California Insurance Commissioner John Garamendi declined to disclose the outcome of a review by the state attorney general of alleged blackmail threats by five of the state’s auto insurers.
“We are still in discussions with the attorney general and cannot comment on these talks now,” said Norman Williams, a spokesperson for Commissioner Garamendi.
But Tom Dresslar, spokesperson for Attorney General Bill Lockyer, said his department had forwarded the conclusions of a review of the charges to the commissioner’s office.
He expressed surprise when told about the purported ongoing discussions and said the commissioner’s office was free to disclose the findings of the review.
Mr. Garamendi has charged that plans by five auto insurers–Allstate, State Farm, Safeco, Farmers and 21st Century–to fund a $2.4 million television advertising campaign against his proposal to revise auto rating criteria were intended to derail his race for the Democratic nomination for lieutenant governor in the June primary. He said that he was approached by an insurance industry representative through a political consultant who said the ad campaign would be dropped if he withdrew his auto rating proposal.
The ads, which started airing this week, are aimed at persuading non-urban Californians that Commissioner Garamendi’s auto rate regulation reforms would unfairly hit them in the pocketbook. The measure would lessen the effect of territory on a driver’s rate, which property-casualty industry advocates fear will result in urban motorists being subsidized by rural drivers.
In addition to the state attorney general, Mr. Garamendi requested the Federal Bureau of Investigation and the U.S. Attorney’s Office look into the charges.
“The insurance industry will use any means necessary–from TV ads to extortion–to stop pricing reforms for good drivers, and this campaign should be seen for what it is: a big lie meant to mislead Californians about the impact of Garamendi’s reforms,” said consumer advocate Douglas Heller, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.
The new Garamendi rules will still allow insurers to consider geography in setting premiums, but will require factors related to a motorist’s driving record to be most important, Mr. Heller said.