No Shortage of Finger-Pointing Over Quackenbush

There’ll be finger-pointing and intense grilling today when Insurance Commissioner Chuck Quackenbush is called before a legislative committee to explain his office scandals. And he’ll deserve every hot, humiliating moment.

But fingers also should be pointed at the initiative sponsors and voters who turned insurance regulating into a political job.

The whole controversy reminds me of the story about the scorpion and the frog. The scorpion talks the frog into ferrying him across a river, promising not to sting. Halfway across, the scorpion stings the frog anyway. “Why’d you do that?” the frog asks. “Now we’ll both drown.”

“I can’t help it,” the scorpion replies. “I’m a scorpion. That’s my nature.”

Politicians can help it, of course. They don’t all do it. Not like Quackenbush. But it is their nature--their necessity for survival--to raise campaign contributions.

When Californians voted narrowly 12 years ago to force a reduction in their rising auto insurance premiums, they also bought into making the insurance commissioner an elective office. Before that, the insurance commissioner had been appointed by the governor--just as are the real estate commissioner, the commissioner of financial institutions and the new director of managed care.

It’s all about regulation. That’s the point. Regulators should not be hitting up the people they regulate for career-sustaining campaign contributions. It’s unseemly, at best. At worst, it can be legalized extortion and bribery.

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Four years ago, long before the Quackenbush scandals erupted, a blue-ribbon California Constitution Revision Commission recommended that insurance regulating revert to an appointive job.

The commission recognized the inherent conflict between direct regulating and money grubbing. It felt the governor should be responsible for overseeing the insurance industry, with the actual regulator being insulated from crass politics.

The commission also recommended abolishing two other elective jobs, which it thought could be handled more practically by the governor: state treasurer and superintendent of public instruction.

The Legislature didn’t give the commission’s two-year study two seconds’ thought.

Recalls commission Chairman Bill Hauck, a Capitol veteran who now is president of the California Business Roundtable: “We got resistance from politicians who didn’t want to abolish offices they might want to run for. Especially in an era of term limits. They don’t want fewer offices to run for, they want more.”

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But the legislator most speculated about as a potential candidate for insurance commissioner is trying to make the office appointive again. She’s Senate Insurance Committee Chairwoman Jackie Speier (D-Daly City), who is sponsoring legislation to put the issue back before voters in November.

“You can’t tell me,” she says, “that they [insurers] make contributions expecting nothing in return.”

The better speculation is that Speier will not seek the job; she’ll conclude it’s a political loser.

Some reformers--such as the 1988 initiative’s author, consumer activist Harvey Rosenfield--contend all that’s needed is for the insurance industry to be barred from contributing to a commissioner candidate. A couple of states do that. But they’re much smaller then California, where a statewide race requires millions. And the only major donors inclined to dig deep are the insurers whose fortunes depend on the commissioner.

One solution would be public financing of campaigns, but politicians shy away from that.

The first commissioner, Democrat John Garamendi, refused to take insurance money. But candidate Garamendi was chairman of the Senate tax committee and could extract donations from an array of special interests. He never ran for reelection, and failed miserably trying to raise money for a gubernatorial bid.

You might think the insurance industry would prefer an elected commissioner it could buy. Not so, according to many I spoke to. They long for the era of an appointed commissioner who is knowledgeable about the industry and not politically ambitious.

Notes Barry Carmody, president of the Assn. of California Insurance Companies: “How do you get objectivity out of a regulator if that regulator is going to be calling you in two days to say, ‘I need money?’ ”

Carmody also suspects an appointed commissioner would not be coercing insurers to finance nonprofit foundations of questionable legality, as Quackenbush has.

In this scandal, everybody’s a victim: The public. Insurance companies. Even Quackenbush, the scorpion.