Karen Reimus' San Diego house was obliterated by the 2003 wildfires, leaving nothing recognizable except a charred jogging stroller and her daughter's burned bicycle.
Yet her insurer insisted that she catalog each of her family's destroyed personal items -- down to pens and tampons -- if she wanted to be reimbursed.
"When insurance companies are selling peace of mind the way they do in their advertisements, nobody has any inkling of the hoops you are going to have to jump through," said Reimus, a 39-year-old lawyer and mother of two. She reached a settlement with her insurer after months of wrangling.
Dozens of similarly frustrating experiences prompted Reimus and other survivors of one of the worst wildfire seasons in California history to urge that new rules be imposed on insurers. But the most far-reaching efforts were derailed by a panel of state lawmakers that is closely aligned with the insurance industry, offering an unusually clear window on how Sacramento works and how legislation can be determined by a handful of well-placed politicians.
Insurers have spent $25 million on lobbyists, campaign contributions and perks for lawmakers -- even some who regularly cross them -- since 2003. Their money shows up particularly prominently in the campaign coffers of members of the Assembly Insurance Committee, a pro-business, relatively conservative bastion within the generally liberal Legislature.
Insurance money -- more than $1 million in 2003-04 -- makes up nearly a fifth of some of those members' war chests. And members, their spouses and their aides routinely accept expensive meals, free golf games, hotel rooms, tickets to Laker and Clipper basketball games and other gifts from insurers and their lobbyists.
In the wake of the Southern California wildfires, lawmakers proposed six bills that, among other provisions, would have forced insurers to provide consumers with more information about policy choices, made it harder for companies to raise rates or cancel coverage and reduced the documentation that homeowners must provide to collect on a claim.
Those provisions, like others strongly opposed by the insurance industry, never made it to the Assembly floor. The less ambitious bills that passed into law, with insurers' consent, extended living expenses for those awaiting rebuilt homes, gave homeowners more options for mediation as an alternative to lawsuits and prevented insurers from canceling coverage while a home's reconstruction was underway.
"What happened to the homeowners bill of rights is certainly an example of the power of this industry," said state Insurance Commissioner John Garamendi, referring to a package of legislation that his office helped write in response to the wildfires.
The committee's members and insurers alike said donations and gifts had no influence on legislative decisions. Insurers praised the panel for understanding that the proposed rules would have cost them so much that they would have raised premiums on all California homeowners.
"A lot of the bills were written because a natural disaster had happened, and people were writing bills that weren't fully thought out," said Juan Vargas (D-San Diego), chairman of the Assembly panel.
Insurers, he said in an interview, "have to be held accountable, but at the same time you have to look at the whole picture: These guys are going to make money no matter what, so you have to keep the prices down."
Rex Frazier, general counsel for the Personal Insurance Federation of California, commended the panel for finding compromises that produced "better bills."
"A number of the bills that were introduced were well-intended," Frazier said, "but were not good policy."
The industry does not rely solely on the force of its arguments to sway lawmakers.
Vargas has received more than $325,377 in campaign contributions from the industry, most of it since he took over the panel in 2003. Insurance donations were 17% of the money he raised for his two Assembly races. He is now making his third run for Congress, trying to unseat U.S. Rep. Bob Filner (D-Chula Vista) in the June Democratic primary.
In addition to the campaign donations, insurers with interests before the committee bought Vargas 13 meals, including one for $181 at Morton's steakhouse in 2004. They paid for his flight to Boston to attend an industry conference and for rounds of golf.
Such events provided the industry with opportunities to present its perspective on legislation. Vargas said his legislative decisions derived not from the gifts and donations, all of which were legal, but from his moderate, pro-business views.
Wildfire survivors who came to Sacramento to press for changes said the committee's position rarely deviated from that of the industry.
"When it came time to vote on one bill, lobbyists literally ran up to the dais and slipped them notes," said Rebecca Huston, a screenwriter whose home in Cedar Glen was destroyed in the fires and one of a dozen wildfire victims who came at Garamendi's behest to testify about their experiences.
"I watched insurance lobbyists mouth things to the Insurance Committee," Reimus said. "You hear about people being in the pocket of an industry, and I really got to see it firsthand."
Erik Strahm, a computer project manager at UC San Diego who also testified and met with lawmakers, said: "Always what we ended up hearing was, 'Well, the insurance lobby is really strongly against this.' At dinner one night, we actually ran into the insurance lobby giving a party to a lot of the lawmakers we had spoken to."
The October 2003 wildfires, which swept huge areas from Ventura County to the Mexican border, damaged or destroyed 3,631 buildings and were blamed for 24 deaths. Although some insurers won accolades for their response, the state insurance department received 869 complaints concerning insurers -- roughly one for every four lost houses.
