Insurers’ Donations Spark Criticism

When the Legislature was moving last fall to tentatively OK a state agency for homeowners earthquake insurance--and limit private insurers’ future earthquake liabilities--reports show that campaign contributions were flowing.

In the two days before a key legislative vote last September, the Farmers group of companies was recorded as making $37,497 in contributions to lawmakers.

In the weeks after the vote, the Assn. of California Insurance Companies--a leading industry lobbying group--made $120,000 in contributions--most of its 1995 total of $150,000.

And state Sen. Charles M. Calderon (D-Whittier), who decided to support the proposed California Earthquake Authority, got $2,000 from insurers before he changed his mind and $11,000 afterward.

The contribution reports have drawn the ire of Consumers Union, an opponent of the California Earthquake Authority. Harry Snyder, the group’s West Coast co-director, says the pattern is “smelly.” But the insurance groups say the timing is coincidental, and they reject any connection between the contributions and votes on the earthquake authority.

Calderon is now chairman of the conference committee trying to reconcile divergent bills that would establish the authority, and an aide said last week that the compromise yet may bring the bill closer to insurance company desires.

The senator says he changed his mind last year because the earthquake authority bill was better for consumers than earlier versions had been and that he came to view state-run quake insurance as the best option.

As for Consumer Union’s statements on the matter, Calderon said in a written statement: “The bitter irony is that I place my reputation, energy and skill on the line only for the satisfaction of believing that my life counts because I’ve tried to make somebody else’s life better.” An aide said Calderon got money from opponents as well as supporters of the earthquake authority.

Snyder, on the other hand, declared: “I think it’s important to remember that in 1995 [when all these contributions were made] nobody was running for office.”

He also noted that former insurance lobbyist Clay Jackson is now serving a prison sentence for mail fraud, racketeering and money-laundering as part of an FBI undercover vote-buying investigation at the Capitol.

“I think it’s also surprising that even though their chief lobbyist is still in jail for violations of the elections code, the companies continue to create the impression that there’s something smelly with their campaign contributions,” Snyder said.

Bill Packer, spokesman for the Assn. of California Insurance Companies, said the group decided to make most of its annual contributions last year after the Legislature adjourned as part of “a conscious effort to avoid even the appearance of impropriety.”

The association board decided “to make as many of the contributions as possible when the Legislature is not in session,” he said. He called Snyder’s remark about Jackson “an easy cheap shot.”

“The ACIC did not invent this system, but it’s the system that’s in place, and it’s the one we have to use, if we’re going to participate,” Packer said. “If the Consumers Union has concerns about the system, they should work to change it.”

The association’s intent in the earthquake insurance legislation, as in other matters, “is to support what we believe is good government,” Packer said.

As for Farmers, spokeswoman Diane Tasaka said the group of companies did not give all the $37,497 in just two days.

“What is represented were contributions for regular campaign fund-raisers held between July and September,” she said. “They all got processed in two days, because we didn’t have a clerk to do it in a more timely fashion. . . . We made a verbal pledge earlier, but that’s when we actually cut the checks.”

On Calderon, Snyder said: “The proximity of the gifts to his dramatic about-face on this issue helps me to understand why a person who was our ally and thought the idea of the California Earthquake Authority was a bad idea one week became the savior of this idea the next week and is our opponent. . . .

“My assumption is that under the law, all the contributions are legal,” Snyder added. “But the legislators ought to be passing campaign finance reform measures to prevent this kind of activity. I’m afraid they won’t do that.

“The [California Earthquake Authority] didn’t change, the concept didn’t change,” Snyder said, between the time Calderon opposed it and then turned to supporting it.

But Calderon, in an interview and two written statements, maintained that the bill did change.

He said the original version of the bill, which he opposed, contained a provision for a special $2-billion assessment against all homeowners, even those who did not buy quake insurance, after a damaging quake.

It also would have absolved the companies of any continuing requirement that they sell earthquake insurance and “was not a good bill,” he said.

The version that he decided in September 1995 to support was a far better bill and did not contain either assessments of all homeowners or any absolution of company responsibility, Calderon said. The $13,000 in contributions had nothing to do with his split with the Consumers Union, he added.

The contributions to Calderon included $1,000 from the Personal Insurance Federation and $1,000 from Farmers Insurance before the original bill passed, and $10,000 from the Assn. of California Insurance Companies, $500 from the Personal Insurance Federation and $500 from the American Insurance Assn. after it passed.

Following the interview, Calderon’s press secretary, Kelly Jensen, said that on the day the Personal Insurance Federation gave Calderon $500, California trial lawyers--who opposed the bill--gave him $2,500.

This demonstrated, Jensen said, that Calderon does not play favorites in responding to contributions.