Outgoing California Insurance Commissioner John Garamendi cautioned that more work needs to be done to lower the cost of coverage in the state while touting his own accomplishments at achieving this goal in his final press conference as the state's top insurance regulator.
"As insurance commissioner for eight years, I have worked diligently to make sure this industry remains healthy and competitive in California," Mr. Garamendi said today. "As its regulator, I have upheld the law that requires that insurance company profits not be excessive. I was determined to fulfill my responsibility, ensuring that premiums paid by California consumers do not exceed what is necessary for insurers to pay claims and earn a reasonable profit."
Among his efforts to reduce premiums, he said, was the implementation of auto insurance regulations in calculation rates that barred insurers from giving more weight to any single secondary factor, such as the address where the vehicle is garaged, than to the three main factors: a driver's record, a driver's experience, and the amount of miles the car is driven.
Mr. Garamendi said the regulation was "the final piece" of the state's Proposition 103 reforms to be implemented, adding that his work to implement the new rule triggered a "major brawl" with insurers.
Despite the strife, he said the new regulations will save drivers more than $1.5 billion in premiums.
Mr. Garamendi noted his work to reduce property insurance rates after a study commissioned by the department last year found major insurers were "literally ripping off the public" by spending less than half of every premium dollar they collected to pay claims. As a result, the department issued "show cause" orders to the state's largest insurers. As recently as Tuesday the department announced that one carrier, Farmers Insurance, filed a request to cut rates by 18 percent overall.
Looking forward, Mr. Garamendi said that California needs to continue work in such areas as title insurance and that a national system for dealing with natural catastrophe risk must be established.
"We hope that it won't happen, but we know it will," he said of the next natural catastrophe to hit the United States. "Unfortunately, America is not protecting itself," he noted, adding that the country should not have to rely on the "Air Force One insurance plan," in which federal dollars are spent after an area is hit.
Another major accomplishment he pointed to was the work done to revive California's workers' compensation system that began under Gov. Gray Davis and continued through Gov. Arnold Schwarzenegger's term.
While saying the effort was "perhaps the most important economic measure" California has seen in the past four years, he said that work needs to continue in some areas, such as ensuring that severely injured workers receive all the treatment they need. These additional measures, he added, can and should be done by regulation rather than legislation. He called for emergency regulations to be enacted as swiftly as possible.
Mr. Garamendi will be sworn in as the state's next lieutenant governor on Jan. 7.
Although they are from different political parties, he said he looks forward to working with Republican Gov. Schwarzenegger.
He said he has met with his successor as insurance commissioner, Republican Steve Poizner, to ease the transition.
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