Auto Insurers Fight New Rules as Garamendi Seeks Lt. Gov.’s Office

Auto insurers are launching a well-financed campaign against Insurance Commissioner John Garamendi’s push for new regulations that the industry contends would raise rates for millions of California drivers.

The campaign is expected to be unveiled Monday, less than a month before Garamendi faces two challengers in the June 6 Democratic primary for lieutenant governor.

Insurers insist their “broad-based education campaign” isn’t politically motivated. The campaign, which is likely to include mailings and TV ads, will argue that Garamendi’s proposed regulations could raise premiums by up to 30% for rural and suburban motorists.

“It’s not about Garamendi. It’s all about the regulations,” said Kathy Fairbanks, a spokeswoman for Californians to Stop Unfair Rate Increases, a coalition of insurers, local elected officials, chambers of commerce and community groups.

The coalition includes State Farm Mutual Automobile Insurance Co., Farmers Insurance Group, Allstate Corp., Safeco Corp., 21st Century Insurance Group and other insurers. Many of those same insurance companies are also supporting a bill in the state Legislature that would study the effect of the proposed regulations and delay their implementation until after Garamendi leaves office at the end of the year.

The proposed regulations, issued by Garamendi in December, would base automobile insurance rates primarily on a motorist’s driving record, the number of miles driven each year and number of years behind the wheel. Other criteria that are now weighed heavily by insurance company underwriters, such as the ZIP Code where a car is registered, would be downplayed.

Insurers argue that the commissioner’s new rules -- designed to make changes approved by voters when they passed Proposition 103, the landmark auto insurance reform initiative, in 1988 -- would raise premiums for 60% of drivers living in rural and suburban areas. Drivers in major cities, such as Los Angeles, San Francisco and Sacramento, are expected to see their rates go down.

Garamendi is not surprised to be targeted by insurers so close to the primary, said Deputy Insurance Commissioner Byron Tucker. “The bottom line is, Commissioner Garamendi is going to move forward with these regulations regardless of any proposed campaign against him,” he said.

Consumer advocates denounced the planned insurance campaign as political retribution. “It’s a scare tactic and an attempt to punish Garamendi to weaken his rules,” said Douglas Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Garamendi faces state Sens. Jackie Speier (D-Hillsborough) and Liz Figueroa (D-Fremont) in the Democratic primary.