Wilson.

But Jackson is not the only industry source to boast privately of Wilson’s fealty.

The Agents and Brokers Legislative Council, a lobbying group, published an October newsletter in which the top item was headlined “Governor Completes ABL’s 1994 Legislative Agenda.”

“The Agents and Brokers Legislative Council,” the newsletter reported, “successfully obtained the governor’s signature on every sponsored legislative proposal put forth in 1994.” The group’s president cited campaign contributions as one reason for the council’s success.

A representative for another major Wilson contributor, Farmers Insurance Group of Cos., said the firm expects only “an ear”--a fair hearing--in return for its donations to the governor’s campaign. Farmers has given Wilson more than $70,000 since the start of 1993.

“That’s all you can expect, that they’ll listen, the door will be open at least to let you plead your case,” said Stephen Feely, vice president for public affairs.

Asked if he thought Farmers could get in that door without making contributions, Feely replied: “I’d hope that we would get that all the time, but I think in the real world, you don’t.”

Harry Snyder, co-director of the West Coast office of Consumers Union, said contributions have soared to such a high level that companies no longer are buying only access to lawmakers.

“When you’re talking about one insurance company giving $50,000 to a candidate, and you expect that candidate to have in front of (him) matters that affect your economic interests, you are attempting to buy government,” Snyder said.

He added: “Democracy in Sacramento has become a marketplace for the sale of influence. It’s not criminal. But it’s plain wrong.”