California Insurance Commissioner John Garamendi refused yesterday to disclose the outcome of a review by the state attorney general of his charge that auto insurers objecting to a regulatory action by him were attempting political blackmail.
"We are still in discussions with the attorney general and cannot comment on these talks now," said Mr. Garamendi's spokesman, Norman Williams.
But Tom Dresslar, spokesman for Attorney General Bill Lockyer, said the commissioner's office was free to disclose the findings of the review and expressed surprise when told about the purported ongoing discussions.
Mr. Garamendi complained that the plans of five state 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 constituted a threat of blackmail intended to derail his race for the Democratic nomination for lieutenant governor in the June primary.
The ads started airing this week aimed at persuading non-urban Californians that the commissioner's auto rate regulation reforms would unfairly hit them in the pocketbook. The measure would lessen the impact of geographic location 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 departmental 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.
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