Garamendi and a number of legislators held public hearings in Southern California and fashioned legislative solutions to recurring complaints. Insurers said the survivors' stories were not symptoms of larger problems and most claims were resolved with minimal dispute.
"A great many of these issues were brought up based on anecdotes," said Bill Sirola, a spokesman for State Farm who is based in Sacramento. "Sometimes in the emotional aftermath of disasters, like the fires down in the Southland, there's a great amount of publicity to what has seemingly gone wrong without seeing that, by and large, everything has gone well."
State Sen. Martha Escutia (D-Whittier) introduced a measure in 2004 to prohibit insurers from canceling a policy or raising its cost because a home had suffered damage from a natural disaster or something beyond the owners' responsibility or control.
Among the homeowners who testified was Lisza Pontes. Her Lakeside house was damaged but was spared destruction largely because she had spent more than $50,000 on fire-resistant coating and brush clearance.
"Mine was the only house on a street of 13 that wasn't a complete loss," she said.
Nonetheless, after Pontes filed a claim, her insurer placed her in a more expensive, high-risk pool, and 17 other California companies rejected her before she found an out-of-state firm that would insure her.
Industry officials argued that it was reasonable to be skeptical of people with a history of filing claims, because they are more likely to file future claims. State regulators and consumer advocates countered that insurers practice "use it and lose it" to deter people from filing claims.
Six members of the Assembly Insurance Committee voted for Escutia's measure, SB 1474. Three opposed it. Nine votes were needed to pass the bill.
Under Sacramento rules, a measure needs the support of a majority of a committee's members -- not just a majority of those casting votes. The panel at that time had 17 members. Escutia's bill failed because eight did not vote, though attendance records show that all were present in the Assembly that day.
In 2005, a scarcity of participants in Vargas' committee killed another bill concerning homeowners insurance.
Sen. Deborah Ortiz (D-Sacramento) had proposed banning insurers from using potential customers' credit histories in deciding whether to sell them policies. Ortiz said consumers' credit was irrelevant to whether they were likely to file insurance claims. The industry countered that its studies showed that people who fell behind on their credit were more likely to fail to take care of their homes.
When the measure, SB 603, came before Vargas' committee, which had been reorganized into a 10-member panel, three legislators cast votes for the bill, and two against it. The bill failed because five other legislators, including Vargas, did not vote, though all were in the Capitol that day.
As do many other interest groups, companies that write homeowners insurance have multiple ways of currying favor with legislators. Disclosure records show that since 2003, property insurers have picked up the tab 70 times on items as small as a $3.72 breakfast and as large as a $340 round of golf at Pebble Beach.
"That's our premium dollars working against us," said George Kehrer, executive director of Community Assisting Recovery, an advocacy group founded after the 1994 Northridge earthquake.
In the last three years, Allstate, Farmers Insurance Group and two industry associations gave committee member Ronald S. Calderon (D-Montebello) $1,300 in golf fees, meals and a room at the Wynn Hotel in Las Vegas. Allstate also paid for a $170 meal at a Pebble Beach clubhouse for Calderon and his wife.
In May 2003, Farmers paid for Calderon and then-committee member George Nakano (D-Torrance) to attend a Laker game at $114 per ticket. State Farm gave $50 tickets to a 2004 Clipper game to staffers who work for Nakano and for two colleagues on the panel, Mark Ridley-Thomas (D-Los Angeles) and Jerome Horton (D-Inglewood).
In March 2005, Farmers bought dinner for Assembly Speaker Fabian Nunez (D-Los Angeles), Vargas and the committee's chief advisor at a cost of $166 a person.
Insurers do not overlook the Republican minority on the panel, though records show that they have tended to pay for smaller events, like a $32 reception in 2003 for Dave Cox (R-Fair Oaks), who owns an insurance business (Cox was elected to the Senate last year).
Committee vice chairman John Benoit (R-Palm Desert) received a $67 dinner in 2004.
One of the most active lobbying groups is the Personal Insurance Federation of California, formed by Farmers and State Farm in 1989 after voters imposed stringent new rules on insurers through Proposition 103.
Between 2003 and 2005, the federation paid for 22 meals for committee members and their aides, as well as a $290 golf game for Vargas' brother, Javier. A frequent participant at those meetings, legislators said, was the federation's president, Dan Dunmoyer, now a deputy chief of staff to Gov. Arnold Schwarzenegger.
Vargas said the perks were irrelevant. "Most of the contact I have is not with them," he said. "Most of the time I'm meeting with citizens, I'm meeting with friends of mine, and these are people who are not in the insurance business."
Vargas noted that since he became chairman of the committee, he has sponsored three bills opposed by insurers and often votes against their interests.
Several of the wildfire survivors said Vargas particularly disappointed them.
"When we found out that the chairman of the insurance committee was a San Diegan, we thought: 'How great, who better than a local guy to know what had happened,' " said Ciaran Thornton, who lost his Harbison Canyon house in the fires.
