Cloud Over Quackenbush

It comes as no surprise that state Insurance Commissioner Chuck Quackenbush is a poor friend to the consumer. But how good a friend of the insurance industry has he been? This is an increasingly urgent question.

On April 2 The Times published a damning story showing how three leading insurance companies got away with a tiny fine for low-balling homeowners’ claims after the 1994 Northridge earthquake. Staff writer Virginia Ellis later reported that Quackenbush’s office struck a confidential deal with another company, Fireman’s Fund, allowing it to avoid investigation altogether. A day after the deal was made, the company paid $20,000 to Quackenbush’s political accounts. These disclosures together raised questions serious enough that the Assembly Insurance Committee rightly launched an investigation.

Today Ellis reported that a nonprofit foundation that Quackenbush established with insurance company contributions for earthquake research gave $500,000 to the Greater Sacramento Urban League after he joined the league’s board of directors. The transaction is being looked into as part of an audit by state Atty. Gen. Bill Lockyer to determine whether the foundation broke any laws.

Quackenbush’s deputy denies any wrongdoing, but the commissioner himself has not accounted for his conduct publicly. He should; his actions will be judged in part by how closely he cooperates with the Assembly committee in its investigation.

Department of Insurance confidential reviews of the Northridge settlements of 20th Century Insurance (now called 21st Century), State Farm and Allstate uncovered a pattern of claim payments so unfair that the department’s own legal team recommended fines in the hundreds of millions of dollars, with more hundreds of millions going to a fund to repay victims of mishandled claims. Quackenbush levied only a single fine of $100,000 and had the firms pay $12 million into the earthquake research and education fund. A state legislator later found that $3 million of that fund had been used for TV commercials featuring Quackenbush.

Among the questions on which the Assembly’s Insurance Committee must focus is whether Quackenbush’s deals with the insurers were proper or even legal, whether insurers were squeezed for campaign donations and whether the use of the educational fund for what amounted to a reelection campaign TV commercial was proper.

Quackenbush has told the committee he might be too busy to attend its April 26 hearing and expressed reluctance to disclose some of the documents related to the Northridge settlements. If Quackenbush obstructs the investigation, it will darken the already substantial cloud over his office.