California Insurance Commissioner John Garamendi accused five major automobile writers in the state yesterday of trying to forestall his rate regulation changes by blackmailing him with a political smear campaign.

The charges stem from Mr. Garamendi's plan to lessen the weight that carriers can give to an insured's geographic location, a move that detractors claim will have the effect of lowering rates for urban drivers and raising them for rural motorists.

Both the insurance industry and a group of elected officials and other activists have mounted a campaign against the changes, which Mr. Garamendi said up until recently had been within the realm of legitimate political argument.

Mr. Garamendi held a news conference yesterday and put out a statement that on April 24 “the insurance industry veered dangerously off track in its efforts, and I firmly believe its leaders have attempted political blackmail and extortion against me.”

Mr. Garamendi named Allstate, Safeco, State Farm, Farmers and 21st Century as the companies engaged in the alleged blackmail effort.

The commissioner is currently engaged in an effort to win the Democratic nomination for lieutenant governor in the June primary and said the threatened $2 million anti-reform ad campaign was an attempt to derail his race.

A group called California to Stop Unfair Rate Increases [CSURI] has said that it has approached the companies Mr. Garamendi named to spearhead a “more expansive effort to educate and engage Californians before it's too late.”

CSURI spokesman Rick Claussen denied any blackmail effort. “It is unfortunate that Commissioner Garamendi is distracting from the real issues of the effort, which is to educate Californians about impending, unfair auto insurance rate increases by making baseless and inflammatory accusations that are completely untrue,” he said.

None of the companies mentioned by Mr. Garamendi responded to a request for comment, but Safeco referred the inquiry to CSURI.

The Garamendi press conference came in response to the announcement by CSURI that it will begin its education campaign through television ads and mailings about “proposed auto insurance regulations that will unfairly raise rates for millions of drivers statewide.”

Mr. Garamendi said his rate revisions will be a final implementation of the voters' will as expressed through Proposition 103 passed in 1988. “The new rules will reward those who drive safely in rural areas as well as urban areas,” he said. “And they will put an end to the unfair insurance industry practice of charging a good driver who lives in one ZIP code more than a good driver who lives across the street in another ZIP code.”

Special Reports /

Garamendi Charges Blackmail On Rates

Related Stories

Recommended For You