Thornton and a friend whose home had narrowly escaped incineration met with Vargas at his Chula Vista office in June 2004.
"We sat down, he listened to us. He said, 'We'll see what we can do.' It was very hard convincing him. It was pretty much a roadblock," Thornton said. "He never got back to us at all."
Vargas said he gave wildfire victims extensive opportunities to make their cases, both privately and before his panel. But he said his empathy was outweighed by concerns that greater protections for wildfire areas, which tend to be affluent, would be paid for by more economically vulnerable people.
"You know who's going to get hurt? It's the elderly woman who has never had a claim, never done anything wrong, and her rates are going to go up by 10%, and that's not right," Vargas said.
Amy Bach, executive director of United Policy Holders, a San Francisco homeowner advocacy group, said the schmoozing between legislators and lobbyists cements personal relationships that carry over into the Capitol.
"If the guy's gotten them a great tee time on a very coveted golf course, then they're pals, and that makes it that much harder on a personal level to go against them," she said.
In 2005, the wildfire survivors pressed for passage of an ambitious proposal by Jackie Speier (D-Hillsborough), chairwoman of the state Senate's insurance committee, who held her own hearings on the industry's actions after the wildfires and believed that the previous year's legislation was insufficient.
Speier proposed that insurers pay out 85% of the limit for personal property without demanding a list of everything lost. Only homeowners wanting to collect the policy limit would have to submit a complete inventory. The concept was endorsed by a Republican senator from San Diego County, Bill Morrow of Oceanside, and it passed the Senate.
When the measure moved to the Assembly, it could not get through the lower house's Insurance Committee. Insurers complained that they would have no way to stop homeowners from exaggerating the value of lost contents and said most people's possessions were not worth 85% of their coverage.
The Assn. of California Insurance Cos. wrote to Vargas that the provision "provides another easy vehicle for fraudulent behavior on the part of policyholders."
Vargas said he agreed. Although homeowners shouldn't have to document the loss of "clothes, underwear, the stuff in your kitchen," he said, they should provide proof of "super-expensive stereos, mink coats, flat-screen TVs."
He said insurers should not have to pay out more than 30% of a policy limit without an inventory of things lost.
Speier -- who is widely disliked by insurers even though they have donated at least $264,247 to her since 2000 -- saw that Vargas' panel would not pass the measure, and she removed the provision so the rest of her bill would pass.
The final version required insurers to provide two years of living expenses, rather than one, for people who lose their homes, but Speier called the bill "a ghost of its previous self."
"It's common knowledge," she said in an interview, "that the Assembly Insurance Committee has become the graveyard for any consumer protection measures relating to insurance."
Industry-supported laws that passed gave homeowners more options for mediation and required insurers to give a specific reason when they choose not to renew a policy. Lawmakers also placed restrictions on public adjusters' soliciting victims of natural disasters, by passing a bill that Vargas introduced.
Insurers also must now renew a policy at least once after a house is destroyed by a natural disaster, and cannot leave disaster victims without insurance while their homes are under reconstruction.
Garamendi and Speier, who are competing this year for the Democratic nomination for lieutenant governor, say these laws are major improvements. Consumer advocates and many wildfire survivors say they are insufficient responses to the problems uncovered during the fires.
"We can't ever get the tough medicine," said Bach, whose group has been pressing for changes since the 1991 Oakland Hills fire. "Every time, we've had the same challenge: The insurance industry has an extremely powerful lobby in Sacramento. All the reforms we've been able to get through are watered down."
(BEGIN TEXT OF INFOBOX)
Members of the Assembly's Insurance Committee accepted more than $1 million in donations from the industry in 2003 and 2004. These are the industry donations to the 17 legislators who sat on the panel during that time:
Juan Vargas (D-San Diego), committee chairman ... $215,136
Ronald S. Calderon (D-Montebello) ...$112,900
Dario Frommer (D-Glendale) ... $ 95,116
Dave Cox (R-Fair Oaks) ... $93,199
Keith Richman (R-Northridge) ... $71,275
John Benoit (R-Palm Desert), vice chairman ... $69,550
John Dutra (D-Fremont) ... $57,600
Manny Diaz (D-San Jose) ... $51,546
Rebecca Cohn (D-Saratoga) ... $41,800
Jerome Horton (D-Inglewood) ... $37,805
Lou Correa (D-Anaheim) ... $34,578
Dennis Mountjoy (R-Monrovia) ... $32,500
Russ Bogh (R-Cherry Valley) ... $31,500
George Nakano (D-Torrance) ... $31,200
Paul Koretz (D-West Hollywood) ... $25,350
Mark Wyland (R-Escondido) ... $23,500
Mark Ridley-Thomas (D-Los Angeles) ... $19,600
Committee total $1,044,155
Source: Times reporting
Los Angeles Times