Garamendi Seeks 'Blackmail' Probe

California Insurance Commissioner John Garamendi has asked state and federal officials to investigate his allegations that an insurance industry representative threatened blackmail to halt his regulatory reform initiative.

In a letter to the Federal Bureau of Investigation, the U.S. Attorney for the Eastern District of California and the California Attorney General's office, the commissioner sought an immediate probe of this "extremely disturbing threat."

Mr. Garamendi alleged that he was approached through political consultant Darry Sragow by an insurance industry representative, who said she would cancel a $2 million advertising campaign if he would withdraw his plan to alter the state's auto rate structure to lessen the influence of territory on rate-setting.

The commissioner, who is seeking the Democratic nomination for lieutenant governor on the June ballot, said he viewed the advertising threat as an effort to damage him in the race.

The companies he said are involved in the "blackmail" are Safeco, State Farm, Allstate, 21st Century and Farmers.

A group of elected officials and other activists have joined together in a group called Californians to Stop Unfair Rate Increases [CSURI] to lobby against the measure, which they contend will result in rural motorists paying higher premiums while urban drivers see their rates decline.

The group announced this week that it has approached the companies named to spearhead an "educational" campaign to derail the rate reform effort.

A CSURI representative, Rick Claussen, denied any "blackmail," and said the campaign would be a legitimate effort to affect public policy.

All the companies cited by Mr. Garamendi declined to comment with the exception of Safeco, which referred the inquiry to CSURI.