Ban Sought on Insurers’ Contributions to Regulator

Saying the integrity of the election process is at stake, a Northern California lawmaker Monday unveiled legislation intended to prohibit insurance companies from giving campaign contributions to Insurance Commissioner Chuck Quackenbush.

Sen. Quentin Kopp (I-San Francisco) said the millions of dollars the insurance industry has funneled to Quackenbush create an appearance that the state’s top insurance regulator is too close to the industry he oversees.

“I believe those contributions must be regulated, must be prohibited to enhance the integrity of this process,” said Kopp, who described himself as being personally fond of Quackenbush.

Quackenbush, who was not available for comment, has not taken a position on the legislation. A spokeswoman, however, defended the commissioner against suggestions that he has been too close to the industry.

“Commissioner Quackenbush has been the toughest insurance company regulator this state has ever seen, cracking down on anti-consumer abuse and fraud by insurance companies, and the numbers prove it,” Dana Spurrier said.

Under Kopp’s measure, attorneys or law firms seeking to represent the commissioner’s office also would be barred from making donations. Violations would be subject to fines and, in the case of the commissioner, possible forfeiture of office.

At issue is whether any commissioner, not just Quackenbush, can act independently in setting insurance rates and handling complaints when he receives large campaign contributions from companies affected by his agency’s decisions.

Even before his 1994 election, Quackenbush was faulted by consumer groups for taking industry donations to win his job. Those complaints were revived last year when a state audit found that Quackenbush had failed to report more than $327,0000 in 1994 campaign contributions, much of it from the insurance industry.

“It smells bad for the California insurance commissioner to raise millions of dollars from the industry which he regulates,” said Harvey Rosenfield, an attorney who championed Proposition 103, the 1988 initiative that changed the commissioner’s office from an appointive to an elective post.

“There are few government offices in the state of California in which the actions of an official translate so immediately and so directly into what California consumers and businesses pay out of their own pockets,” said Rosenfield, whose Proposition 103 Enforcement Project is co-sponsoring Kopp’s measure.

“Under Commissioner Quackenbush, the Department of Insurance has become an insurance industry dreamland of premium increases, state bailouts, halted investigations and reduced 103 refunds,” Rosenfield said.

Spurrier took strong exception to Rosenfield’s comments, saying they “don’t hold an ounce of validity.”

Anne Eowan, a lobbyist for the Assn. of California Life and Health Insurance Companies, said her industry has not had an undue influence on Quackenbush.

“Allegations can be made in terms of influence, but none have been shown,” Eowan said. “He’s a fair regulator, and we disagree with him as much as we agree.”

If Kopp’s bill becomes law, California would be the fifth state in the nation to prohibit industry contributions to insurance commissioners, according to Rosenfield’s group.

Kopp would not forecast the odds of the bill’s passage or whether it would be signed into law by Gov. Pete Wilson. A spokesman for Wilson said the governor has not taken a position on the proposal.